Original title: (Fair Release: A New Tokenomic Paradigm of Demand-Driven Token Unlocks)
Original author: Dr. Daoist
Fair Release: A brand new token economic paradigm
As revealed in the article (Timely Unlocking Token Economics: The Elephant in the Room of the Crypto Industry), timely unlocking tokens is the fundamental cause of the 'low circulation high FDV' surface problem. The economically rational approach is to abandon time-based token unlocking and instead release driven by market demand.
Time-based unlocking not only violates basic economic principles but is also unfair. On the surface, it seems to prioritize the community in unlocking tokens (such as through airdrops), but in reality, it ensures that the project side and VCs can 'exit on time' during unlocking, regardless of the actual market demand for the tokens—inevitably leading to sell pressure. Worse still, under the guise of 'prioritizing community unlocking,' there are often hidden interests of the project side and VCs (such as through mixing in airdrops or unloading with treasury/ecosystem tokens), allowing them to exit cleverly and quietly at the timing of token issuance—far earlier than the first unlocking time. In this gameplay, the unlocking cycle has become a mere formality, and by the time the scheduled unlocking begins, the token price may have already plummeted.
This maneuver has become an open secret, and the community and retail investors have expressed their dissatisfaction through actual actions—whether from the poor performance of VC coins after listing on centralized exchanges (CEX), or from meme coins overwhelmingly becoming the current market mainstream, it is evident. Why do meme coins rise? Because they are fairly issued—at least at the moment of TGE, considered fairer than what the 'project side + VC + CEX alliance' has done. But we all know that fair issuance is impossible for VC coins, as VCs have already invested in projects at lower prices before TGE.
So, is there a solution to this problem?
The answer is 'Fair Release': a brand new token economic paradigm—new tokens are only released when demand increases, and are fairly distributed to all stakeholders at each release. Additionally, it has anti-inflation characteristics. Depending on whether the project generates positive externalities (such as revenue), there are three versions of fair release:
1. Ponzi Version (no revenue): Whenever circulating tokens are consumed and destroyed, an equal amount of new tokens is released (proportionally distributed to the team/VC/community/treasury, etc.), thereby maintaining a constant circulation;
2. HODL Version (with revenue): Similar to the Ponzi version, but new tokens are released in an inflationary manner, and the inflation portion is immediately repurchased and destroyed using revenue, thus maintaining a constant circulation;
3. Moonshot Version (with revenue): Similar to the HODL version, but the revenue is not all used to repurchase tokens released through inflation, but also used for price pumping, thus creating a potential 'only increase, no decrease' effect.
Here are the analyses of the three models.
Fair Release 1.0: Ponzi Version (suitable for projects with no revenue)
Even two years after the collapse of the 'X-to-Earn' narrative, the Web3 industry still faces a harsh reality: most projects still lack positive externalities—that is, these projects still do not generate revenue denominated in foreign currency. The token economics of these projects inevitably become 'Ponzi'—similar to how the Federal Reserve and the U.S. Treasury support the economy through money printing + 'left hand to right hand'—until the bubble bursts, token credit goes to zero, and the project no longer receives seigniorage.
Nevertheless, for these projects, the Ponzi version of fair release is still feasible—at least it can achieve relatively fair and anti-inflation purposes at the time of token unlocking. The key to this version is that there is no inflationary release, and it works as follows:
· At T₀: Assume the initial liquidity pool contains $TOKEN and $USDT, giving $TOKEN an initial price;
· T₀ to T₁: A certain amount of $TOKEN is consumed (e.g., through community interaction) and destroyed, reducing circulation and driving up prices;
· At T₂: An equal amount of $TOKEN is released to restore the destroyed supply, causing the $TOKEN price to fall back to the initial pricing level, while tokens are proportionally distributed to all parties.
The net effect is that the circulation and price of the token remain unchanged, while completing a round of fair token unlocking.
Fair Release 1.0: Ponzi Version (no revenue)
However, due to the nature of Ponzi economics, this is essentially a castrated version of fair release, as each round of release dilutes the community's share in circulating tokens. The consumption of tokens mainly comes from the community, but only a portion of the new unlocked tokens used to replenish these consumed tokens is allocated to the community. While it is mechanically more reasonable than time-based unlocking, this version still benefits the project side/VC at the expense of the community.
This is also why we need Fair Release 2.0.
Fair Release 2.0: HODL Version (suitable for projects with revenue)
A version that can achieve true fair release must unlock through 'inflationary release' and then offset that inflation through repurchase and destruction. This requires the project to generate revenue denominated in foreign currency.
