Wiretap Wednesday: The Genesis of Fair Launches With $YFI

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Fair launches are so much better than the ICO garbage we dealt with in 2017. You mine as well sign up to get dumped on if you’re participating in tokens with presales.

You know it.

From the bottom of your heart.

The VC style dumpage on noobs is not morally right, but that is the tale of the markets: Zero sum, information asymmetrical results.

Now that were a few months into the fair launch movement, we took a step back to analyze what made Yearn so successful, so fast & how other protocols have failed to mimic their success.

Lets go lets go lets go!

- Andy


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Wiretap Wednesday: The Genesis of Fair Launches With $YFI

Who needs VCs anymore?

A lot of companies and projects thats for sure, but not the ones that want to be adopted by crypto degens and praised by the whales.

See, here’s the problem with VCs:

They get in before everyone else because of their fancy ties and executive stature (as well as years of hard work, persistence, networking and everything else that goes into being a successful business owner).

9 Television Characters Destined to be VCs | by Zack Miller | Unicorn Jerky  | Medium

And then once their in, and all their whale buddies get into a presale of a token, they do the infamous:

Dump it on everyone who buys it on the open market. Getting richer. Then, just repeating the process with different protocols. Not sure about you, but I’m pretty tired of that concept reoccurring for every token launch.

That was so 2017, bro (In fact, this article from 2011 sums up the typical VC vibe pretty well).

So…if we can’t do presales and ICOs anymore…how do we distribute tokens?

Well, Yearn Finance introduced a legendary concept with the $YFI token that has now sparked a plethora of “fair launches” with some being more fair than others.

Yearn Finance allowed people to provide DAI into a liquidity pool to ‘farm’ the $YFI token at the genesis block ~ 2 months ago. The amount of $YFI you earned was dependent on the amount of funds you deposited into the pool. The more funds, the higher % of the pool you owned, the more funds you get. While this was definitely still in favor of the whales, the launch skipped the VC/outside funding step which was huge for the markets and has since been reflected in $YFI’s valuation.

At this point, I think its fair to say any sort of ICO or presale is pretty much dead. The recent farming craze has led to a new era of token launches via liquidity pool token distributions. The concept of giving the power back to the people has certainly resurfaced in this new realm of DeFi, but that doesn’t exclude us from the malicious actors.

Conceptually, fair launches sound a bit better on paper than they really are. Here’s why:

Unknowing traders see a token like $SASHIMI pumping from $1 to $2, to $3, $5 all in one day thinking they are going to get rich, so they jump in at $5.50. Price keeps going up to a little above $6 and all the farmers unload their stacks. Remember the farmers got their SASHIMI at a $0 cost basis since all they had to do was provide liquidity to Uniswap, then deposit their UNI-V2 tokens to the pools to earn $SASHIMI.

They didn’t actually buy any.

But other, unknowing people, did. And now the farmers get amazing ‘free money’ at the expense of the buyers hoping to catch a ride on a new token.

Then, this happens:

Farmers continue to dump the token as they get it for free and there’s very little chance the buyers will ever recoup their losses. Not to mention, steep 90%+ losses due to the constant sell pressure. In this case the Sashimi rewards were 10x’d for the first two weeks, so they sell pressure would slow after those first two-three weeks, but who knows if it will ever recover price-wise.

And honestly, I blame the aelf team for creating Sashimi. They probably just wanted to exit their dead positions in their token down 96% from ATH over the last 2 years.

This is a downfall to fair launches.

Yet, YFI seemed to survive this scheme and evolve to new heights…But, why?

Well a combination of a few amazing things - first the total supply cap at 30,000 tokens and a wildly important denial of a proposal in the beginning, which aimed to increase token supply (this was huge for the HODLers who didn’t want to see their token decrease in value because of more supply).

Next, the governance.

The Yearn Finance community immediately stepped in and created a governance mechanism with rewards for participants. This helped grow a massive community and push the protocol forward at a rapid pace.

Then some Blue Kirby started to appear on Twitter and aggressively grew the hell out of the Yearn community with memes, a very well done tutorial blog & more. Wen Tokyo sir? This rallied and united a community with the 'F!#& VCs’ mentality & that really hit home for crypto degens.

It didn’t stop here.

The Yearn team continued to grow at a rapid pace and develop so many protocol upgrades with Andre Cronje, the DeFi God, pushing out insane products and valuable features for DeFi users.

And thats really just the start.

So, what can we take away from Yearn’s fair launch & success?

  1. Fair launches can be quiet, lowkey & still be a success

  2. Deflationary tokens >>> rapid inflation at the beginning

  3. Implement governance ASAP with real incentives & improvement proposals around tokenomics & value accrual for native token

  4. Create a community mascot that is likable & put them to work 24/7

  5. Have a non-anon founder who can be in the spotlight & isn’t scared to do so

  6. Before launching have a valuable product ready to go that will be implemented quickly to absorb as much TVL as possible

  7. Team up with other protocols and members of the industry

  8. Be Andre Cronje

  9. Incentivize community driven tutorials, blogs, resources, stats, platforms as quickly as possible

  10. Do the right thing. Be moral. Be proper. Do a real fair launch. Build a team. Think long term. Build a product people want to use.

Its real easy for me to put 10 steps in there like its some kind of easy task, but frankly its not at all.

The fair launch movement is just getting started. Its definitely a step in the right direction.

Let’s see how this goes.

P.S. To those reading who are looking to invest into the newest food protocol or want to build something in DeFi, maybe revisit those 10 points before moving forward ;)


⚠️DISCLAIMER: Investing into cryptocurrency and DeFi platforms comes with inherent risk including technical risk, human error, platform failure and more. We are strictly an educational content platform, nothing we offer is financial advice. Please refer to our blog for more on mitigating your downside when using these protocols!


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