The entire cryptocurrency market is in an unprecedented crisis of trust. These fears are rooted in concerns about loss of control, potentially inequitable token distributions, and misalignment with the short-term profit motive. We find that nearly 40% of airdrop recipients immediately sell their tokens upon receipt. This short sighted sell-off demonstrates that they do not have the long-term commitment and confidence in the projects they fund. First, this behavior is contrary to the fundamental transparent ethos of crypto. When teams are dumping tokens immediately after launch and making huge allocations to private investors, this is doubly degrading trust in the system. To regain that confidence, the industry should go back to its original promise. A good framework should require equitable launches, support community governance, and emphasize long-term value creation to ensure healthy market development.

The Genesis of Fairness: Bitcoin's Example

Bitcoin was created as a reaction to the centralized banking system’s failure during the 2008 financial crisis. It accomplishes all that while embodying a radical vision of a decentralized and transparent financial system, empowering individuals over institutions. Satoshi Nakamoto’s creation was a masterclass in fairness. There was no pre-mine and no insider allocations. This dedication to equitable distribution set an important example for the broader crypto space. It demonstrated how trust and value can flourish when there is a clear, transparent, and inclusive process.

For an additional interesting example of a fair launch, consider Yearn.Finance. The project then rewarded these liquidity providers the full YFI token supply, completely free of any pre-mine. For the team? Nil, zip, nothing. While this added significant time to the project, this method created deep community buy-in and alignment that has proven essential to the project’s ongoing success.

The industry has lost touch with these fundamentals. Some have raised over 30% of their supply to private investors, and others are willing to dump tokens immediately after they launch. These practices go against the whole purpose of decentralization and hurt the trust in the entire crypto ecosystem.

Data Speaks: Fair Launches Outperform

Despite the prevalence of inequitable token distribution models, research suggests that fair launch tokens tend to outperform others in the market. According to a 2021 Messari report, fair launch tokens lifted off with an average increase of +296.46% at 90 days. This spectacular performance completely crushed the 112.41% average gain of the now 1,000 other top assets in the same time period.

These results suggest the possible enhances of focusing on impact equity and community engagement in token launches. When people feel that they have a legitimate chance to participate in a group, their overall investment in the project goes up. They’re more likely to be long-term holders and active contributors. This, in turn, can lead to more sustainable growth and long-term value creation that benefits the whole ecosystem.

Grant programs have quickly become an essential tool for overcoming the funding hurdles often found with fair launches. These programs provide critical resources and encouragement to innovative projects with great potential. They free these projects to innovate and flourish outside the constraints of the typical venture capital financing model.

Beyond Launch: Building Enduring Value

We can’t let fair launches be the only half of the equation in how we build trust and enduring value. To be truly successful, projects need to prioritize sustainable economic models and long-term community engagement. Horizen, on the other hand, allocates the equivalent of 2,000,000 ZEN (40% of the total token supply) for ecosystem development.

Rob Viglione, the CEO of Horizen Labs, notes that Horizen’s investments are made very intentionally in projects that produce revenue and equity generation. This method ensures their durability as emission sinks diminish. That approach encourages the creation of innovative applications and services. Perhaps more importantly, it has laid a sustainable financial path for the project’s future.

With a focus on long-term value creation and positive community engagement, crypto projects have everything to gain from building trust, fostering innovation, and achieving sustainable success. That necessitates a culture change. Rather than continuing to pursue short-term profits, we need to start thinking about creating long-term positive ecosystems that are sustainable for all the participants.