The Evolution of Token Launches: How Crypto is Growing Up

The cryptocurrency industry has come a long way since the launch of Bitcoin, which was introduced without much fanfare or marketing efforts. The landscape has changed significantly over the years, with the entrance of financial institutions like Robinhood into the crypto space being a notable indicator of the industry’s maturation. Today, token generation events are no longer just about distributing tokens, but about building a sustainable ecosystem that maintains momentum beyond the launch phase.

A Brief History of Token Launches

The method of launching tokens changed with the introduction of Ethereum in 2014. Instead of quietly distributing tokens to early contributors, the Ethereum team generated and sold tokens to the public through an Initial Coin Offering (ICO). This approach raised funds for the project and allowed the team to build a community around it. The ICO boom that followed saw numerous crypto projects raise funds with whitepapers and ERC-20 tokens, which would later appreciate in value. However, this model also invited regulatory scrutiny, and many projects failed to deliver on their promises, leading to a burst of the bubble in 2018.

After the bubble burst, projects became more cautious in their fundraising methods, and Venture Capitalists (VCs) stepped in to fill the funding gap. While this gave crypto founders the runway they needed to build their projects, it also raised questions about the community ethos and the distribution of tokens. Many projects found themselves unable to sell tokens to anyone other than professional investors, yet they wanted to reward early contributors. Airdrops offered a solution to this problem.

The Rise and Fall of Airdrops

Airdrops became a popular way for projects to bootstrap their communities and launch their tokens. The strategy proved successful, with Uniswap’s legendary airdrop kickstarting the “DeFi Summer” of 2021. Other projects adopted this approach, and token launches became the culmination of months-long campaigns that incentivized community members to accumulate points, rise on the leaderboard, and be active in Discord servers. However, the success of airdrops also attracted short-termists who sold their drops on launch, hurting long-term holders.

To counteract this, teams began spreading out airdrops over time, prioritizing retention by tweaking tokenomics and distribution schedules. This approach ensured that recipients received their drops gradually, reducing the likelihood of a big sell-off on launch. Despite these efforts, the hype around airdrops eventually led to fatigue, and the industry began to look for more sustainable models.

A New Era for Token Launches

Today, we see a new wave of evolution hitting token launches. With the entrance of institutional investors like BlackRock into the crypto space, the industry has hit a new level of maturity. Projects are now having to think increasingly long-term, considering their lifetime well beyond the token launch. To be successful, founders must focus on building a solid foundation for their projects, with a clear plan for maintaining and growing value over time.

The concept of tokenomics has also evolved, with a greater emphasis on managing demand-side economics. Projects need to structure their tokenomics to foster long-term demand for the token, ideally on a scale that offsets further issuance and sell pressure. This can be achieved by addressing real problems, offering value to users, and building a thriving community, a strong brand, and a solid ecosystem.

Building Community and Utility

Recent examples of successful token launches, such as Hyperliquid and Plume Network, demonstrate the importance of building community and utility. Hyperliquid’s token launch, which distributed millions of tokens to its community, did not result in a big sell-off, thanks to the project’s focus on offering real value to users. Plume Network’s approach, which combined airdrops with a holistic program to retain and build a solid community, also shows promise.

As the crypto industry continues to evolve, it’s clear that token launches are just the beginning. Founders and developers are learning to focus on building a solid foundation for their projects, with a clear plan for maintaining and growing value over time. The revenue meta is just the beginning of a larger undercurrent in crypto’s transformation, and success is no longer defined by a big green candle on launch day, but by the months and years spent developing a project that offers real utility to its community.