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    Can Fair Launch Be An Alternative Model for Token Distribution?

    Beyond DeFi, NFTs, and Bitcoin, “Fair Launch” is also a hot topic among investors.

    What Makes Fair Launch Special?

    ICO market crash in 2017 made people realize that the whole ecosystem should be sustainable. That was when the idea of “ Fair Launch” introduced. 

    Simply put, Fair Launch is a fair playground. Everyone has their own idea of what fairness means. In this case, fair means that access to the token or asset is open to everyone upon launch. The stated goal of Fair Launch is to give everyone the chance to acquire tokens under the same conditions. Who holds the necessary token can participate in this type of model. Think of it as a project launching without an ICO from day 1. It’s fair because everyone can participate in a permissionless and transparent system.

    You can read more about “Fair Launch” definition HERE

    Fair Launch is a fair playground

    YFI (yearn.finance) led by Andre Cronje is one of the forefront projects are promoting the concept of Fair Launch. This project provides a method for liquidity providers to earn the governance token by setting aside tokens and voting for the team or founder.

    Through Fair Launches, many new DeFi projects can attract much interest from small investors and avoid a reliance on seed capital from private investors. Beyond DeFi, the equality of this model can also be represented through number of addresses holding a digital asset or a combination of distribution plus active participation in validation-based networks. 

    With all of those advantages, people have begun to ask about the future of Fair Launch as a better model for token distribution. 

    Major Challenges Fair Launch Still Face

    Fair Launch, while promising, is not a perfect system yet. There are many issues remain that hinder this model from being the next major advancement in the crypto space. 

    Is the fair launch of DeFi really “fair”?
    • The first is having too many participants. Sometimes, too much of a good thing is harmful. In this case, this problem has caused the distribution of tokens to be too scattered. Most tokens are in the hands of retail investors who tend to follow each other and move with market sentiment. This can lead to price fluctuation rapidly. Any positive or negative news can severely affect market sentiment, leading to higher volatility. 
    • While too many participants can be an issue, equally troublesome is the possibility of too few participants. Fair Launch becomes a playground for “whales,” and people with more tokens get more tokens. Compared with other types of models, the concentration of tokens is even worse in Fair Launch. Especially in the bull market, high-frequency trading causes high gas fees due to the blockage of Ethereum (ETH), which makes the gas fee more expensive for retail users to join in. And, the large amount of tokens mined/farmed through whale staking has no locking mechanism, which means they can sell tokens at any time. The so-called “Fair Launch” token has once again become a marketplace for big players.

    Fair Launch has to solve these problems before it can be preferred as an alternative business model for token distribution.

    Sum up

    Currently, Fair Launch is still a new term. New things will require time for trial and error to find out what works before they can make an impact. Even when the debates about Fair Launch continue, eight years from now, maybe this model will open a new era for crypto space and surpass EOS or even BTC.

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