Fair Token Launch

β€’6 min read
Cover Image for Fair Token Launch

You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time. - John Lydgate

In Web3, space protocols try to deliver the best possible airdrop. Now, every protocol has a different definition of "best." Some think that providing a good share to the community is best, some believe that keeping the investors happy is best, some say giving it to all is best, and some say let's do it and think of the consequences later is best.

Indeed, every one of them has their reasons. We (or at least I) are no one to say why you did this, or you should have done this because we ( or at least I) are here to bring revolution to the internet, not ONLY for the money πŸ™‚

My recent foray into tokenomics has been an enlightening journey, one that will equip me to build my own in the future. This created a Frequency Illusion, and I started noticing the "Fair Launch" which AO did a few days back.

My inspiration for this blog came from a recent 'Fair Launch' I observed and the subsequent discussions and insights shared by various community members. This led me to jot down the most crucial factors a protocol should consider before embarking on an airdrop.

Let's dive in πŸŠβ€β™‚οΈ

Community

Protocols excel in their tech, but only with their community to support them.

The community members contributed to the protocol without self-interest and because they believed in the product.

Protocols should define before their airdrop what type of community members will be rewarded for their contributions.

Early Contributors

Every protocol now was (in many cases is) a startup.

A startup is a new venture with a small, motivated team focused on innovation and rapid growth.

Rewarding the team who helped you reach the airdrop is something that every protocol should do in one way or another.

Early contributors can also include the computer geek lying on his mattress and creating valuable PR to make your protocol more efficient, secure, or understandable. They can also include a few of your advisors who are not technically on your team but have always reviewed your codebase, pitches, designs, etc.

But it should be clear to both you (as a protocol) and them (as a contributor) that the protocol should not be liable for this. Contributions can be considered volunteered work if tokenomics are not in favor (which I can't think of the case why they wouldn't).

Sybil Resistance

Sybil attacks exploit the network by using multiple fake identities.

It's no news that the crypto space is filled with Airdrop hunters. I also tried and failed miserably.

These airdrop hunters include some college students who got a taste of money, some serious hackers running bots at once to get qualified, and others.

Many protocols use several ways to avoid this, and that's great. Giving the airdrop to these hunters is discouraging for other community members.

Criteria

Every protocol needs to define criteria when they are approaching the airdrop.

This is mainly done when the "Check Eligibility" site goes live, which is the clean way.

You define the criteria after taking the snapshots = You avoid many bots and hunters already.

However, I have seen many protocols announce their criteria for upcoming airdrops to bring in more liquidity. This works, but again, it shifts the focus from the community and building the future to filling one's pockets. Adopting this has made several airdrops worthless to both airdrop hunters and genuine community members.

Allocation of Tokens

I guess this is the most important point of all. The protocol founders should always consider this before raising funds.

In the crypto space, many protocols with even great tech are required to raise funds to keep building before going to the mainnet due to the niche category from where they need to hire and the infrastructure cost they have to bear in the starting at least. In most cases, raising funds comes at the cost of allocating tokens to investors. Though these allocations have vested periods to prevent the spike in the circulating supply of tokens (or dumping of tokens), issues arise with this.

I know and understand two of them:

  • Suppose the token distribution aligns with the community (releasing most tokens to the community). In that case, it dramatically impacts the token price, affecting investors' portfolios and making them unhappy.

  • Suppose the token distribution is aligned towards generic distribution (or some other term). In that case, the distribution of tokens to the community can be halted in several ways. One is making the token non-transferrable for some period. This safeguards the investor's portfolio, but community members lose interest because they genuinely believe in the product and don't want to be treated like that or because they are airdrop hunters who trade 24 hours to make money.

There are many other reasons why token allocation should be considered from the start by the founders and the team if they are sure that they will be holding the token.

Eligibility Check

Use Excel.

This is what the community wants. Community members just want to know whether they are eligible. There shouldn't be any reason they need to connect their wallets and sign a transaction.

The approach of connecting a wallet and signing the transaction only motivates scammers to build clones and harm others. Many incidents have already happened where members sign malicious transactions in the belief of the product and the team and get caught in severe scams. Making community members connect their wallets should be avoided as much as possible.

Preparation for Distribution

The distribution phase of the token is done in several ways a few of them are:

  • directly sending allocated funds to the wallet.

  • making the user sign a transaction.

  • making the user sign a transaction and connecting their socials to claim the tokens. (this helps in avoiding sybil attacks)

Whichever method the protocol chooses, they should be ready with clear definitions and guidelines for claiming the token in the form of a post on X or a blog. This helps prevent(up to an extent) users from visiting phishing sites and getting scammed.

Protocols should also consider the following points:

  • The claim site should be able to handle high traffic.

  • The network on which they are distributing the token should not get bottlenecked

  • Deleting the scam links from the comments on socials (can help, but it is a tedious process)


These were my 2 cents on the Fair Launch.

Let me know your thoughts on the above points by simply DMing me.

Thanks for reading!

Keep Building (🧱,πŸš€)