The prevailing approach to token launches, often driven by immediate fundraising needs, frequently leads to market instability and compromised project longevity. A critical paradigm shift is necessary: tokens must be recognized and designed as integral infrastructure for a decentralized network, rather than mere short-term financial instruments or fundraising shortcuts. Embracing this perspective can safeguard projects from common pitfalls and foster more robust, sustainable ecosystems.
The Perils of a Fundraising-First Mentality
Many token launches prioritize capital acquisition, with founders minting tokens primarily to raise funds without a clear, pre-defined utility. This "raise first, figure it out later" strategy creates a host of problems. Legally, tokens lacking genuine utility risk being classified as securities, attracting unwelcome regulatory scrutiny under frameworks like the Howey Test. Strategically, projects become slave to investor demands and vesting schedules, building around "cliffs" rather than focusing on product adoption or user growth. This often leads to oversized insider allocations and token unlock schedules that flood the market, causing dramatic price crashes – with statistics showing 90% of token unlocks result in price drops. Ultimately, such an approach turns token purchases into a mechanism for early investors to cash out, undermining long-term value.
Building Tokens as Essential Infrastructure
To counter these issues, the focus must shift to foundational business planning. A robust token model begins with a comprehensive business strategy – one that maps out the company's core functions, growth trajectory, revenue generation, and beneficiary ecosystem. This clarity reveals whether a token is truly necessary and, if so, where it naturally integrates into the product. The token's role should be fundamental, powering essential functions like blockspace fees, staking for data access, or gating ecosystem rewards. Only when a clear, indispensable role for the token exists within the product's loop, and the product itself has achieved traction, should a token be deployed. Funding early development through traditional equity, milestone-based SAFEs, or revenue-share notes is often a more prudent path, preventing premature speculation and allowing founders to focus on product growth rather than defending a price chart.
Designing for Longevity and Genuine Utility
True infrastructure-minded token design demands a focus on longevity, not just launch-day hype. This means moving beyond simple time-based unlocks towards milestone-based vesting, where token supply grows in direct correlation with network activity, such as the number of active validators, modules shipped, or usage targets achieved. Furthermore, token models must be rigorously stress-tested against real-world scenarios, including market downturns, slippage, and project delays. Seeking external expertise to identify incentive flaws and edge cases is crucial. Ultimately, if removing a token doesn't fundamentally break a project's core functionality or value loop, it's a strong indicator that the token is superfluous. The guiding principle should be: build the essential product loop first, then integrate the token as a necessary component to enhance and sustain that loop. This mindset fosters a robust, utility-driven ecosystem that aligns with evolving expectations from venture investors, exchanges, and regulators alike.
