When it comes to the Fair Launch model, Bitcoin is a typical example. That’s to say, there is no Private Sale, no VC, no ICO or pre-mining. Anyone who wants to own Bitcoin has to buy or mine it.
So, what exactly is Fair Launch? Well, as mentioned above, Fair Launch is a token distribution model where everyone can participate on equal footing. No early access, pre-mining, or token allocation means no one has a better price than you. With Fair Launch, not only large investors but also small investors have the same access and potential for profit. Then, let’s talk about its advantages and disadvantages.
Pros
Fair Launch basically creates a fair playground for all participants involved in the market.
- Founders: As its core, Fair Launch allows founders to quickly get to market while skipping the traditional fundraise and improving token distribution.
- Users: For users, Fair Launch enable anyone to participate, creating new conditions for self-governing communities.
- Investors: A project that adopts the distribution model of Fair Launch can meet all kinds of investors as well as decrease the risk of whale domination and price manipulation.
Cons
- For the project itself, no private sale, VC, or ICO, IDO also means that the development team will not receive the support of early investors. This forces they to put more effort into improving the project’s quality instead of using operational data to convince investors.
- In case there are too many participants, the distribution of tokens will be too scattered. Most tokens are in the hands of retail investors who tend to follow each other and make decisions based on market sentiment. This can lead to extreme price fluctuations extremely quickly. Any positive or negative news can severely affect market sentiment, resulting in extreme volatility. In this situation, it is no longer the big players manipulating the market, but the players who can grasp the key information.
- On the other hand, if there are too few participants, Fair Launch now becomes a playground for “whales”, and those with more tokens will get more tokens. Compared to non-fair launch projects, the concentration of tokens is even worse. Especially in a bull market, high-frequency trading causes high gas fees due to the blockage of Ethereum that makes gas fees more expensive for retail users to participate in. And, the huge amount of tokens mined/farm through staking by whales has no lock-up mechanism, meaning they can sell the tokens at any time. The so-called “Fair Launch” token has once again become a market for big players.
The last words
Each model has its own pros and cons and of course, Fair Launch is no exception. However, it will certainly bring many innovations in token issuance. For latest crypto news, please visit:
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