Introducing The Presearch ButterFlywheel — A PreFi Innovation

7 min readJul 30, 2024

Presearch, a pioneer of unbiased and privacy centric search, is engineering a Liquidity Hub on Base for its longstanding PRE utility token, with a central focus in Aerodrome. This PRE-nexus is designed to foster a self-reinforcing cycle of growth in terms of demand, utility, user acquisition and revenue.

Now that our PRE Base Mainnet has been deployed, audited and whitelisted in Aerodrome and available on the official Base SuperBridge, we’re ecstatic to share an article outlining this long-awaited power-move — a Presearch Game-Changer…we don’t throw that term around lightly btw.

The barrier to entry of high gas fees has been eliminated so LFG!!!

A holistic, birds-eye view of the Presearch Liquidity Ecosystem

Disclaimer: The information provided in this tutorial is for educational purposes only and does not constitute financial advice. Please do your own research and consult with a professional before making any financial decisions.

The PRE ButterFlyWheel represents the interconnected and cascading effects of small actions within what we’re calling the PreFi system. It symbolizes the momentum and compounding growth generated by continuous participation and efficient liquidity provisioning. Each turn of the ButterFlywheel builds upon previous efforts, creating a powerful, self-sustaining mechanism.

The Key: Starting August 1st, 2024 ~5% of monthly Ad revenue will go toward incentivizing the PRE-AERO pool in Aerodrome each week. The immediate effect is that liquidity providers get AERO emissions for staking their LP. The knock on effects are numerous and outlined below.

This is in addition to our monthly PRE buybacks (5% of Ad revenue as well) found here.

Like never before, PRE velocity can flourish, allowing for more frequent, seamless transactions driving hyper growth. Base and Aerodrome make this possible with their super low transaction fees and AERO emissions, coupled with our new PREmissionless features on platform!

Presearch (PRE) DeFi ButterFlywheel

Goal: To establish and optimize a PRE DeFi flywheel, dubbed the Presearch ButterFlyWheel around the primary objectives:

A. Boosting PRE token liquidity, velocity

B. Increasing search volume

C. Serving as the catalyst, initializing a “Presearch Renaissance” or “Presearch Rebirth” …a marketing anchor and compelling narrative we can leverage to re-invigorate the community and boost user acquisition…more soon.

Over-Arching Opportunity

TLDR: The path to heightened profitability and a deflationary PRE token ecosystem accelerates.

With Base PRE and the Presearch platform’s permissionless features, our total addressable market massively and quickly expands into the DeFi realm where millions of Global users reside.

As awareness spreads about our unique position at the crossroads of the crypto-savvy and “Normies” with our IRL value-add search engine, coupled with DeFi mechanisms, we can fully realize our potential. Presearch already has a significant impact and reach, greatly contributing to the growth and prosperity of the crypto ecosystem. Now, we are poised to scale like never before.

As we develop our ambassador program, we become increasingly appealing to numerous global influencers, creating a marketing and liquidity Presearch Perfect Storm.

Knock-on Effects

I. Closing the Sustainability Loop

The PRE ButterFlywheel drives to boost liquidity, close the PRE tokenomics loop and encourage more folks to search on Presearch.com, search stake and generally support the ecosystem because more searches = more impressions = more PTA revenue = more incentives deposited to the pool which encourages more liquidity.

II. Dampening Volatility

By launching the Base PRE integration on the Presearch platform and expanding our DeFi footprint, we aim to attract those interested in more sophisticated strategies that are often available permissionlessly and onchain, so organically, a PRE Derivatives market spawns. PRE-centric liquidity mining and yield farming now becomes viable.

Auto-compounding (like ExtraFi)
Lending i.e. Seamless Finance or Moonwell Protocol
Looping, hedging with covered calls and other derivatives.

III. Arbitrage

Arbitrage opportunities exist cross chain across Spot (CEX), Uniswap, and Aerodrome pairs, including the Base 1:1 bridge and other cross-chain swap bridges. When gas prices (Gwei) decrease and arbitrage opportunities increase sufficiently, traders naturally balance the market, thereby boosting liquidity and dampening volatility.

IV. Downstream Rewards Flow:

By structuring rewards to flow downstream with our unique incentive program, we create a robust and self-sustaining ecosystem where each layer of participants benefits and contributes to the overall health of the DeFi platform. This approach aligns incentives across different levels, ensuring liquidity, reducing slippage, and fostering active community engagement.

