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The Art of Tokenomics: Best Practices for Launch and Growth
Nazar Didyk
13.06.2024
4 Min Read
Tokenomics can do wonders — from fueling ultrasound money to building a cult of around 21m. This guide offers strategies that will appeal to your KOLs, investors, and the team itself.
The Speed of Token Release. How Fast is Too Fast?
Full Throttle
Firstly, let’s understand what is quick and slow in terms of vesting. At this point in the cycle, < year vesting is in fact a fast-paced approach.
Examples: CV Pad, Ethereum, Filecoin, Avalanche.
Source: https://dropstab.com/coins/avalanche-2/vesting
We saw this much more in previous cycles, with less popularity right now. Let’s dig into the pros and cons:
Slow and Steady
Most recent, large-scale projects ($1b FDV+) choose to stagger token releases over time, aligning with market cycles and long-term goals. Here is an overview.
Examples: Aptos, StarkNet, Arbitrum.
Ultimately, your choice should align with your project’s goals, market conditions, and investor expectations to ensure sustainable growth and successful fundraising.
With much capital already locked, you have to give competitive terms.
KOLs aren't investing in KOLs rounds, waiting for ROI from previous investments
— Rusya.solus (@Rusya_Solus) June 9, 2024
VCs aren't investing in Private/Strategic rounds, waiting for ROI from previous investments
Angels aren't investing in Private/Strategic rounds, waiting for ROI from previous investments
Full scale…
Require Marketing? Consider KOL Round
Delivering your vision to the public might be as crucial as fundraising (you wouldn’t be here otherwise).
If you want to avoid paying influencers in stablecoins, consider a separate round for KOLs. Here are the key points, differentiating KOL and Investor round:
Usually, vesting terms are not the bottleneck for a good KOL Round. What is a much bigger challenge — management, and quality influencers themselves. We can surely help with that.
Best Practices for Effective Tokenomics
Tokenomics is highly dependent on your project’s specifics. As a mechanic cannot fix your car without seeing it, we cannot give you a ready solution.
However, based on our experience, 10 principles and non-written rules have proven effective across various market conditions.
- Team Lockups: Ensure that lock-up periods for the team are longer than those for other contributors. This demonstrates commitment and aligns the team’s incentives with the project's long-term success. Investors and the community are more likely to trust a project where the team is dedicated to its future.
- Roadmapped Release: Plan unlocks that coincide with key project milestones or favorable market conditions. This helps maintain liquidity without overwhelming the market.
- CEX Listing Requirements: Centralized exchanges (CEX) often require a cliff period of a few months post-TGE before listing a token. Understanding these requirements and planning accordingly can facilitate smoother listings and better market reception.
- Early Contributor Lockups: Provide reasonable lock-up periods for early contributors to prevent large sell-offs while continuing to keep them interested in investing.
- Investor Communication: Maintain clear and transparent communication with investors regarding token distribution and unlock periods. Transparency builds trust, reduces market speculation, and strengthens your strategic messaging. Keeping investors well-informed sets up a supportive community and mitigates uncertainties that could lead to market volatility.
- Market Maker Partnerships: Collaborate with market makers to ensure liquidity and stable trading conditions. Market makers can help manage volatility and maintain healthy order books, especially in the early stages, providing a smoother experience for new investors.
- The Buzz Creation: Generate initial interest and community engagement before the KOL round to simplify onboarding.
- Strategic KOLs First: Onboard strategic KOLs (e.g., 500k+ X followers) first to attract others.
- Allocation Diversification: Diversify allocation between agents/GEOs and types of KOLs. Strategic KOLs get more, regular KOLs get less.
- Narrative: Create a single, relevant, and viral narrative aligned with the project theme for all KOLs.
Conclusion
Whether you choose a fast or gradual release, each approach has its own set of benefits and challenges. It’s important to match your strategy to your project’s goals, market conditions, and what your investors expect. Given the amount of capital already locked in the market, offering competitive terms and maintaining clear communication are crucial.
If you are ready to make your launch a success, our agency has a good track record doing just that.
Token Launch
TGE
Vesting
Investor Relations
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