The entrance of Robinhood and financial institutions into crypto is an indicator of a bigger trend: a maturing industry where Token Generation Events become about more than just distributing a token. Instead, projects now have to carefully consider how they maintain momentum beyond launch.
While Bitcoin was launched without much marketing or fundraising efforts, the method changed with Ethereum. Instead of quietly distributing the token to early contributors, in 2014, the DAO behind Ethereum generated and then sold the tokens through an ICO to the public.
During the ensuing ICO boom, crypto projects raised funds with a whitepaper and ERC-20 tokens that would later appreciate once they had built what they promised. Token launches replaced VCs, mirroring what Kickstarter did on-chain, but also invited regulatory scrutiny after countless projects failed to deliver.
As VCs Entered the Scene, Token Launches Changed
In 2018, though, that bubble burst with a spectacular bang – leaving many investors nursing steep losses. After this, projects became more cautious in their fundraising methods, and VCs stepped in to close the funding gap. However, while this gave crypto founders the runway they needed to build, it also raised questions about the community ethos.
Source: FinTech GlobalThis was fueled in part by frustration over token distributions, lock-up schedules, and the feeling that all the best opportunities are only available to professional investors who, at public sale, have already multiplied their holdings and are therefore incentivized to sell.
Due to regulatory constraints, many projects found themselves between a rock and a hard place, unable to sell tokens to anyone other than professional investors, yet at the same time wanting to reward early contributors. Airdrops offered a solution.
An Excess of Hyped Airdrops Eventually Led to Fatigue
After Uniswap’s legendary airdrop kickstarted the so-called “DeFi Summer” of 2021, other projects adopted the strategy. This new tool proved a great way for projects to bootstrap their projects and launch their tokens through their communities, which were rewarded in-kind.
Thanks to airdrops, token launches became the culmination of months-long campaigns that incentivized community members to accumulate points, rise on the leaderboard, and be active in the Discord servers. As with all good parties, though, there are always some crashers, and airdrops fell victim to short-termists who sold their drops on launch, hurting long-term holders.
To counteract this, teams began spreading them out over time, prioritizing retention by tweaking tokenomics and distribution schedules to ensure recipients received their drops gradually over time.
In a Crowded Ecosystem, Standing Out Requires Long-Term Thinking
Today, we see a new wave of evolution hitting token launches. With BlackRock now the world’s second biggest holder of Bitcoin, the industry has hit a new level of maturity that means projects are having to think increasingly long-term. To be successful today, founders must consider their project’s lifetime well beyond its token launch.
It’s no coincidence that the latest meta on Crypto Twitter is “revenue.” It’s another sign that the crypto industry is moving beyond early models that saw developers often focus their energy on building open-source projects, with value creation coming as an afterthought.
Another area affected by this change is tokenomics. Until now, most investors have been content with seeing a pie chart of the initial token allocation. In the long-term era of crypto, though, more is needed to understand how a project plans to maintain and grow value.
Indeed, tokenomics really refers to the entire economic system of a token. While a pie chart effectively describes the allocation of supply, managing demand-side tokenomics is also important, and becoming increasingly so.
For sustainable growth, projects need to structure their tokenomics to foster long-term demand for the token, ideally on a scale that offsets further issuance as well as sell pressure, without relying entirely on speculation.
The easiest way to achieve this is by addressing a real problem and offering value to users in a way that encourages them to purchase the token. This approach is complemented by building a thriving community, a strong brand, and a solid ecosystem.
Projects Have to Build Community and Utility to Thrive in This Era
At the end of last year, Hyperliquid, a DeFi protocol for trading futures, distributed millions of its HYPE tokens, worth approximately $1.2 billion, to its community. Counterintuitively, the big sell-off never happened.
The reason is quite simple: demand for HYPE continues because their products offer something traders have been looking for. Their success highlights how real demand can counteract sell pressure that inevitably happens during public token launches.
A more recent example of a project planning beyond its token launch is Plume Network. The RWA-focused blockchain split its airdrop into seasons and combined those with a holistic program to retain and build a solid community. Another good example is SAHARA, which has already awarded tokens to over 1.4 million eligible addresses via a vesting schedule.
As for any L1, what defines Plume’s token price over the long run will be demand for its blockspace generated through apps. Already at mainnet launch in June, Plume had onboarded more than 200 projects and partnered with renowned institutions like Superstate and Blackstone, solidifying its stance as a project that’s here to stay.
Token Launches Are Just the Beginning
As crypto realizes that token launches are when the real work must begin, rather than end, founders and developers are learning to focus on building a solid foundation for their projects. The revenue meta is just the beginning of a larger undercurrent in crypto’s transformation.
In this new era, success isn’t defined by a big green candle on launch day; it’s measured in the months and years spent developing a project offering real utility for their communities.
Disclaimer: The opinions in this article are the writer’s own and do not necessarily represent the views of Cryptonews.com. This article is meant to provide a broad perspective on its topic and should not be taken as professional advice.
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