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Token Launch Case Studies

Publish by Coin98 Ventures at 18 January 2021

This article is our observations on 12 projects that have successfully launched their tokens to the public.

Determine Product-Market Fit, Then Launch Token

TL;DR:

Examples of projects of this type: The Graph, Uniswap, 1Inch, Compound, Curve Characteristics:

  1. To create products finding the solutions for problems that have not been solved yet
  2. To build in a long period before token launch (at least one year)
  3. To raise Series A funding, then launch token
  4. Not community-owned
  5. Fully Diluted Valuation larger than $1B at launch
  6. Unique token launch method that kicks off the flywheel

The Graph

Context

The Graph found a product-market fit when DeFi had really exploded. Multiple well-known protocols, namely Uniswap, Aave, Synthetix, are using API of The Graph to query structured blockchain data. After more than three years, The Graph officially launched its native token on December 18, 2020.

Before launch

To evaluate The Graph’s success, the most accurate metrics could be (1) Number of Sub-Graphs and (2) Daily Query Volume from other protocols.

The Graph has a total of over 3,000 generated sub-graphs, with over 300 million queries per day.

Metrics at token launch

After the token launch, there was still no decisive impact on The Graph's network, besides valuation increased sharply.

Token Launch Method

  1. To build products solving the problem that exists in the market
  2. To raise fund to maintain operations & expansion
  3. To find the product-market fit
  4. To choose the appropriate time for the public token sale
  5. To launch by listing on top-tier exchanges from the beginning
  6. To pump token price

Uniswap

Context

After three years of hard work, Uniswap found the product-market fit before the token launch. The token launch time could not be better supported by good market sentiment.

Metrics at token launch

Network

Token Price

Token Launch Method

  1. To build a product finding the solutions for problems that have not been solved
  2. To raise fund to improve the product & build up the team
  3. To determine product-market fit, which is liquidity mining driving the market crazy
  4. To sell the token for VCs
  5. To launch token in an unprecedented way (i.e., retroactive), leading to FOMO phenomenon among community
  6. To establish a liquidity mining program that bootstraps liquidity for the network, then kicks off the flywheel
  7. To list token on top-tier exchanges from the beginning leading to a strong price pump (ATH $8.5)

Compound

Context

Compound found its product-market fit after more than three years and officially launched token in June 2020. The launch time is pretty good. The launch going with incentivized liquidity mining kicked off the entire DeFi ecosystem into a bull run.

Metrics at token launch

Network

Token Price

Token Launch Method

  1. To build a product that solves lending/borrowing problems
  2. To determine product-market fit
  3. To launch the token through liquidity mining only (no public sale) that bootstrapped the number of suppliers and borrowers on Compound
  4. To list token on top-tier exchanges from the beginning
  5. Token price to create FOMO phenomenon then reach ATH
  6. To go through the FOMO period (3-6 months) and return to the normal state but with a more extensive user base.

Launch Token, Then Product

TL;DR:

Examples of projects of this type: PowerPool, dHedge, Perpetual Protocol

Characteristics:

  • Token price discovery is intense but then drastically corrected.
  • There will usually be incentives for early adopters who tested the product.
  • To raise funds from well-known VCs.
  • After launching the product, there are incentivized programs to kick off and pull back the traction to the network.
  • FDC of each token is around 50 - 300 million dollars right after the launch.

PowerPool

Context

PowerPool launched CVP token in advance for early supporters who tested the platform, then ran a liquidity mining program to distribute tokens. At the launch time, the market is very hype about liquidity mining projects. But, as the product has not launched yet, the token was only for speculation, did not create any real value.

Token Launch Method

  1. To determine the problem in the market which has not been solved yet (i.e., meta-governance)
  2. To launch beta products, then create an incentivized testing program to hype it up
  3. To launch token together with liquidity mining program to push the token price to the moon (with small supply)
  4. Mined tokens were dumped, so the price was going down.
  5. To launch products (i.e. PowerIndex)
  6. Token Price has been recovered from the bottom.

Metrics at token launch

Token Price

dHedge

Context

dHedge is built on Synthetix to open up a brand new market. The launch time, August 2020, coincided with the DeFi boom, and the market sentiment was good.

Before token launch

  1. Product has not officially launched.
  2. Raised funds and launched a testnet incentives program (i.e., trading competition) to attract early adopters.

Token Launch Method

  1. To choose a niche market that no one has explored (i.e., built on Synthetix)
  2. To release test products then raise funds
  3. To launch testnet incentives program to attract early adopters
  4. To select a good market sentiment time for token launching
  5. To create price discovery using Mesa auction
  6. To list on many top-tier exchanges

After token launch

Network

(1) Started the mainnet launch

(2) Funded for top managers & launched Performance Mining to incentivize managers to earn DHT and attract users in bootstrapping the network

After launching Performance Mining on December 13, 2020, the data shows that (1) TVL in dHedge reached over 7 million dollars. 243 pools were created, and 225 managers joined dHedge.

(2) Total transaction volume reached $45 million.

