Fair Launch As The Essence Of DeFi
From its inception to its implementation, Ubiquity has always been a fair launch decentralized autonomous organization (DAO). A fair launch is a publicly announced DAO without founder allocation, early access, or pre-mine.
Evidently, this is quite revolutionary for a finance organization. Thus, fair launches became an idea to aspire to, especially in the DeFi community, where decentralization takes the uppermost value. In hindsight, Bitcoin and the older top 10 crypto assets are credited for being the original template for fair launches.
But what is a fair launch really, and why should DAOs aim for one? Beyond the heroic and admittedly good intentions, is there any real use for it? Also, let’s not ignore the elephant in the room, is there really such a thing as fair?
Let’s go through the basics of free launch again. First, there’s no such thing as free lunch in a fair launch. Everyone has to work, and proof of work (PoW) must be provided to earn tokens. In Ubiquity’s case, the founders’ Proof of Work set the tone and momentum for the fair launch.
Liquidity mining is also recognized as PoW, where rewards are given for providing liquidity to lending protocols, like Compound, or exchanges, such as Curve and Uniswap.
But here is where things get complicated. How fair is it? Everyone has their own idea of what fairness means. But in this case, fair means that access to the token or asset is open to everyone upon launch. The primary goal is to give everyone the chance to get the tokens with a specific set of rules other than directly purchasing them. This ensures that participants have an equal opportunity to acquire tokens. Think of it as Filecoin or Tezos launching without an ICO from day 1. It’s fair because everyone can participate in a permissionless and transparent system. Founder privileges become a nonissue, as the founders are playing along with everyone else.
It’s also fair because price equality is added to the equation. An article from as early as 2019, written by Arjun Balaji and Hasu, defined a fair launch as one that has an extended length of issuance for the sake of price discovery and equality — where there’s no discount.
When yEarn launched its token without going through an ICO or pre-mine and only used liquidity mining for getting their token to pave the way for price discovery, it set the path for DeFi projects doing their own fair launch. Judging by the data that Messari, a crypto data aggregator, revealed in the early part of 2021, it looks like investors like the idea, as Fair Launch tokens are outperforming most projects released through centralized token distribution events.
Still, it’s not a perfect system yet. The debate continues whether fair launches are genuinely fair, because crypto whales can earn a significant share of tokens, being able to provide far more liquidity than the average Joe. KYF is one answer to this issue. In the end, we believe that DeFi and fair launches still have a long way to go. Nevertheless, fair launches mean influence in a DAO is to be earned, not bought. Ubiquity believes that this approach stays more faithful to the essence of DeFi.
