A lot of people do not understand just how much importance needs to be placed on how tokens initially get printed into the markets.
Tokens are not stocks and shouldn't be treated like one.
Many seem to have allowed themselves to accept the practice of “paying the team” a couple million tokens at launch simply because it's — The Team.
Certainly, nobody stops to think about the symbolism of these actions, also, it would appear that the concept of these tokens being initially locked translates to some form of “commitment” from the often few founders that make up the team.
And let's not even talk about the VC stakes.
I have one question though: why would the team(a better term would be pioneers) not be committed? Why do they need to pay themselves some huge stake and lock it for 6 months with linear unlocks to prove “commitment?”
It's insane if you're a sane person looking at it.
I ran into an X article a couple of days back exploring the concept of “discounted tickets” as a replacement for inflationary incentives — like in liquidity mining — and airdrops.
The general concept was that rather than giving tokens away for free to people who are only incentivized to sell, the tokens should instead be sold to users that meet certain criterias at a discounted price.
So we are essentially looking at a system where some onchain activities give you discount tickets, like an options ticket of some sort that can be used to buy the native token cheaper than the market rate.
At this point, there seems to be a couple of people beginning to realize that incentives are not well designed and that crypto projects are just too comfortable being speculative assets that have no revenue sources that should drive up investors' interest in buying and holding their tokens.
The problem isn't liquidity mining nor airdrops being bad, fundamentally, but that the incentives design and initial supply distribution of these tokens are not very well thought out.
Initial supply should be about fair opportunities to acquire a stake
Personally, I'm beginning to hate the idea of crypto projects having these “tokenomics docs” because why do I need to go read how you've scheduled your token's initial supply and future inflation to feed team members and VCs?
Why do I need to read about your treasury bullshit like we don't all know that funding developments with native assets without sufficient market demands is a recipe for disaster?
Of course, you hope I ignore that because it's really not for developments anyways.
For an ecosystem that has literally had an early mover that did it right and the chain thrived(Bitcoin), we sure act like we don't have practical examples on how to approach distribution.
Team stake should not exist, nobody should have an initial stake, early stake acquisition should be about earning it through contributing to the project.
By having founders stake, you essentially signal an existence of a centralized power over the project and also directly wield the power through the allocated stake.
If a founder needs a stake, the simple solution is to earn it like everyone else. At least that's what Satoshi did and he's sitting on coins worth billions today.
Earning it like everyone works and it allows for the project to grow more sustainably with actual users and investors interested in it.
Otherwise, we just create an environment where we sing temporary victories at launches whilst the market slowly prices in all the flaws and we discover too late that shit is moving really fast in the wrong direction.
Initial token launch doesn't necessarily need to involve being tradeable
Something I've never really seen is a project launching a token with an active product without a market for it being live and I think we are leaving a lot of potential on the table.
If a token has no market whatsoever, but can be earned on-chain and have its supply further spread through various processes or operations on the blockchain, we would be dealing with something truly unique and more likely to have much higher investor retention.
We are in times where people have more conviction in memecoins because for some reason, they expect more believers to be attracted eventually, leading to the prices going up.
The only way I can think of replicating a similar level of conviction would be through the mining of actual tokens with no live markets but having numerous actual products.
This phase would make most participants develop emotional attachment with their stake because they never saw the immediate financial incentives, all they saw was actual tokens that they needed to grow sustainably. It was all about developing the right strategies to increase one's stake and move up the rank.
It was sort of a game and growing one's stake was equivalent to winning while a reduction in stake was losing.
The positive outcomes I believe would far outweigh any negatives that may lie under the rug somewhere and this would also serve the protocol, chain or project well to be able to effectively price its token fairly and avoid disastrous launches that go downhill really fast.
Developers need to rethink supply distribution and users need to stop accepting these doomed to fail designs.