In our crypto circle, although there are various innovations in technology and application scenarios, for those of us who are old hands, the innovation that has the greatest impact is the innovation in the way assets are issued.
Almost every time there is a new way of issuing assets (Ge Jiu Cai), it will bring a wave of wealth effect.
Today, let’s review the characteristics of previous asset issuance methods:
POW
When Bitcoin, the dragon of our cryptocurrency, first appeared, its issuance method was PoW (proof of work). All early tokens followed this model, including Litecoin/Dogecoin and early Ethereum.
The advantage of this approach is that as long as there is a uniform standard for the way of working (usually mathematical operations), anyone can join in.
In the early stages of a project, the coverage that can be collected is high and the threshold is low.
Of course, after the project becomes popular, the threshold in the later stage is not high. Not only the hardware but also the electricity cost and operation and maintenance capabilities must be competed.
Although this issuance method is more user-friendly, it does not help project owners raise funds.
Private placement
This method has actually been used in traditional industries for many years. There is actually no essential difference between private equity in the crypto industry and traditional private equity. Investors and project owners can just negotiate the conditions.
However, most projects did not issue tokens when conducting private financing, so the SAFE based on equity investment developed into SAFT.
The full name of SAFT is Simple Agreement for Future Tokens. This method is highly compliant and now almost all mainstream projects use this method for financing.
However, this method is mainly suitable for professional financial investors, and the threshold for retail investors to participate is still a bit high.
IXO
The IXO we are talking about here includes various derivative forms of ICO/IDO/IEO.
Let’s first talk about ICO (Initial Coin Offering), the first public issuance of digital currency.
ICO, the initial coin offering, originates from the concept of initial public offering (IPO) in the stock market and is the first issuance of tokens by a blockchain project.
Earlier ICOs were very similar to private placements, in that project owners had to prepare a lot of project information to introduce the projects to investors. However, the recent ICOs have been led astray by Solana, and project owners only need to post a tweet and leave an address.
This has been introduced in our previous video on Solana’s marketing.
As the gameplay deepens, ICO has evolved into IDO and IEO.
IDO stands for Initial DEX Offering, which refers to the initial issuance of tokens based on a decentralized exchange (DEX).
In plain words, the project party builds a pool on Uniswap or other dex, which is IDO. Retail investors can buy this token on dex. Currently, the mainstream method of Tugou projects is IDO.
The full name of IEO is Initial Exchange Offerings, which is the first issuance of digital currency on an exchange. Similar to IDO, if the project party does not go to dex at the beginning, but to a centralized exchange cex, it is IEO.
At present, the threshold of IEO is higher than that of DEX, because anyone can build a DEX, and at present, centralized exchanges still have some audits on projects. Most of the tokens issued through IEO are projects that have raised some money through private placement.
Airdrop
Many crypto projects will issue coins through Airdrop when they need an active community.
Friends who often pay attention to encryption will definitely be familiar with this concept, it’s just a matter of fluff!
However, this method has become increasingly difficult recently. On the one hand, many project owners are cracking down on witches, and it is becoming increasingly difficult to expand profits through technical means. In addition, the airdrop rules of some projects are becoming increasingly opaque. For example, the founder of the Taiko project even refused to disclose the rules:
At present, the airdrop distribution method seems to have more and more conflicts between project owners and users, and even evolved into a counter-trade. The first thing most people do after receiving the airdrop is to sell it, for fear that they will sell it too late and not get the price.
Fairlaunch
Precisely because of the growing antagonism between project owners and users in the airdrop method, the fair launch model became popular in 2023, with Inscription being the representative asset.
In this way, the project owner and retail investors scramble for chips together, and then shout together after grabbing them.
However, although this kind of gameplay with no threshold seems fair on the surface, it can be said that it was eventually killed by scientists.
A large number of chips for many projects were snatched away by scientists, who became the de facto dealers, with even more chips than the project parties.