Metrics at token launch

Token price

  1. DHT was listed on a series of major exchanges with a starting price of up to $4 (2 times higher than the ending price of the public sale).
  2. DHT was then strongly corrected (-92%) even though there is a liquidity mining program to create liquidity for DHT.

Perpetual Protocol

Context

Perpetual Protocol launched token before the product officially goes live, focusing on the next lego of DeFi - derivatives. PERP token was launched in September 2020 through the liquidity bootstrapping pool.

Before token launch:

  1. Organized two trading competition on the testing platform
  2. Raised fund through one round of strategic sale for VCs
  3. Completed deployment on Ethereum but delayed the product launch due to high gas fee

How to Launch Token

  1. To select the market that has no product from any team (i.e., Perpetual AMM)
  2. To launch the beta version, then conduct the incentivized test program to attract early supporters
  3. To raise fund from VCs
  4. To choose a good market sentiment time to launch (but ended up delay due to high gas fee)
  5. To launch token to the public in the style of buying leading to “REKT,” which can discover the token price the real demand of the market
  6. To launch liquidity mining program to create liquidity rather than listed on centralized exchanges
  7. To launch products and accompanying programs

Metrics at token launch

Token Price

Launch Token And Product At The Same Time

TL;DR:

Examples of projects of this type: Saffron, yearn, Keep3r

Characteristics:

  • Initial FDC is very small. Liquidity mining created price discovery. About one month after launch, FDC is 10x higher than the initial.
  • Their products solve the market's actual problems and must be the first mover to win.
  • Product release and improvement speed are fast to overcome liquidity mining inflation.

Saffron

Context

Launched in November 2020, a bleak period of the market, Saffron targets a new market that is customized and tokenized risk & reward of yield farming. Hence, the launch token is quite positive.

Token Launch

SFI token is launched with the Saffron app and liquidity mining program to bootstrap the network and users of Saffron products.

Thanks to liquidity mining, Saffron's TVL increased from 0 to 60 million dollars. SFI price increased sharply to $ 1,000 after just a few days but then divided by 8.

Token Launch Method

  1. To build a different product that the market needs (i.e., customized risk & reward)
  2. To launch the product at the same time with liquidity mining to bootstrap the network
  3. To enable token price discovery and “moon.”
  4. Token price to go down reflects the real value of the project
  5. To grow through partnerships & integrations, then the token price goes up again

Metrics at token launch

Token Price

Keep3r

Context

  1. Keep3r solves a problem of the market, which has not been solved (i.e., Keeper Jobs).
  2. Launched token at the end of October 2020, when the market sentiment is not good.
  3. Andree successfully launched Yearn Finance before.

After token launch

The Keep3r network and KP3R token are launched simultaneously, so we just need to analyze the time after token launch.

KP3R is designed to serve the needs of seeking for keepers performing specific tasks of protocols. Therefore, the value of KP3R depends on the development of the network.

After more than two months of launching, the Keep3r network completed more than 8700 jobs from more than 12 protocols, with the help of 921 keepers.

Metrics at token launch

KP3R Price

KP3R is launched in a fair launch manner, which means no token sale, no token allocation for the founders and team.

Because Yearn Finance has built a strong brand before, it is not surprising that KP3R created the community’s FOMO phenomenon. The price has increased sharply after its launch.

Yearn

Context

Yearn launch token under fair launch style means that the founder does not have a token allocation, and the YFI token is earned via a liquidity mining program. Its launch time was right after the liquidity mining idea of Compound was released, starting the bull run of DeFi.

Before token launching

Andre created the iEarn protocol (the predecessor of yEarn), which is also a yield aggregator but ended up with failure. After the demand for yield increased and the token launch through liquidity mining was proved successful, Andre launched yEarn.

Token launch method

  1. To build protocol, finds the solutions for the problem which was not solved (i.e., Yield Aggregator)
  2. To launch token with liquidity mining and enable token price discovery
  3. To get the community involved in building the protocol

Metrics at token launch

Token Price

A Special Case: SushiSwap

Context

SushiSwap is a fork of Uniswap, so the product was available. SushiSwap led the trend for forked projects which have VCs and use fair launch and liquidity mining.

Metrics at token launch

Token Price

Sushi's success is thanks to the efforts of the team and the community. Most importantly is a more innovative approach than other AMM protocols on the market. Moreover, the build and release speed of SushiSwap are really impressive.

Closing Thoughts

Above 12 projects are analyzed and divided into three types in terms of token launch. Each type has its advantages and disadvantages. But in general, for a successful token launch, it is necessary to have:

  1. The product must solve a problem on the market, but no one has solved it yet. The first mover wins.
  2. The token distribution must create token price discovery. Specifically:
  • Group (1): Retroactive + Liquidity Mining + Major exchanges listing
  • Group (2): Selling tokens to the public through many different ways such as Dutch Auction, Liquidity Bootstrapping Pool, Liquidity Mining
  • Group (3): Only uses Liquidity Mining and distribute 100% to the community

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Coin98 Ventures

Investment arm of Coin98 Finance. Follow us on Twitter @Coin98Ventures

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