Bootstrapped Liquidity

Pools can be started on Goat with no matching Ether required.

When initially creating a pool you decide how much "virtual" Ether you want to start, how much "real" Ether (if any) you would like to deposit, and how much "real" Ether you want to raise for liquidity. There's a minimum of 5 Ether required to start whether virtual, real, or a combination.

The pool then functions as a sort of bonding curve that uses the traditional Uniswap x * y = k algorithm. No tokens are allowed to be sold into the pool that were not previously bought from it, so while in the bootstrapping phase the matching Ether can never go below what it started at.

As traders purchase the token, the price of the token changes in the exact manner it would with a traditional AMM. Traders can buy and sell as if it were any other fair launch. Once the Ether generated from purchases meets the liquidity goal, the pool transitions into an AMM without the restrictions of the bootstrapping phase (but maintaining all other security measures).

The biggest difference between the bootstrapping phase and the AMM phase is that during the bootstrapping phase tokens cannot be sold into the pool that were not previously purchased from the pool. This could result in price differences on Goat pools and AMMs elsewhere because arbitrage can only happen one direction, but those will even out as price rises and disappear once the liquidity goal is met.

The final AMM phase might also result in a drop in liquidity depending on the variables set by the launcher, so it will be more beneficial to purchase a token during the bootstrapping phase when liquidity is higher.