Key Summary

  • The imbalance of investment opportunities between retail and venture capital in the cryptocurrency market is a topic of ongoing discussion.

  • Fair Launch platforms are committed to providing fair investment opportunities to address this imbalance, but they still face structural limitations.

  • Innovative approaches such as providing investment opportunities based on on-chain and off-chain data, and using transparent fair launch mechanisms under AI agents, are attracting attention.

1. Introduction

Source: rsuthar 94, Dune Analytics

Launchpad platforms like Pump.fun and DAOS.Fun are experiencing strong growth in the cryptocurrency market. They have drawn attention due to high trading volumes and active user participation. Unlike traditional ICOs and IEOs, these platforms adopt fair issuance mechanisms—allowing all users to freely participate in investments at the beginning of token issuance without having to sell to capital parties in advance. This model has attracted widespread attention by enabling retail investors to participate from the start, share value, and benefit from the fair distribution of tokens. This trend highlights the long-standing exclusion of retail investors from quality investment opportunities, while also raising market expectations for more inclusive investment models. This report will analyze whether Fair Launch platforms can effectively address the inequality of investment opportunities for retail investors and support the sustainable development of the cryptocurrency market.

2. Retail Investors and Venture Capital: The Origin of the Conflict

The inequality of investment opportunities between retail investors and venture capital institutions has long been a persistent issue in traditional financial markets, and this problem also exists in the cryptocurrency market. Venture capital institutions buy tokens in large quantities at low prices during the private placement stage and then sell them at higher prices in the public market for profit. This process puts retail investors at a disadvantage, forcing them to enter the market only after prices have already risen, deepening dissatisfaction with the lack of fair investment opportunities.

The MC/FDV of tokens issued in 2024 has dropped to its lowest level in nearly three years, Source: Binance Research

This issue is supported by data. According to Binance Research, the market capitalization (MC) / fully diluted valuation (FDV) ratio of the cryptocurrency market has continuously declined from 41.2% in 2022 to 12.3% in 2024. This indicates that the proportion of tokens circulating in the market is decreasing while the proportion of locked supply is rising. The limited supply artificially raises token prices, benefiting early investors such as venture capital. However, when a large amount of locked supply floods the market during unlocking periods, oversupply often leads to price crashes, with retail investors bearing the brunt of the losses. Ultimately, the inflated pricing at the time of issuance often causes financial losses for retail investors. In this context, retail investors are naturally attracted to fair issuance platforms. These platforms eliminate the risks associated with token unlocking by distributing all tokens from the start, providing all participants with an equal starting point. This model promotes balanced token distribution and healthier ecosystem development, meeting the demands of retail investors for early participation in projects.

3. Fair Launch Platforms: A True Fair Alternative or Another Form of Imbalance?

Fair launch platforms have opened new opportunities for retail investors and positioned themselves as an alternative to traditional investment models. However, there is still controversy over whether these platforms truly address the inequality of investment opportunities. On the surface, they create a fair environment where all participants start on the same line. In practice, however, new forms of inequality and challenges have emerged.

$DRUGS VIP Participant List, Source: DAOS.fun

Taking Pump.fun as an example, the platform faces challenges brought by automated tools, such as token generation event (TGE) sniper bots and trend bots, which often seize trading opportunities, pushing retail investors to the back. In addition, some projects undermine fairness through mechanisms like whitelisting, favoring specific groups or forming interest groups to provide advantages to insiders. These issues erode the original intention of fair launch platforms. The facts show that inequality has not been eliminated, merely transformed into another form, and retail investors still struggle to gain fair participation opportunities. More concerning is that this model is now repeating at a faster frequency. Since fair issuance platforms often skip the due diligence process typical of traditional venture capital, they expose retail investors to greater risks, further exacerbating the inequality of investment opportunities.

4. Deep Reasons for Inequality of Investment Opportunities

Fair launch platforms have not fundamentally solved the problem of inequality in investment opportunities. To deeply understand this issue, we need to examine it from a more essential perspective. This inequality is not limited to the opportunity differences between retail and venture capital; it is not just about the fairness of opportunities, but more importantly, it threatens the long-term sustainable development of the entire ecosystem.

