There are 12 launchpads that we could find
Collectively they have launched around 760 projects and raised (erased?) $195 million.
We randomly sampled 100 projects from 5 top launchpads. 75% of them are down from IDO price, even though many of them once were at huge multiples from IDO price.
This is largely due to negligent token design, launching with a tiny float so that even small amounts of buy pressure result in massive multipliers to the token price, at which point insiders (VCs and Team) dump their tokens for instant profit, before any semblance of product market fit or building of an actual business. The chances of actually building something impactful after this sort of launch is very slim, because the incentives are misaligned. The team and VCs are now rich and don’t need to try to make the project work. The community collapses and most leave, those that stay are complaining 24/7 because the chart is down only day after day. It’s 2017 on repeat with a new name.
So retail loses money like always, but who gives a fuck right? Wrong… Retail is already catching on and IDOs like their predecessors IEOs and ICOs are headed to the graveyard.
Here’s the main problem — Teams need a way to raise capital and distribute their tokens to as many people as possible. If every 3 letter acronym we create destroys retail investors, then soon capital will dry up. VC and institutional capital is only here because retail is here; if one leaves it’s a slippery slope. If builders can’t raise, nothing will get built and the space will stagnate.
In my opinion, launchpads are not inherently bad, typically builders struggle with marketing and if you’re not a crypto native and haven’t been in the space for a while and built a good network, the chances of anyone giving a shit about your token when you launch it are very slim.
As much as we like to say democratization of finance blah blah, crypto is still very much an insiders club. Launchpads level the playing field and give builders some much needed attention, they serve an important function of initial token distribution and establishing an early user base for new products.
Summary:
Launchpads = Good (attention for new projects)
IDOs = Bad (huge losses for retail, through bad/scammy token design)
Retail getting fucked = Bad (captial inflows could dry up)
What’s the solution? May I present the latest and greatest 3 letter acronym ILO
The Initial Locked Offering (ILO)
The ILO seeks to align incentives and give builders a chance to find product market fit without a down only chart.
What is an ILO? (Initial Locked Offering)
An ILO is the next phase in capital raise and fair distribution of tokens that aligns the incentives of builders, VCs, and retail investors.
Participants in an ILO receive locked token allocations represented as NFTs. Depending on the project these NFT positions can be openly traded on a suitable marketplace, providing liquidity to holders of early positions should they wish to exit their position before all the tokens have unlocked.
VCs and retail investors receive the same lock period in an ILO which, traditionally, has not been the case for ICO, IEO, and IDO launches.
Benefits of the ILO
The ILO eliminates the all-too-common early pump & dump price action, using retail and the project community as exit liquidity for VCs and the team. With locked token positions that unlock without favoritism to VCs or team members, this can no longer be the case.
This launch strategy also reduces the odds for negative sentiment of ugly price action, allowing the community to build with the storyline of positive tokenomic outcomes, engaging new members and driving users into the project. Your Community = Your Users
Greater time horizons for token unlocks provides the development team time to build the project with the support of their investors, who are now incentivized to provide guidance focused on long-term success.
Suitable Tokenomics Models for the ILO
An ILO launch without a dynamic locked tokenomics model is simply a delay of an inevitable dump once its locked tokens are released.
On the other hand, properly executed ILOs with innovative tokenomic models including vested token multipliers, daily APY rewards, and additional incentives provide the framework for a successful launch and future for a protocol and its token.
At Tangible, the NFT marketplace for real world assets, our locked token positions are called 3,3+ NFTs.
Tangible 3,3+ NFT positions provide greater token multipliers proportional to their respective lock period.
Increased multipliers on tokens that are locked for greater periods of time reward community members with longer time horizons. A perfect alignment for a long term protocol.
The Tangible ILO is taking place on April 29th, with participants receiving a 3,3+ NFT that contains locked TNGBL tokens that vest per block on a curve over 4 years.
In addition to providing vested tokens over the lock period, Tangible 3,3+ NFTs also entitle holders to their proportion of marketplace revenue share paid in USDC weekly.
If you would like to learn more about Tangible’s locked 3,3+ NFT tokenomics model including USDC revenue share, claimable balances, and ignition phase dynamics you can find more information here.
Conclusion
In conclusion, we believe the ILO model to be the natural successor to the IDO since its features include:
- Aligning VC, Team, and Retail Incentives
- Being a Safeguard Against the Pump and Dump
- Giving a Protocol the Time to Build a Great Community and Product
The ILO aligns incentives for all and helps protect retail by ensuring teams build a product that creates actual value. We hope to motivate users and builders alike to engage in this new launch strategy.
