We’ve said it multiple times before, the crypto world is becoming a frenetic space of wild and wonderful possibilities.
There is so much potential and innovation creeping out of every corner of the globe, but there’s also a lot of wasted space clouding the view of what’s important. Every day new DAOs and crypto projects are launched with the hopes of their founders anticipatively pinned to their undetermined success.
Some of them succeed, many fail, and most don’t even make it onto the airwaves. Launching your own crypto project requires a strategic approach that will help you ensure the availability of a viable market on the day of listing. Getting to that point is a whole adventure on its own, but developing a clean passage towards this outcome is seeming to pay off in the long run, as we have seen with multiple fair token launches outperforming the more established and iniquitous presale model in recent months. This kind of thinking is shaping the launches of many new projects in a different, yet appealing, way.
A Fair Space for Investors and Founders
At the same time that founders are seeking an audience and launchpad for their projects, there is a sentiment that they need to own some kind of accountability. Rug pulls and scams are happening all too frequently, making the environment appear sketchy and suspect for those looking to invest in the next big thing.
Rug pulls can come out of nowhere, and while there are ways of identifying them, doing your due diligence is not always a viable solution. Investors need surety. They need to know they are backing something with confidence. On the flipside of that, you have your founders who are simply searching for the most optimal conditions within which to launch their projects. They want to secure investment so that they can concentrate on building something sustainable that has longevity and a future ahead of it.
Fair Token Launches Creating More Ethical Practices
It was inevitable that fair token launch projects would come into being with so many crypto enthusiasts simply wanting to make the best of decentralized finance. There is a sharing economy that is more ethically sound. It removes the money-grubbing aspect of “all mine” and converts it to a “mutually beneficial” space. It’s also open to anyone and everyone, which makes it fair and viable with the opportunity to grow legs and run.
So, what are fair token launches, exactly? Fair launches are a way of raising capital in an alternative way to venture capital. Fair launch tokens are those produced with no initial coin offering (ICO), no pre-mine, early allocation, or early access to tokens. Everyone involved is on equal pegging with one another. The price of a fair launch token is determined by a process called price discovery, which is an extension of the initial dex offering (IDO) sector.
A set number of tokens are made available and an auction is held. Investors can deposit Ether (or an alternative base currency) into a pool in return for a proportionate amount of tokens. Say, for example, an investor deposits 1 Eth into a pool which, by the time the auction finishes, contains 100 Eth, they will receive 1% of the total tokens being sold.
The price of the token is determined by the most fundamental principles of supply and demand; the total number of tokens being sold is divided by the amount of Ether deposited into the pool multiplied by its price at the time of sale.
For Example: A project mints 1,000,000 tokens and puts them up for sale in an auction pool.
A number of investors deposit a total of 100 Eth with which to buy the token.
Say, for the sake of expediency, the price of Eth at the time is $1,000, the token price is determined by No. of tokens / [Amount of Eth x price].
In this example, the equation is 1,000,000 / [1,000 x 100] = $0.10.
Some of the immediate advantages are that prices are not arbitrarily set, the focus is not on the founder, team, or early investors making hoards, but rather on making it available for a wider audience. It is an equitable and fair way of launching tokens for investors, but it also enables founders to create a stable environment for their projects. This gives them the opportunity to get to work on the really exciting parts of building their projects once their foundation is in place.
For those wanting stability and sustainability, it makes it quite obvious as to why fair launch tokens are outperforming typical crypto at the moment, shifting the consensus around what is the most optimal way to launch a token. So, how does one even get there? finance.vote has been busy creating solutions to bridge the gap between founders and investors who are both looking for anything that represents the fair value of an asset.
Fast-Tracking Decentralisation With finance.vote’s Suite Of dApps
Welcome to a suite of dApps that have been positioned to help fast track decentralization for DAOs, all while providing them with the required governance and infrastructure to bolster their success. With fair token launches, rug pulls and other artificial inflation scams such as pump and dumps are a thing of the past. There are no pre-sale allocations and founders can launch at a fair listing price for both fungible and non-fungible digital assets.
Speaking specifically to price discovery issues currently prevalent in the crypto space, auction.vote, will soon be available to support this process and ensure the founders are poised for action on listing day. auction.vote is a decentralized price discovery mechanism, purpose-built for bootstrapping markets for digital assets. The aims of the system are to effectively “search” through the population of players in the game, seeking to find a sensible listing price by presenting better than zero slippage buy opportunities at a sequence of price ranges.
It will help founders discover a fair listing price using something the finance.vote team calls the exponential token option – an iteration through price and supply. It essentially searches through the population of investors in the pool, seeking to find a sensible listing price by presenting better than zero slippage buy opportunities at a sequence of price ranges.
The ultimate goal is to find the best and most viable price for something in a fair and equitable way. Contrast this with the more traditional token launches, whereby centralized teams arbitrarily set an initial listing price often several times that of presale prices, and the improved equitability becomes evident; with auction.vote, the token price is arrived at organically through fundamental supply and demand principles, as opposed to being artificially selected according to how much ROI it will generate for teams, VCs and early stakeholders.
The entire purpose of this exercise is to put a large question mark on the listing price. A key principle of finance.vote governance is outcome indeterminacy; if outcomes are known prior to a decision event, then it wasn’t a decision in the first place. Not only will this help new crypto projects fairly, transparently, and impartially elevate themselves into being, but it is also a means to implementing good governance from the outset, which, as seen with fair launch tokens, is a tactic that can pay off exponentially in the long-run.
Where Does That Leave Us?
Finding the optimal price for an item through an auction is a fair and just way of giving that item value. Who are we to say that anything is more or less valuable than something else? That’s an entirely relative concept that changes from one person to the next. Using the facility of an auction is centuries old, but its ability to level the playing field is something we are really seeing the benefits of now.
The taming of the wild in the crypto space might never happen, but there will always be pockets of people trying to keep things legitimate and fair. If it pays off exponentially in the process, well, that’s just a bonus. But at the very least we can aim to create channels of sustainability, accessibility, and longevity, so that growth can take root and the benefits can be shared by all.
For more information on the finance.vote dApp suite, and how they’re helping forge new systems of good governance practices within DeFi, please visit their website. To stay up to date on all their news and announcements, you can follow them on Twitter.