# DEX Recap for Rover’s RGFL:

# Rover’s RGFL — Revenue Generating Fair Launch

https://rovercapital.medium.com/roverdao-improving-defi-fair-launch-c8a41467b727

# DEX Recap Example

Say DEX starts out with near 0 Liquidity Depth (LD) of some new token with, say, 1 USD.

DEX liquidity and price growth is illustrated below:

100 USD sent to Rover Fetch by user, to get RTR — Rover Transaction Rewards tokens.

Normally, DEX price and liquidity would work as below. First, recall DEX’s normally use:

# DEX Constant Product Model

DEX “constant product model” means the amount of

A * B = K

K is constant after all trades, but changes on LD add/remove. More explicitly:

A amount of token type1 in pool reserves * B amount of token type1 in pool reserves = K.

The spot price of A to B is just the number of A tokens divided by the number of B tokens.

The spot price of B to A is just the number of B tokens divided by the number of A tokens.

The “Constant Product Model” means K is constant in trades, while the 2 token amounts, A & B, in the pool, change when people send A or B to receive the other token — B or A — in return.

For our examples, we’ll use A & B as: some USD stable & our token, RTR, so that:

USD tokens in pool * RTR tokens in pool = K.

Say we start with just 1 USD and 1 RTR:

1 USD * 1 RTR = K = 1.

The spot price of USD to RTR is now 1, meaning sending a tiny bit of USD will return a near equal number of RTR, and vice versa.

Note that sending 1 USD would result in:

2 USD * 0.5 RTR = K =1

K must remain constant, so 0.5 of RTR would need to be sent back to a buyer, to bring RTR down from 1 to 0.5, so that this 0.5 would multiply to 1 K, when multiplied by 2 USD, instead of the previous 1 USD.

2 / 0.5 = 4, which is the spot price of getting a tiny bit more from the 0.5 RTR by sending USD.

The price of 4/1 is now 4x higher than the previous price of 1/1.

LD for the token grows only 2x, to 2 USD.

Price of tokens thus grows as LD². This leaves LD too low in early fair launch before funding.

Rover’s RGFL automatically creates more adequate liquidity from any initial LD while funding dev as price & volume grows. Buyers are incentivized to use the RGFL DEX-LGE split, which reduces the direct DEX slippage. Its RGFL also offers an APY program only via Rover Fetch.