Bounce M&A: Introduction

6 min readNov 5, 2022

Infrastructure for a community oriented merger and acquisition process

Intro

Now that we’ve briefly introduced Bounce M&A to the world we wanted to give you all some more specifics on our vision for Bounce M&A and why we think mergers and acquisitions are the next catalyst for innovation in crypto and Bounce’s role in providing crucial defi infrastructure going forward.

Natural Selection

Natural selection is the “engine that drives evolution”; the Darwinian concept describes the process in which various populations adapt and change with their environments. Organisms with favorable traits are ultimately the most likely to survive and reproduce; their traits leave them fit to survive and adapt to their environment. Over time, this natural selection process promotes advantageous traits while weaker, less desirable ones are weeded out. Simply put, organisms must adapt to their environment or they will cease to exist.

In our eyes, the cyclical (or “evolutionary”) nature of cryptocurrencies and blockchain technologies is no different than that of biology. Crypto markets are quickly maturing through their own evolutionary processes. This means that weaker projects will no longer be able to rely on historically frothy monetary conditions and rampant speculation for survival. Instead, these projects will be forced to adapt to the tightening market conditions with innovation and creativity, otherwise they will die out.

Defi’s Dilemma

Over the past few years, the rapid introduction and subsequent boom of decentralized finance has facilitated the birth of many “species”, or projects, within the space. In our eyes, this bootstrapping process was an important and natural first step for the defi ecosystem as a whole. Unfortunately though, the countless number of new participants has left the market fragmented and overly-diluted; many projects and communities have been, and will continue to be, abandoned and left “holding the bag” with little hope for recovery.

This happens for many reasons including, but not limited to:

Founding team gives up or loses interest in their project
Little incentive to innovate.
New narratives emerge making it more profitable to found new projects with new tokens and more hype
Their no longer have financial OR reputational incentive (cashed out their tokens, anon founders)
Competitive, quickly changing defi landscape

Crypto markets are very fast paced, and investors reallocate frequently and mercinarily- especially among projects that have already tokenized. There is no mechanism to:

a. hold founders accountable

b. give old projects new narratives, and fresh tokens

c. enable bigger, more liquid projects the power to acquire smallers ones

Defi’s Next Phase of Evolution: Consolidation

These circumstances, though, beg a few important questions:

How will the defi projects that have already been tokenized be incentivized to innovate & grow as resources dwindle and the space continues to evolve rapidly? (Hint: most won’t… )

Again, Constantly shifting narratives, less speculative markets and greater emphasis on utility are all factors increasing pressure on defi protocols and their teams.

What can be done to incentivize innovation and attract investor interest towards the countless number of projects that have launched over the past few years

After tokenizing and cashing out on one project, founders often build and subsequently launch new, more attractive projects with their own new tokens- abandoning their original vision & communities

How can token holders of these projects be rewarded for their loyalty and take initiative/control over projects themselves?

As it stands, token holders (communities) are often the ones responsible for a token’s success (advocating on behalf of projects for free) yet have little real say in a project’s future direction and are also often left bag-holding thanks to their loyalty.

How can the fragmented defi landscape be fixed?

There are too many projects with tokens. This actually hurts defi, and crypto for that matter, as a whole. This is because the market is overly diluted- too many projects without real vision or sustainable investor interest.

Bounce M&A

For most projects, and the market as a whole, a consolidation process is necessary for evolution. Evolving or “adapting”, as it relates to the general defi ecosystem, may mean that projects collaborate and join forces with one another through novel, cryptographic merger and acquisition processes.

Introducing fresh narratives, fewer tokens and stronger communities through processes of mergers and acquisitions will spur the next wave of sustainable innovation, growth and consolidation within Defi.

Today, however, there is no medium for projects to undergo the required, later stage growth or “adaptation” process that is required to consolidate the broader landscape of Defi projects. In an effort to help facilitate defi’s inevitable late stage transition, Bounce M&A will provide infrastructure for projects to merge and acquire one another; or, in a biological sense, to make the appropriate adaptations for survival.

Introducing Bounce M&A

Bounce M&A: Infrastructure for a community oriented merger and acquisition process.

Input — — — → Chemstry — — — — — — -> Output

Bounce M&A’s Use Cases

Merger and Acquisition (M&A): At its core, Bounce M&A is an infrastructure protocol designed to facilitate the merger and acquisition processes on the token level. The process is carried out in a decentralized and permissionless environment and is referred to as a “Chemistry”.
Forking: If, for example, a community is headed into two different directions, Bounce M&A can be used to split up & “fork” the community, as well as its protocol, into two separate entities, each with their own distinct visions.
Liquidity Access: Tokens that are listed on exchanges and/or are popular among speculators tend to have high levels of liquidity, a valuable commodity within defi. Nevertheless, these tokens often lack utility or narrative. Communities and teams can capitalize on their token’s liquidity to acquire protocols with utility.
Airdrops: The “Redeemable Chemistry Option”. Bounce M&A uses existing tokens to claim new, original tokens on behalf of its willing community and holders, a “free-play” of sorts.

Ecosystem transition- Bounce M&A can be used to facilitate a project’s move from one ecosystem to another by changing the new output token’s.

Defi M&A

For crypto projects, we see the natural selection process as one that will revolve around mergers and acquisitions, processes of consolidation.

However, natural selection in crypto has clear, unique distinctions from the realms of traditional finance and biology. The main reason these differences exist is because many projects and tokens are community oriented. As a result, the merger and acquisition process may not actually be driven by a project’s team or its founders. Instead, it can happen under the surface, within a community of holders and supporters.

This dynamic is one that is actually beneficial for token holders because these are the participants who are not only invested into the future of these projects but are also the ones who wield the necessary governance power for initiating these processes.

It is clear: mergers and acquisitions between projects will enable the consolidation of utility and ultimately support the necessary adaptations to survive in today’s maturing, overly diluted crypto market.

Chemistries: Mechanisms of Change

Chemistries is the term we use to describe the central process of Bounce M&A. These are the key mechanisms of change on the token level, if you will.

Irreversible Chemistry

What is an Irreversible Chemistry

In an Irreversible Chemistry, users provide an input and receive an output following their chemistry. After this process, tokens that were initially inputted can not be recovered.

Think of an irreversible chemistry as a “one way” transaction; inputs are burned by Bounce M&A and will not be recoverable.

Reversible Chemistry

What is a Reversible Chemistry

A Reversible Chemistry is initiated with an initial input. Once the chemistry is initiated, a separate output is created. At this point, the input is then “frozen” in a separate holding contract.

The output can be used to reverse engineer the chemistry and retrieve the initial input. If a chemistry is reversed, however, the output will be lost/returned in exchange for the initial input.

Redeemable Chemistry

What is a Redeemable Chemistry

In a Redeemable Chemistry, inputs are used to generate outputs. However, unlike the other chemistry types, users can retrieve both their initial inputs and outputs without giving up either an input or an output.

The Redeemable Chemistry has mechanics similar to airdrops.

Features:

Composition of tokens: Bounce M&A supports a variety of tokens from ERC20 to NFTs
Dynamic configuration: Design the input and output process with customizable parameters.
Permissionless environment: Anyone can initiate their own chemistry at any time.
Automatic, no-code execution: New tokens will be issued automatically following our consolidation process.

Stay tuned for more on the latest from Bounce and our ecosystem of products! In our next article we will give you all a better understanding of the traditional merger and acquisition process, don’t miss it!

Find Bounce here