Preferred Token vs spot holder returns by token price at maturity.
What it is
Liquidity Preferred turns your treasury tokens and holder deposits into a fixed-term, protocol-owned liquidity position — locked from day one, redeemed at maturity. The holders who fund it stay downside-protected, with full exposure to the upside.
Issue
Holders deposit USDC and are issued Liquidity Preferred tokens. You match each deposit with your own treasury tokens.
Lock
Half your tokens pair with the deposits into a locked, protocol-owned DEX position; the other half is held in reserve to fund holder upside.
At maturity
Holders redeem their Liquidity Preferred — protected principal if the token's down, full upside if it's up. You redeem the LP — in full plus fees if the token's up, or minus the protection paid to holders if it's down.
How it works
From deposit to redemption.
Example: $1,000 deposit
What is Liquidity Preferred?
Liquidity Preferred lets you gain exposure to a token's upside with a hard floor protecting your downside. Think of it as a defined-risk bet on a token you believe in.
Buying a Liquidity Preferred.
Any project can issue Liquidity Preferred tokens — they set the protection floor, the term, and put up the collateral. You deposit USDC.
The project's offer
this becomes your reference price
You
The collateral backing the Liquidity Preferred is a structured product made up of an LP position that funds the floor, and a token reserve that funds the upside. Read the docs if you're curious for a full breakdown.
You're issued a Liquidity Preferred.
You're issued a Liquidity Preferred. The Liquidity Preferred gives you exposure to the full token upside while keeping you downside protected.
Your guarantee
At maturity, you redeem.
Drag the slider to see what you walk away with and how it compares to just holding the token outright.
Token price at maturity
was $1.00 at issue
Your Liquidity Preferred
$1,000
+$0
Spot holder
$1,000
+$0
FAQ
Common questions.
A preferred token is a structured onchain position that gives protected upside exposure with defined downside terms. Liquidity Preferred, Funding Preferred, and Conviction Preferred share the same family of mechanics, with different objectives and collateral framing.
Legal frameworks can help with disclosure and market rules, but they do not create this ownership and risk structure for crypto-native token holders. Preferred tokens define terms onchain through structured issuance mechanics.
A preferred token is an onchain instrument with defined downside protection and full upside exposure over a fixed term. If the underlying token drops below the floor, the holder has a predefined protection level; if it rises, the holder keeps upside participation.
User capital and project-backed collateral are structured into a protection mechanism at issuance. As long as outcomes stay above the agreed floor, the protection is designed to preserve value through the token term.
Holders capture the upside according to campaign terms. The structure is designed to preserve upside while limiting downside exposure under the floor.
Collateral is locked in immutable smart contracts from day one and is governed by the terms shown at launch. The project cannot withdraw or modify terms mid-term, and settlement rules are onchain, not based on discretionary trust.
Yes. Preferred tokens are ERC-20-class instruments and are designed to be transferable where secondary liquidity exists.
Preferred tokens reduce downside exposure, but don't remove risk: smart-contract risk, protocol risk, oracle/settlement risk, collateral risk, and price risk remain possible depending on terms.
More detail in the full documentation.
Running an issuance?
Read the docs · Talk to us