The first ERC-1919 token, how to play with AIR on Base?
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The first ERC-1919 token, how to play with AIR on Base?
ERC-1919 can improve Dutch auctions and node sales.
Navigating Web3 tides with focused insightsAuthor: 0xJermo
Translated by: Peng Sun, Foresight News
Degens will be degens—but just days ago, AIR on Base introduced a new mechanism called ERC-1919. So what exactly is ERC-1919?
The problem with DEX trading isn't necessarily a lack of liquidity—it could also involve the risk of malicious attacks by anonymous developers on existing liquidity.
AIR's solution directly addresses this issue. The concept behind ERC-1919 is not difficult to grasp. I even believe it’s simpler than standard Uni V3 (or even Uni V2) pools. In other words, with ERC-1919, there’s no need for a DEX, and no need for LPs to provide liquidity to pools.
Instead of using the traditional 50/50 LP model to determine prices based on supply and demand, it adopts a multi-tiered pricing structure. In this specific case, prices increase or decrease in fixed steps with a predetermined delta of 0.8% per tier.
The amount of tokens at each tier is pre-defined in the contract. If demand surges, the price rises and ETH returns proportionally decrease. When selling pressure exceeds buying pressure, the price drops back to the previous tier. If buy or sell orders are too large for a single tier to absorb, the nearest tier is filled first, then the price continues moving up or down accordingly.
A key benefit of this system is that you know exactly what return you’ll receive from the system. Once you sell your tokens, their tier level decreases (and they are subsequently burned).
I find this mechanism fascinating due to its potential applications in various future use cases—such as improved Dutch auctions, tier-based node sales, and more. Beyond that, I particularly appreciate how this approach completely eliminates counterparty risk (since developers cannot pull an LP rug after launch), which is really cool.
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