Fair Launch: Is it Really?
How Much $$$ Do You Really Need To Launch Your Project?
As cryptocurrency and decentralized finance becomes more mainstream, more and more innovators are looking to launch their projects into the crypto space. Unfortunately, the giant many of these innovators face is the struggle to finance their projects.
Now you could argue and say that these projects can just opt for an IDO. However, many of the new crypto projects are leaning towards “fair launches” of their projects in order to attract more interest from small investors and avoid a reliance on seed capital from private investors.
What Is A Fair Launch?
In simple terms, a “fair launch” of a crypto project refers to a launch where tokens are distributed fairly to the market participants. In its purest form, there is no founder allocation or early access. Through fair launches, everyone is equal in the project’s ecosystem from day one. Plus, there is less of a chance of whales dominating token launches, which has been a major problem for many offerings that go the ICO route.
Benefits of A Fair Launch:
- Attracts all kinds of investors
- Decreased risk of whale domination
- Decreased risk of price manipulation
Launching A Project
Fair launches are great but here is the catch, in order for projects to have enough liquidity for a fair launch they need to raise a lot of capital, usually in the region of $200k — $500k.
This is because current DEX’s that allow permissionless listing of new tokens use liquidity pairs. As such, if you are a project and want to deposit $500k of Token A, then you need $500k of ETH in order to build the pair.
Is this really a “fair” launch when projects still have to allocate that much of their own capital in order to have sufficient liquidity for their token?
Funding Your Project
In order to understand how capital intensive “fair launching” a project is at the moment you will have to understand exactly what it takes to fund, develop and launch a crypto project.
- Research & Development (Up to $1,000,000)
The first, and arguably most important, factor is of course the technology behind the project. It is important to consider the viability as well as the real-world applications of your project. A blockchain developer/s will have to be hired to develop the code. Depending on how much research you have to do and how many developers you have to enlist if you are outsourcing, it can be quite costly, sometimes reaching figures of up to $1,000,000. - Whitepaper ($5,000 — $15,000)
A whitepaper is a document that is intended to give potential investors an in-depth introduction to your project. Although you can write a whitepaper on your own, some projects opt to completely outsource it. Either way, most projects hire someone to fine tune their white papers anyway, so the cost varies all the time - Website ($10,000 — $20,000)
Before a project goes into the launch stage, it should have a good online presence. Creating a good website for your project communicates a certain level of attention to detail and professionalism that people are looking for before they put their money into a project. Websites can easily be built with templates, but in order to get a secure, professional and unique website, you will have to put money into it - Marketing & Communication Channels (10–20% of Funding Target)
Marketing is one of the most important things to focus on, many times being the make or break for some startups. Communication channels are important because they help grow a vibrant community that supports your project. Although social media channels don’t require any funds to set up, many projects look to hire influencers, host AMAs, hire marketing managers and this can cost a lot of money. - Third-party security audits ($10,000 — $50,000)
It is imperative to conduct third-party security audits on all smart contracts in order to ensure there are no bugs that can be manipulated by hackers to undermine your project. The cost will vary depending on the third party you are choosing to conduct the audit. - Legal Expenses ($10,000 — $50,000)
To ensure regulatory compliance, it is important to have the right legal backing that allows you to navigate the token sale in a manner that ensures you are staying within the confines of the law. Again cost will vary depending on a number of factors. - Exchange Listing ($5,000 — $1,000,000)
Apart from enduring a thorough review process, listing your token on some of the bigger more reputable exchanges can set you back millions of dollars, whereas opting for lesser known exchanges will only cost you a few thousand.
Launching on MonoX
Including salaries for the team as well as other miscellaneous costs, a successful project launch will cost $250,000 — $500,000 on the low end and up to $3,000,000 on the high end.
So as you can see, if you want to launch a project that injects a lot of value into the crypto space and has a genuine use case, you will have to invest a lot of initial capital in your project. Unfortunately, many projects have to cut back spending on other arguably more important parts of the project so they can save capital to provide enough liquidity for product launch.
