1. Understand the Price Formation Mechanism on Uniswap

On Uniswap and other DEXs that use an AMM (Automated Market Maker) model, the price of a token is determined by the ratio between the tokens available in the liquidity pool. The mechanism is based on a simple formula: 𝑥 × 𝑦 = 𝑘 Where:

x

is the amount of token 1 (e.g., ETH),

y

is the amount of token 2 (your token),

k

is a constant (which remains fixed as long as no trade is made). Thus, if you add more of your token to the pool without adding ETH or stablecoins at the same time, the price of your token will decrease. Conversely, if you add more of the other token (ETH, USDT, etc.), the price of your token will increase.

2. Simulating the ICO Price Curve

During an ICO, you typically want to increase the price of your token as sales progress. To replicate this on Uniswap, you need to adjust liquidity by adding or removing tokens in the pool so that the AMM formula increases the price according to your plan.

3. Options for Adjusting the Price During the ICO

a) Manually Adjusting Liquidity

The simplest approach is to manually adjust liquidity in your pool as the ICO progresses. Here’s how it works:

Increase the price

: When the price of your token needs to increase, you can add more ETH or stablecoins into the pool without adding your own token, which will raise its price. At each stage of your ICO (for example, after each sales tranche), you can manually increase the price by changing the proportion of tokens in the pool.

Drawback

: This requires regular monitoring and adjustments to follow your defined price curve.

b) Use a Smart Contract to Automate Price Management

If you want to avoid manually managing liquidity, you can create a smart contract that automates the liquidity adjustments in the Uniswap pool based on the progress of the ICO. Here’s how it works: The smart contract could be programmed to add ETH or remove tokens every time a certain amount of tokens is sold during your ICO. You predefine a price curve, and the smart contract automatically adjusts the Uniswap pool to reflect this curve.

Example

: You set the price to increase by 10% after every 1,000 tokens sold. The smart contract ensures that for every 1,000 tokens sold, the token proportions in the pool are adjusted to reflect the price increase.

Drawback

: This solution requires programming and fees for deployment and interaction with the smart contract, but it offers more flexibility and automation.

c) Sell Directly on Your Own ICO Platform

Another option is to sell a portion of your tokens directly on your own ICO platform (outside Uniswap) at a fixed, manually adjusted price. Meanwhile, you can leave liquidity on Uniswap in passive mode and, at the end of each ICO phase, adjust the liquidity to make the price on Uniswap follow your ICO price. Here’s the process in three steps:

Set a price per phase

on your ICO platform (e.g., start at $0.01 per token and gradually increase the price to $0.02 per tranche).

Add liquidity on Uniswap

only at the end of each phase by manually adjusting the pool so that the price matches your ICO.

Synchronize the two processes

: At each new phase, manually adjust the liquidity on Uniswap so that the secondary market reflects the price set on your platform.

Drawback

: This requires an independent ICO platform but allows for stricter price control.

d) Use a Launchpad Platform

If you don’t want to manually manage the price adjustments, you can also use a decentralized launchpad platform like DxSale or Bounce Finance. These platforms allow you to:

Sell tokens

according to a predefined price curve (exponential or linear).

Automate token distribution

while preparing their listing on Uniswap once the ICO is completed.

Drawback

: Fees may be higher, and you must accept certain limitations imposed by the platform.

4. Calculating the Adjustments Needed to Follow the Curve

To adjust the price on Uniswap according to your ICO price curve, you need to calculate the exact amount of ETH or your token to add to the pool.

Target Price

: If you’ve set the token price to reach 0.05 ETH after a certain sales tranche, you’ll need to withdraw or add tokens to adjust the pool ratio until that price is achieved.

AMM Formula

: Use the formula 𝑃 = 𝑦 / 𝑥 (where P is the token price, y is the amount of ETH tokens, and x is the amount of your tokens) to adjust the proportions and reach the target price.

5. Tools to Monitor and Adjust Prices

You can use liquidity dashboards like Uniswap Analytics or Dextools to monitor the price of your token in real-time and quickly adjust liquidity as needed. These tools allow you to:

Track liquidity

in the pool.

View the current price

of your token.

Estimate the impact

of adding or removing tokens.

Conclusion

To ensure that your token’s price follows the sales curve of your ICO on Uniswap, you can manually adjust or automate the liquidity management in the pool. The methods include manually adjusting token proportions, using a smart contract to automate the process, or using launchpad platforms to manage the ICO and listing simultaneously. The key is to fully understand the price formation mechanism through the AMM and prepare a liquidity management plan based on your goals.