Hey folks, so this is probably going to be one of the smaller marketcap tokens that I’ve taken a look at, but something I found interesting nonetheless.

If you’re a frequent binge watcher of Coffezilla like I am, you’ll probably already know that a common scam is a liquidity rug pull, where a project gets a lot of hype reaching ATH’s in price, only to get it’s liquidity pulled by a whale (often times a founder) leaving all the guppies to get dumped on. This holds especially true for smaller marketcap tokens, and from a surface level, you’d probably think that $LINQ is susceptible to the same pump-and-dump mechanics.

What caught my eye about $LINQ however is that looking at the token on etherscan, out of the 4,000+ holders (and growing) of $LINQ, the top addresses hold no more than 5%, and with the exception of 2 addresses (Uniswap and the Linq Deployer wallet), none of the remaining 4,000+ addresses hold more than 2%:

Based on these factors alone, I felt curious enough to go down Linq’s rabbit hole to see why $LINQ is a common token listed on many people’s 100x moonshot lists.

Decentralized Liquidity and How it Works

As mentioned in the title of this article, the novel way that $LINQ tries to approach liquidity is through decentralization — not just a tagline but an ethos that many in the cryptospace hold dear.

Unlike traditional liquidity pools, the amount of $LINQ tokens you own essentially serves as a claim for your proportional amount of Linq’s Uniswap-V2 LP token, which you can claim via Linqgroup’s dapp:

Once you receive your LP tokens, you can stake them (once again through the dapp) to start earning rewards directly in $ETH:

To be clear, at time of writing the ‘Staking option’ contract was not yet live, and was projected to be available by September 26th, and dependent upon the LP price at contract launch, the initial APR is projected to be at 500%. People who are staking right now are currently receiving $ETH rewards, but new deposits are turned off awaiting the new contract’s deployment.

500% APR — how is that even possible?

This is part of where the magic comes in — there’s a 6% transaction tax that comes in for every swap that ‘s made from $ETH to $LINQ, 3% that is claimable by all $LINQ holders and 3% that helps maintain the staking APR and development (more on that later):

In case if you’re wondering how 3% doesn’t equate to 500%, it’s because the 3% is an immediate return, whereas 500% is an APR, so adjusted annually. In other words, this means that whether you’re a whale or a guppy, and whether you buy or sell $LINQ, all these transactions will get siphoned off at 6% and the redistributed to the holders and bolster the crazy 500% APR yields, all paid out in $ETH. If you’re curious to learn about how much revenue they’ve been able to generate already, I highly recommend you check out their stats on dune, or else if you’re curious of how much you can potentially make, check out their revenue calculator:

Drawbacks and Risks

When dealing with any project that advertises high APRs, I try to be prudent and analyze all of the possible drawbacks and risks

Sustainability :One of the most glaring drawbacks is that if there is no demand for $LINQ then there will be no taxes to be distributed. My assumption however is that with 500% APR + a low marketcap token will generate a great deal of interest for people to speculate the hell out of $LINQ’s price action, generating lots and lots of fees. I think a huge deciding factor for the longevity of $LINQ as a whole is whether or not they decide to continue to build. Luckily right now it looks like they have a lot of things in the works, including a DEX and a wallet:

The most bullish outcome is if their Linq ecosystem as a whole gains more adoption, creating more taxes and revenue for its holders.

Small Marketcap = High Volatility: anytime you have a small marketcap token you are subject to a crazy amount of volatility, for a whale can completely dump a token’s price. As I mentioned earlier, right now there’s thankfully no massive whales and there’s a pretty decent spread between wallets, but that doesn’t necessarily ensure that there won’t be whales coming in the future.

Smart Contract Risk: As far as I can tell, there hasn’t been any audits yet (although I was told there would be in the future), which does give me cause for concern. As someone that’s been of different exploits in the past, audits aren’t a 100% guarantee that you won’t get an exploit, but it does offer reassurances nonetheless. Like many other crypto projects, the Linq team is going into a bit of uncharted territory, meaning that risks might not be realized until it’s too late.

Conclusion

As I’m writing this, $LINQ has significantly retraced from its all-time highs of $0.38 and is back down to $0.10 — all in the span of just a month:

However, with it’s new staking contracts being deployed, I imagine that we’ll see a jump in activity of people wanting to earn 500% APRs that will at least in the short-term cause a run-up in price. Do I think this a risky play? Absolutely. But in the long-run, it’ll be interesting to see how things play out and whether or not this will start a new narrative of decentralized liquidity.

Are planning on aping into these 500% APRs? If so (or if not), I’d be curious to here about it in the comments below.

And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!

Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!