Token Launches Are Rekt But They Don't Have To Be
TLDR: WE ARE CO-HOSTING AN IDEATHON WITH @asylumventures IN NYC
The current token vesting & distribution model is broken. We all know the high FDV/low float meta (and are tired of debating it). Airdrop recipients immediately dump, and then early investors and the team unlocks provide ongoing constant sell pressure. There are a million other examples of failed attempts to distribute tokens that we won’t go into. In many cases, we fear that these models end up creating tokens that are not actually designed to succeed and instead are designed to be sold heavily for years.
Unfortunately despite a constant recognition of these problems, there’s been very little experimentation or innovation around incentivizing different (and better) behavior.
As Cobie said recently, we aren’t going back to the earlier days of distribution and airdrops because the space has grown so much & there’s more demand for exposure. But that doesn’t mean we should default to the status quo and neglect trying to find better ways to incentivize, distribute and unlock tokens.
Everyone in crypto likes to talk about “community” as the most important thing – part of this is allowing your earliest and post-TGE supporters to actually participate in the upside of your protocol/project/company. The goal should be some combination of allowing for more upside in public markets and rewarding your true, long-term aligned users.
Here are two high-level competing thoughts on how to do this:
Extend vesting periods: lock investors & teams for longer (4-8 years instead of 1-4) with a core belief to optimize for long-term alignment and value accrual
Compress vesting periods: 12mo cliff with no vesting – the core belief here is to find true price discovery as soon as possible
We @CompoundVC are partnering with @asylumventures to host an Ideathon focused on novel ways to redesign token incentivization, distribution, and unlocks. Consider this the Request For Submission, of which we’ll choose 5-8 of the best ideas to present at an IRL event full of builders, operators, researchers, investors and others in the crypto space.
Structure:
Submit a proposal in the format of your choosing (visual, written, diagrams, bullets, etc) for a unique, novel or experimental design for better incentivizing the vesting & distribution of tokens – the more detailed the better though you should be able to reason through the design at a high-level in just a few minutes
We’ll go through all of the submissions and select 5-8 of these to present their proposal at the event
Each presentation will be 5-10 minutes with another 5 minutes left for Q&A followed by a happy hour event
We’ve included a pair of examples of real token launches for reference (bit.ly/ideathonexamples) of how these proposals could look
Submissions are due by July 31st
Specific event details will be shared soon but will likely be the week of August 5th and will be in NYC
Please submit your proposal to crypto@compound.vc and feel free to DM me with any questions