A Guide To Fair Launching — Part 1
Launching a token in the crypto ecosystem is a challenging process.
Balancing the project and the community’s needs while minimising the impact of bots and those who don’t have the best interests of the project at heart requires projects to be extremely careful during the launch process.
Recently, we’ve seen numerous unfortunate token launches result in genuine community members missing out and sniper bots scooping up the supply. Strips Finance was one such example, where the auction raised $3.7m but only 14 addresses participated, most likely all bots.
A fair launch is critical to building rapport with your community in the early stages of a project’s life cycle. Without a fair launch and the potential of bots scooping up the supply, token launches can become a PR disaster, with potential community members lost forever.
The ideal fair launch can vary from project to project depending on their aspirations and goals. For the most part, a fair launch should have the following characteristics:
- Rewarding genuine community members
- Sniper Bot resistant
- Permissionless
- Capital Efficient
- Open & Transparent
Based on these characteristics, and using a general example. Here is an example of how a project could launch their project fairly.
Step 1: Rewarding early community members
Taking care of your early community members is vital when building out a project. These users become the heart and soul of your project and contribute in the form of community moderation, memes, content and even technical contributions.
One of the more popular ways many projects are rewarding community members is through the airdropping of tokens in exchange for involvement and/or contributions.
Ribbon Finance has used Discord engagement as one of the metrics that qualified their community members for airdrops. TempleDAO has created a cult-like following, sharing tokens with those who have made genuine contributions in the form of memes, content and education. KlimaDAO whitelisted community members that participated in their testnet for an Initial Discord Offering (IDO) and used that raise to gather the necessary collateral for a Copper Fair Launch Auction (FLA).
While the number of users trying to game the system has increased, having project leaders monitor this through a range of measures including discord bots, submissions and manual checks has made it easier to discern between genuine community members and others.
Step 2: A token Fair Launch Auction (FLA)
Once early community members have been rewarded, wider community building is the next step in raising awareness and funds for projects.
A Fair Launch Auction (FLA) is a unique fundraising method that deters sniper bots and bad actors from scooping up the supply via a high to low capital-efficient price mechanism, while effectively bootstrapping an engaged community of token owners.
How is this done?
The initial price of the token being auctioned can be magnified by up to 99 times relative to the collateral deposited along with it. Additionally, the collateral can be fully retrieved at the end of the auction unless the auctioned tokens already exist outside of the FLA and someone decides to sell into the auction.
EXAMPLE OF AUCTION WEIGHTS
The price being ‘magnified’ is the mechanism that stops the bots. If 10 bots were to simultaneously try and scoop the supply of a token via a FLA within 10 seconds of a launch on Copper, they may send the market cap of the sale from tens of millions to the hundreds of millions and beyond.
In degen terms? If you ape into the auction at the start, you will get rekt and most likely pay too much for the token.
This is fairer for communities because it means that bots and whales are limited in their want and ability to immediately ape into the sale, when compared to batch auctions, where it becomes a race and first in gets the best deal.
Want to learn more about how Copper can provide a fair launch experience for your project? Contact us.
The Copper team will bring you more pieces on how to fair launch in the coming weeks!