I call this the 'HODL version' of fair release because the ability to generate revenue supports sustainable token prices. It works as follows:
· At T₀: Assume the initial liquidity pool contains $TOKEN and $USDT, giving $TOKEN an initial price (the same as the Ponzi version);
· T₀ to T₁: A certain amount of $TOKEN is consumed and destroyed, reducing circulation and driving up prices, while the project generates revenue in $USDT;
· At T₂: A certain amount of $TOKEN is released in an inflationary manner, exceeding the previously consumed and destroyed circulation—where the inflation portion is used to unlock and distribute to various parties—causing the $TOKEN price to drop below the initial pricing level;
· At T₃: All income is used to repurchase and destroy the inflationary portion of $TOKEN, restoring circulation and token price to initial levels.
In this version, the net effect on the token supply and price after each round of fair unlocking and distribution is zero.
Fair Release 2.0: HODL Version (with revenue)
Fair Release 2.0 addresses the issues in the Ponzi version, as token unlocking only occurs within the inflation portion of each release. The community can basically retain its circulation share during each token consumption-release process, thus continuously being incentivized and participating without worrying about dilution. This also maintains the stability of the proportion of all stakeholders throughout the lifecycle of the token.
But the story doesn't end here... If a project can generate revenue, why not use part of that revenue to repurchase released tokens while using another part to pump the price? This is entirely feasible—this is why we have Fair Release 3.0, a magical 'only increase, no decrease' model.
Fair Release 3.0: Moonshot Version (suitable for projects with revenue that pursue 'only increase, no decrease')
Although the HODL version has achieved our core goal—on-demand token unlocking and fair distribution—it still has a neutral impact on the token price. The advanced version of fair release introduces a positive feedback loop that drives continuous growth in token prices: during each round of fair release, part of the revenue is used to pump the token price, further incentivizing the community to hold and participate. I call this the 'Moonshot version' of fair release, because once the flywheel starts turning, it rolls bigger and bigger like a snowball!
The specific operation is as follows:
· At T₀: Assume the initial liquidity pool contains $TOKEN and $USDT, giving $TOKEN an initial price (the same as the Ponzi version and HODL version);
· T₀ to T₁: A certain amount of $TOKEN is consumed and destroyed, reducing circulation and driving up prices, while the project generates revenue in $USDT (the same as the HODL version);
· At T₂: A certain amount of $TOKEN is released in an inflationary manner, exceeding the previously consumed and destroyed circulation—the inflation portion is used to unlock and distribute to various parties—causing the $TOKEN price to drop below the initial pricing level (the same as the HODL version);
· At T₃: Use part of the revenue to repurchase and destroy the inflationary portion of $TOKEN, restoring circulation and token price to initial levels, while using the remaining revenue to pump the price of $TOKEN.
Through this model, each round of fair release will have a net positive impact on the token price. The more unlocked, the higher the token price—doesn't that sound like magic?
Fair Release 3.0: Moonshot Version (with revenue)
Compared to the HODL version, the Moonshot version requires only more precise mathematical calculations: setting the optimal inflation release rate and determining the ideal distribution ratio of revenue—ensuring part of the revenue covers inflation buybacks while the other part effectively pumps the price. Beyond that, the rest relies on execution.
Final thoughts
Many attribute the poor performance of the crypto market to lack of liquidity, stagnation of innovation, or narrative fatigue, but few realize that the real problem lies in unfair wealth redistribution—it exacerbates the divide between grassroots (community/retail) and institutions (project side/VC).
The ideology of decentralization lies in achieving a fairer distribution of power and wealth. If we cannot break through the centralized shackles of traditional finance in production relations, Web3 cannot truly prosper, even with ample liquidity, technological breakthroughs, or narrative hype.
The simplest step towards a fairer redistribution of wealth is to correct the token economic model.
Fair release is the simplest solution to the prevalent issue of timely unlocking. It follows basic economic principles and addresses the root cause of the 'low circulation high FDV' problem. This is not a profound science, but a fully practical solution. By using liquidity pools as leverage, it can also create a flywheel effect for projects with positive externalities.
It may be the fairest and most sustainable token economic model for VC coins. Join this paradigm shift and be part of the revolution!
Gabby World's Fair Release 3.0 Practice
I have already implemented Fair Release 3.0 (Moonshot Version) during the TGE of my project Gabby World on decentralized exchanges (DEX).
Stay tuned and witness its performance together!
' Original source'
