Liquidity Bootstrapping Pool (LBP)
LBPs are a special kind of balancer pool where the token is paired with a stablecoin or another token with high liquidity with a high initial weight on the project token that reduces over time.
Therefore the initial price of the token is very high and algorithmically decreases over time. This mechanism aims to discourage front-running and whale manipulation, while providing fair and open price discovery.
Adoption Rate: LBPs have been around since the 2021 bull market but have been used only by very few projects. Examples in Cosmos include White Whale ($WHALE).
Timing: LBPs are usually conducted right before the project launches and are therefore part of the project's launch sequence. They could technically also be held before the protocol fully launches, however after the TGE.
Initiator of the Sale: The LBP may be initiated by the project team itself or there may be a portion of token set in the genesis file that is dedicated to liquidity bootstrapping. In order to launch the token and conduct the sale/distribution in a more decentralized manner is to initiate the sale via a governance proposal.This will only work however, if tokens have already launched and are already in the hands of users, e.g. via a prior airdrop.
Flow of Funds: Funds raised from an LBP are ideally directed towards certain protocol functions which require liquidity. Funds can also flow to the protocol treasury or community pool. Directing funds to the team is usually not recommended as it raises the question if the sale was conducted by a centralized entity, eg. the founding team.
Who Can Invest: Technically anyone can invest, but the complexity of the mechanism makes users often cautious. Further, certain projects may impose restrictions based on geographic location or other criteria to comply with local regulations.
Decentralization: Due to little to no restrictions into who can participate, this price discovery mechanism has a high chance of distributing tokens into a variety of users hands, however, this is not necessarily a given as it also depends on the terms of the lockdrop, and how appealing it is to a wide user base. If the LPB is not initiated by the founding team or project and the funds flow into a protocol owned pool this mechanism is relatively decentralized.