Fair launches have recently sparked a wave of enthusiasm, from BRC20 to Ferc20, and have gained unanimous praise among retail investors. Today, let's discuss the risks and opportunities associated with fair launches and cold starts.
I. The nature of fair launches:
Fair launches can be implemented through various methods, such as public token sales, airdrops, and mining. In the case of BRC20, both regular users and project teams need to actively mint tokens without any reservations. This distribution method aims to ensure a fair and transparent token allocation process, avoiding specific individuals gaining undue advantages during the token issuance.
II. Risks of fair launches:
Low-quality projects: Fair launches do not guarantee the quality and feasibility of the projects themselves. Some projects may exist solely for speculative purposes, lacking genuine technological or commercial applications. Therefore, token investors participating in fair launches need to make their own judgments and assess the potential and value of the projects.
Competition and rush by bots: Due to the typically limited supply associated with fair launches, participants may engage in fierce competition and rush to acquire tokens. This may result in an overabundance of automated participants, leading to a one-sided skew in the distribution of project tokens.
Liquidity and exchange listings: Fair launch tokens may face issues of insufficient liquidity due to the relatively small number of token holders and the limited trading market. This may result in price fluctuations and market instability after token listing on exchanges, as well as the risk of gas fees being spent without being able to trade.
III. Opportunities of fair launches:
Equal participation opportunities: Fair launch mechanisms ensure that everyone has equal opportunities to participate in the token issuance process. This allows individuals and small-scale investors to have a chance to acquire tokens during the early stages of a project, not just those with more resources and connections. It provides more opportunities for retail investors, which is something they favor.
Value discovery: Fair launch tokens can facilitate the process of value discovery in the market. Since tokens do not have a predetermined price in the initial stages, investors can decide on the token purchase price based on their understanding and evaluation of the project, as well as market demand and supply.
Community engagement: Fair launch tokens contribute to building a positive community participation environment. Individuals involved in token issuance become early holders and supporters of the project, providing them with an opportunity to interact with the project team, provide feedback and suggestions, and participate in the project's development and decision-making processes.
In summary, on BRC20, trading occurs after minting through placing orders, while on Ferc20, liquidity is added after completion. Thus, Ferc20 resembles more of a community DAO scenario, where liquidity is voluntarily added for project co-building. However, this also carries a risk where, in the absence of strong community consensus, added liquidity may be used as cannon fodder by large token holders. Which scenario do you prefer?