One of the driving reasons behind the creation of MonoX was to make it easier and less capital intensive for smaller projects to launch their tokens. on our platform, project owners can list their tokens without the burden of capital requirements and focus on using funds to further develop the project instead of providing liquidity.
Single Token Liquidity and Tiered Pools
The unique design of our liquidity pools makes that possible. Along with Single Token Liquidity, which we detailed in a previous article. We will launch two different types of liquidity pools.
There will be “Trustless Listing Pools”, whereby any user is able to launch a token and create a liquidity pool. Additionally, we will have “Official Pools” which have passed a community DAO vote to become an official Monoswap pool.
Monoswap allows the trustless listing of new tokens. Trustless listings create single token liquidity pools, where deposited tokens are grouped with the vUSD stablecoin.
What is Trustless Listing?
Trustless listing means that anyone (project or developer) can write a smart contract, create a pool for their token, and add liquidity so it can be launched and traded. However, a built-in feature to safeguard against malicious token listings is that for trustless listings, the vUSD balance is not allowed to go past 0.
Rug Protection
By not allowing the vUSD balance to go below 0, we can prevent malicious actors listing a token and selling it back to themselves.. If the vUSD balance goes to 0 then people cannot sell the token anymore. However, it is still possible to buy the token. As a result, a user cannot list a token, set the price and add liquidity, then sell all the tokens back themselves into vUSD.
“Zero-Extra Capital” Launch
Trustless Listing in tandem with Monoswap’s single token design enables developers or projects to launch their tokens with zero extra capital as they do not need the extra capital for the pair. This way, projects are able to save capital and direct it to more important areas such as research and development, auditing, marketing and employee salaries.
The IDO Dilemma
IDO platforms are all the craze of crypto right now, IDOs are the ICOs of 2020/21. Nowadays, most projects looking to raise money for liquidity will initially launch on an IDO platform in the hopes of tapping into a massive user bank. Users of an IDO platform contribute either USDC, ETH or a native currency of the platform. The offerings are limited and are on a first come first served basis, resulting in oversubscription most of the time. Which is good in some sense, because it drives value up, right?
Projects will spend majority of their marketing funds to hype this IDO launch so it’s as successful as it can be. Once the IDO closes and funds have been raised, the project owners will then rush to list the project on a platform like Uniswap using the money just raised as liquidity. This results in a value-loss loop being created in the market. The problem with this little gap in the flow chart is that a lot of value falls through that little gap from the IDO and whitelist to the Uniswap listing. But it doesn’t need to.
Listing your token on Monoswap ensures that as soon as you launch your token, it can be traded. Instead of spending capital to build up hype for your project on an IDO platform just to list it elsewhere a few days later, at a cost of $200–500k, you can save money by launching on Monoswap at no extra cost and benefit from trading beginning right away. Effectively putting an end to the value loss loop.
We are undoubtedly in a strong bull market in the moment and the popularity of crypto and in turn DeFi is increasing rapidly. A lot of projects are being launched right now and it seems like there is plenty of money to go around, however one must bear in mind that this is a bull market, things will not be the same in a bear market and that is where capital efficient protocols like MonoX will save the day.
Thank you for reading. If you have any questions, leave a reply or reach out to us on Telegram or Twitter. You may also browse through our website or visit our Docs where you can also find our roadmap.
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About MonoX
MonoX is a new breed of Automated Market Maker in the DeFi arena. We have built a new AMM using a single token pool design. It works by grouping deposited tokens into a virtual pair with our own vUSD stable coin.
MonoX will revolutionize the DeFi ecosystem by fixing the capital inefficiencies of current protocol models. If you want lower trading fees, capital efficiency, and launch a token with zero capital — then you are in the right place. MonoX will expand the capabilities of DeFi.
