Original author: Tiger Research
Reprinted: Luke, Mars Finance
1. Introduction
Source: rsuthar94, Dune Analytics
Launchpad platforms like Pump.fun and DAOS.Fun are experiencing strong momentum in the cryptocurrency market. They have gained attention due to high trading volumes and active user participation. Unlike traditional ICOs and IEOs, these platforms adopt a fair issuance mechanism - all users can freely participate in investments at the outset of token issuance without prior sales to capital parties. This model has garnered widespread attention by allowing retail investors to participate from the beginning, share value, and benefit from the fair distribution of tokens. This trend highlights the longstanding exclusion of retail investors from high-quality investment opportunities while raising market expectations for more inclusive investment models.
This report will analyze whether Fair Launch platforms can effectively address the issue of unequal 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 unequal investment opportunities between retail investors and venture capital institutions have long been a persistent issue in traditional financial markets, and this problem also exists in the cryptocurrency market. Venture capital institutions purchase a large number of tokens 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 their dissatisfaction with the lack of fair investment opportunities.
The MC/FDV ratio of tokens issued in 2024 has fallen to the lowest level in nearly three years, source: Binance Research Institute
This issue is supported by data. According to statistics from Binance Research Institute, the market capitalization (MC)/fully diluted valuation (FDV) ratio of the cryptocurrency market has continued to decline from 41.2% in 2022 to 12.3% in 2024. This indicates that the proportion of circulating tokens in trading is decreasing while the proportion of locked supply is increasing. Limited supply artificially inflates token prices, benefiting early investors such as venture capitalists. However, when a large amount of locked supply floods the market during the unlock period, oversupply often leads to price crashes, with retail investors bearing the brunt of the losses. Ultimately, the artificially inflated pricing at issuance often results in financial losses for retail investors.
In this context, retail investors are naturally attracted to fair launch platforms. These platforms eliminate the risks associated with token unlocks by distributing all tokens at the outset, 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 project participation.
3. Fair Launch Platforms: A True Fair Alternative or Another Form of Imbalance?
Fair launch platforms have opened up 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 issue of unequal 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 from automated tools such as token generation event (TGE) sniper bots and trend bots, which often seize trading opportunities and push retail investors to the back. Additionally, some projects disrupt fairness through mechanisms like whitelists, prioritizing specific groups or forming interest groups that provide favorable conditions for insiders. These issues undermine the original intention of fair launch platforms. The fact is that inequality has not been eliminated; it has merely taken on a new form, and retail investors still find it difficult to obtain fair participation opportunities. More worryingly, this model is now repeating at a faster pace. Since fair issuance platforms often skip the due diligence phase of traditional venture capital, they instead expose retail investors to greater risks, further exacerbating the inequality of investment opportunities.
4. Deep-rooted causes of unequal investment opportunities
The fair launch platform has not fundamentally solved the issue of unequal investment opportunities. To deeply understand this problem, we need to examine it from a more essential perspective. This inequality is not limited to the opportunity differences between retail investors and venture capitalists; it is not just about fairness in opportunities. More importantly, it threatens the long-term sustainable development of the entire ecosystem.
If a project merely seeks financing, then opening investment opportunities to everyone makes sense. However, a token-based ecosystem should not solely focus on raising funds; it needs to grow together with investors and ecosystem participants, continuously creating and developing value. This requires genuine participants who are not only concerned with 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 financial support but also brings a wide network of connections and human resources, verifying 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 unequal investment opportunities, merely achieving equal access is not enough. The long-term growth and sustainable development of the ecosystem require a structured solution that can identify and incentivize participants who can make substantial contributions. This is a fundamental challenge that the Web3 ecosystem urgently needs to address.
5. Seeking a New Balance: Value-Driven Ecosystem
The current cryptocurrency market is caught between two extremes: one side is the pursuit of absolute equality through fair launch models, while the other is the traditional model centered around a few seasoned investors. Neither of these models fully reflects the intrinsic value of the Web3 industry. Therefore, we need to shift towards a 'value-driven participant screening' strategy, which is to identify and attract participants who can make significant contributions to the ecosystem, focusing on their value creation capabilities rather than simply considering capital size or investor type. Two recent cases demonstrate the potential of this new approach.
5.1. Legion: Community Investment Round Platform
Legion, as a community-driven investment platform, is committed to screening investors who can create substantial value for the ecosystem. The platform's goal is not only to raise funds but also to focus on building sustainable collaborative relationships between project teams and investors.
The core Legion Score system comprehensively evaluates investors based on multi-dimensional data such as their on-chain activity, social influence, GitHub contributions, and recognition by project teams. The scoring system is based on the actual contribution ability of investors to the ecosystem, rather than merely considering their financial resources. Investors need to submit a cover letter and Legion score detailing their potential contributions and participation plans, which helps build trust with project teams. This approach not only enhances the fairness of investment opportunities but also promotes deep interactions between project teams and investors. Legion is pioneering a new investment model that enhances the credibility of the cryptocurrency market while building a community ecosystem focused on contributions.
5.2. AI-Pool: 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 attracted attention and spread within hours. Many investors injected funds into the project, raising over $5 million. Note: Skely's account was suspended due to a false account report. The specific reason is unclear as it was reported by a third party. Additionally, the platform is an early, untested experimental project that is not stable or reliable enough yet. However, users' ideas remain promising.
AI-Pool attempts to address the pain points of existing fair launch platforms through AI agents. Compared to the common issues of centralized operations and insider trading seen in traditional platforms, AI-Pool employs a Trusted Execution Environment (TEE) to achieve process transparency. TEE protects the private keys of AI wallets and ensures the autonomous operation of AI agents, effectively reducing the unfairness brought about by centralized control and insider trading.
Although AI-Pool still faces challenges such as bot interference and insufficient liquidity, it demonstrates unique advantages in ensuring the fairness of token issuance and initial distribution, providing new ideas for addressing the distribution injustices 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 cryptocurrency market is often simplified to the opposition between retail investors and venture capitalists, but this is merely a surface phenomenon. Whether it is the preferential treatment of specific groups in KOL rounds or the failure to fully achieve fairness in fair launch platforms, both indicate the deep-seated inequalities within the market. The innovative practices of Legion and AI-Pool offer new ideas for addressing these issues: Legion screens valuable participants through a comprehensive data evaluation system; AI-Pool enhances process transparency through AI agents. Both projects go beyond simple capital investment, showcasing new directions for enhancing ecosystem trust and sustainability.
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 teams. These efforts will lay the foundation for realizing a truly decentralized system.