If a project merely pursues financing, then opening investment opportunities to everyone does make sense. However, token-based ecosystems should not only focus on raising funds; they need to grow together with investors and ecosystem participants, continuously creating and developing value. This requires real participants who are not only concerned about short-term gains but are also willing to contribute to the long-term development of the ecosystem.

In this context, the role of venture capital is particularly important. Venture capital not only provides funding support but also brings extensive networks and resources, and verifies the stability and reliability of projects through preliminary research and due diligence. This also explains why some fair launch platforms incentivize vetted participants through early access.

To address the issue of inequality in investment opportunities, merely equalizing access opportunities is not enough. The long-term growth and sustainable development of the ecosystem require a structured approach that can identify and incentivize participants who can make substantive contributions. This is a fundamental challenge that the Web3 ecosystem urgently needs to address.

5. Finding a New Balance: Value-Driven Ecosystem

The current cryptocurrency market is trapped in two extremes: one side pursues an absolutely equal fair launch model, while the other is a traditional model centered around a small number of seasoned investors. Neither model fully reflects the intrinsic value of the Web3 industry. Therefore, we need to shift towards a 'value-driven participant selection' strategy, identifying and attracting participants who can make significant contributions to the ecosystem, focusing on their value creation capabilities rather than simply considering capital scale or investor type. Recently emerging cases demonstrate the potential of this new approach.

5.1. Legion: Community Investment Round Platform

Source: Legion

Legion, as a community-driven investment platform, is dedicated to screening investors who can create substantial value for the ecosystem. The platform's goal is not limited to fundraising but focuses on building sustainable cooperative relationships between project parties and investors.

Source: Tiger Research, Legion

The Legion Score system at the core of the platform comprehensively evaluates investors based on multidimensional data such as on-chain activities, social influence, GitHub contributions, and recognition by project parties. The scoring system is based on the investors' actual contribution capabilities to the ecosystem, rather than merely their financial resources. Investors are required to submit a cover letter and Legion score detailing their potential contributions and participation plans, which helps establish a trust bond with the project parties. This method not only enhances the fairness of investment opportunities but also promotes in-depth interaction between project parties and investors. Legion is pioneering a new investment model that improves the credibility of the crypto market while building a community ecosystem that values contribution.

5.2. AI-Pool: A Fair Launch Platform Based on AI Agents

AI-Pool is an experimental fair launch platform based on AI agents, proposed by user Skely on December 24, 2024. The idea quickly gained attention and spread within hours. Many investors injected funds into the project, raising over $5 million. Note: Skely's account was suspended due to false account reporting. The specific reason is unclear as it was reported by a third party. Furthermore, the platform is an early, untested experimental project that is not yet stable or reliable. However, the users' ideas remain promising.

Source: Skely

AI-Pool attempts to solve the pain points of existing fair launch platforms through AI agents. Compared to the centralized operations and insider trading issues common in traditional platforms, AI-Pool employs Trusted Execution Environment (TEE) to achieve process transparency. TEE protects the AI wallet's private keys and ensures the autonomous operation of AI agents, effectively reducing the unfairness brought by centralized control and insider trading.

Although AI-Pool still faces challenges such as bot interference and insufficient liquidity, it has demonstrated unique advantages in ensuring the fairness of token issuance and initial distribution, providing new ideas for addressing the distribution inequities of centralized platforms. With further technological improvements, AI-Pool is expected to become a model for enhancing trust and transparency in the cryptocurrency market.

6. Conclusion

The issue of unequal investment opportunities in the crypto market is often simplified to the opposition between retail investors and venture capital, but in essence, this is just a surface phenomenon. Whether it is the KOL rounds that favor specific groups or the fair launch platforms that fail to fully achieve fairness, they all reveal the deep-seated inequalities present in the market. The innovative practices of Legion and AI-Pool provide new ideas for addressing these issues: Legion filters valuable participants through a comprehensive data evaluation system; AI-Pool uses AI agents to enhance process transparency. Both projects go beyond simple capital investment, showcasing a new direction for enhancing trust and sustainability in the ecosystem.

The core value of the Web3 industry lies in creating equal opportunities and a fair environment for all participants through decentralization. To achieve this goal, we need to build a balanced ecosystem that eliminates biases while establishing a collaborative mechanism that promotes positive interactions between investors and project parties. These efforts will lay the foundation for a truly decentralized system.

Original link: https://reports.tiger-research.com/p/fair-launch-platform-eng