Presearch X Aerodrome

Capital efficiency is the name of the game. Since Aerodrome is by far the most liquid DEX on Base, offers a novel and optimal approach for projects like Presearch, we anticipate driving the incentives mainly towards the PRE-AERO pool. This way we deepen our commitment and foster a fruitful reciprocal and symbiotic relationship. Additionally, with a more market correlated asset like AERO, the pool should experience less impermanent loss.

Liquidity Provisioning and Incentivization in Aerodrome:

The act of supplying tokens to a liquidity pool in a decentralized exchange (DEX), Liquidity providers (LPs) deposit tokens into these pools to facilitate trading, and in return, they earn a share of the transaction fees and sometimes additional rewards i.e. AERO in Aerodrome in our case. Find Aerodrome PRE pools here.

Increased activity leads to higher fee generation, which funds further rewards, creating a self-sustaining cycle. Let me reiterate the key to unlocking massive potential: ~5% of monthly Ad revenue will go toward incentivizing the PRE-AERO pool in Aerodrome each week so increasing activity on our search engine is directly correlated to incentives in a Liquidity Pool…never been done before…Boom!💥

TLDR: Aerodrome’s project-centric unique mechanics act as a multiplier for LP incentives in specific pools with rewards disbursed in the form of AERO.

Concentrated Liquidity Pools (Slipstream/Uniswap V3 Pools):

Incentives for Efficiency: LPs are rewarded for providing liquidity within specific ranges relative to trading volume, reducing slippage and enhancing capital efficiency. Small contributions here can have a large impact on trade execution quality. In our case, a PRE-AERO pool in Aerodrome and a PRE-WETH pair in Uniswap.
Butterfly Effect: Each LP’s decision to concentrate liquidity within a certain range leads to better trade prices, attracting more traders and increasing overall liquidity.

Note: This method may require rebalancing occasionally, sometimes frequently depending on several factors. Read more about Aero specific mechanics here and Uniswap specifics here.

2. Basic Liquidity Pools (Basic/Uniswap V2 Pools):

Incentives: In addition to Aerodrome specific rewards and emissions described below and in more detail here, these pools receive rewards in kind to maintain adequate liquidity depth relative to the trading volume in that pool, ensuring that large trades can be executed without excessive slippage. Maintaining a broad base of liquidity supports large trades and market stability, which in turn encourages more participation and liquidity provision.
Broad Liquidity Safety Net: LPs provide liquidity across a wide price range automatically, ensuring there’s always some liquidity available for trades, even if the price fluctuates significantly. These pools ensure there’s always liquidity available, providing stability and confidence in the system. In our case a PRE-USDT pool in Uniswap and PRE-AERO/PRE-USDC pools in Aerodrome.

3. Automatic Market Maker (AMM) Functionality:

Trade Execution: The AMM attempts to fill trades at the best possible price within the available liquidity ranges. For large trades, the AMM defaults to basic liquidity pools if concentrated pools are insufficient.
Aerodrome specific incentives: Every epoch (week) liquidity providers (LPs) receive $AERO token emissions proportionally to the votes the pools accumulate. Participants can lock their $AERO to be able to vote on the next epoch distribution of emissions, becoming veAERO Voters. veAERO Voters are then rewarded (proportionally to locked amounts) for their votes with 100% of the protocol trading fees from the previous epoch and any additional voters’ incentives from the current epoch.

4. Looking ahead to potential Future enhancements: Dynamic Incentive Adjustments: Adjust the currency and percentage of ad revenue used for incentives and buybacks based on:

Current liquidity needs and market conditions. For example, when PRE price is low, increase buybacks/burns to support the token price.
Increase incentives based on PTA sales.
Global Search Milestones: Set global search milestones (e.g., every 25 million searches) that trigger special bonuses or events, creating buzz and driving search volume.
Additional Gamification techniques: Flash Bonuses etc.

Conclusion

Implementing this structured approach will help us achieve our goals of increasing liquidity and search volume while incentivizing user participation primarily through search.

Deepening into DeFi not only serves to “liquify” a market, but offers diversifying strategies, which in turn serves to mitigate systemic and idiosyncratic risk. Furthermore, we expect this to result in volatility of PRE price dampening, ultimately making PRE more attractive in its utility.

Somewhat counterintuitively, by incentivizing and fostering downstream rewards flow, we can connect the dots in the most novel of ways between DeFi activity and IRL activity in the form of searching and earning on Presearch.com.

Additional Resources

Uniswap Tutorial and PRE LP staking protocol Video here.
To Bridge your Erc20 PRE to Base PRE, follow these instructions. See our tutorial video here.
Web3 best practices and Troubleshooting guide here.
PRE on Base layer 2 Blog Post here.
PRE in Aerodrome Blog Post here.