The launch of a crypto project, or any other endeavor for that matter, is extremely important. A good start will go a long way in securing the future success of the platform. In this regard, fair launches have proven to be an ideal way to release a crypto project to the world. Platforms that use this launch technique ensure a greater deal of decentralisation and inclusivity. But what are fair launches and why do they matter? Tag along to find out.
What are fair launches?
During their launch, some crypto projects have several presale rounds for their tokens. Some of these rounds are private, where only a select group of investors is allowed to participate. Sometimes, these investors are even granted a discount for purchasing a large chunk of the token’s supply in one go.
In other cases, the project developers themselves hold on to a substantial amount of tokens. After allocating large swathes of the supply to private parties, the remaining tokens are made available to the public. These tokens may even be priced higher than what was offered to private investors.
What happens in these cases is that early investors wait for the best time to cash out on their investments. Therefore, when the price has risen significantly, these early investors begin dumping their tokens in the open market. This causes the price of the token to drop, often leaving public investors with losses.
Fair launches offer a more transparent, decentralized token distribution process. They allow all market participants equal access to tokens. This means that no one is privileged to an investment above others. Essentially, there are no private presales or pre-mining during the launch of the project.
Arun Balaji, a popular crypto investor, describes a fair launch as a liquidity generation event where the public has an equal opportunity to acquire coins over a long period of time. According to Balaji, price discounts should also be discouraged. If any sort of price benefit is offered to certain investors, their tokens should be subject to a vesting period wherein they cannot access or sell them.
Some examples of fair launches
Bitcoin, the world’s oldest cryptocurrency, is an example of a fair launch. Satoshi Nakamoto did not reserve any of the token’s supply for any individual or group of individuals. Instead, new tokens were issued to those who participated in the protocol’s mining process. At that point, one could mine Bitcoin on a normal PC, meaning that anyone and everyone had an equal opportunity to earn Bitcoin.
Another good example of a fair launch is yearn.finance. The project founder, Andre Cronje, did not receive any tokens in advance. Instead, YFI tokens were distributed to anyone willing to deposit tokens to a designated liquidity pool. In a week, users had deposited enough crypto to generate 30,000 YFI. After this, the liquidity pool was stopped. This created a solidified ownership of the protocol amongst a highly concentrated and dedicated community of early adopters.
Airdrops are another great way to release tokens to users. Projects will earmark a certain amount of crypto for the airdrop. Then, they will ask users to perform certain tasks to qualify for the airdrop. Those who successfully carry out the tasks will be given the right to purchase tokens.
Conclusion
Fair launches allow all market participants to have equal access to a project. It also ensures that tokens have better price stability as there are no early investors who can exit the project to recover their investments. These are all great benefits for the otherwise volatile crypto market.
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