At the same time, this method of project cannot raise money, and it is impossible to rely on scientists who have a lot of chips to build it.
Node Sales
Now it is 2024, and more and more projects have recently issued tokens through the node sales model.
Because a decentralized network itself requires a large number of nodes, in the POW era, users' mining machines are actually nodes.
However, the project owner cannot obtain financing in this way, and the money that users use to purchase mining machines is actually given to a manufacturing company that has nothing to do with the project.
The essence of the node sales model is that the project party can obtain financing by selling nodes, and users can also participate in project construction and gain benefits.
This method may be the mainstream method for many crypto projects in the future, and it is better than the various methods mentioned previously.
Distribution method
Decentralization
Participation threshold
Fund Raising
POW
yes
Low
none
Private placement
no
high
have
IXO
no
Low
have
Airdrop
no
Low
none
Fair Launch
yes
Low
none
Node Sales
yes
Low
have
What projects are currently using node sales?
There are three leading projects this year: XAI, Aethir, and Sophon
XI
This round of node sales can be said to be driven by XAI.
XAI is a project launched on Binance in January this year. This project is the son of Arbitrum and is a Layer 3 for gaming.
The XAI project sold 35,155 nodes for 13,080 ETH, which raised 400 million U.S. dollars based on the Ethereum price at the time.
In the token economics of this project, 85% of the tokens are released for node rewards, about 1 billion. According to the recent market value of $0.76, the average floating profit of node investors is about 20 times.
Both investors and the team have a 6-month lock-up period. After node investors have been mining for several months, shouldn’t they have already made their money back before other investors have unlocked their shares?
Actually, it is not true. After the node mines the token, it does not get the token immediately, but esXai. It takes 180 days to convert esXai into Xai. There are two options. If it is converted in 15 days, you can only get 25% of Xai. In 90 days, you can get 62.5% of Xai.
They will go
Everyone should be familiar with the Aethir project. It was introduced when I introduced AI depin before. It is also a leading project in AI computing power.
Aethir started selling nodes to the public in March this year, and has sold 74,040 nodes for 41,627 ETH, which was equivalent to 130 million US dollars at the price at the time.
The release rules of Aethir are not clear, but it is stated that there is a 4-year release period. The node reward is only 15% of the total amount, and it is expected to be around 5%~7% in the first year.
The fundamental reason for this is that Aethir still reserves a large portion of the rewards for computing power providers for mining.
Sophon
Sophon is a modular blockchain project that received $10 million in funding in March this year with OKX participating.
Sophon has sold 121,261 nodes for 31,087 ETH, worth $96 million.
You see, since the fundraising method of node sales came into being, private placement is no longer attractive, right?
The final profit will test the project team’s pattern
However, node sales are still a new issuance model. As the first project to try out this round, XAI’s tokens of node investors have not yet reached the 6-month unlocking period. However, according to the calculation that 62.5% of XAI tokens will be redeemed within 90 days, node investors should have already recovered their investment.
The tokens of Aethir and Sophon have not yet been officially issued, so this model is still in its early stages, and is essentially similar to private placement, except that it is sold through nodes, which can lower the investment threshold and complete the project's infrastructure construction.
The node sales phase of the aforementioned XAI/Aethir/Sophon has ended. The star project that is still selling nodes recently is CARV. Interested parties can search for relevant information on their own.
Our crypto industry has been developing for so many years, and the token issuance model sold at this node this year does seem to be more suitable for crypto than other methods.
The most primitive way to initiate an ICO directly on the public chain cannot meet the needs of long-term business construction, and users can easily be cut by the project party; sending it directly to the user's wallet for free is Airdrop, which has caused confrontation between users and project parties; the threshold for private placement participation is high, which is in line with the characteristics of our encryption decentralization and wide participation.
Only through this node sales model can users obtain better financing conditions than private equity, and the project party can also complete infrastructure construction. Why not do it?
