Lightspeed Newsletter: Anatomy of a token launch

Maybe there’s no silver bullet to avoiding most tokens dumping after launch…

article-image

Dennis G Zill/Shutterstock and Adobe modified by Blockworks

share

Howdy!

Today’s Lightspeed is a bit shorter, on account of the US office being closed for Memorial Day. 

Hopefully you’re soaking in a bit of sun today. And if any current or former members of the military happen to be reading this, thank you for your service! 


High FDV, low float, no dice

If you want to kick a crypto founder or VC into fight or flight mode, ask him about his low float, high fully diluted valuation (FDV) token launch. 

The online part of the crypto world has been blaming these sorts of token launches — where the amount of initially available tokens is small, and the total supply is large — on lackluster returns that purportedly benefit insiders for some newly-circulating coins. Boiled down, some allege that inflated FDVs are making it difficult for retail investors to capture any upside. 

One chart has been making the rounds showing a large majority of new Binance listings seeing price declines in recent months.

The prodigious crypto poster cobie opined on the subject at length, concluding that new token launches are “uninvestable” because of “the privatization of price discovery and unhealthy inflated valuations from VC markets that ignore supply and demand.”

In the VC corner, Dragonfly managing partner Haseeb Qureshi argued that new token prices are actually down because risky assets became generally less attractive when instability flared up in the Middle East.

In Solana land, where token launches have been a big driver of DeFi activity in recent months, it’s unclear how much of a problem this all is. Jito and Jupiter’s tokens were among the rare few to appreciate in price following their Binance listing despite having FDVs in the billions, per CoinGecko. Still, the Solana ecosystem token PYTH declined post its early February listing, per the aforementioned chart.

I spoke with David Lu, core contributor at Drift Labs, about the perpetuals DEX’s airdrop from last week. DRIFT launched with 17% of its total supply circulating, Lu said, adding that many tokens launch with closer to 10% in circulation. 

Lu said this put Drift’s community on a more level playing field with insiders. 

“The high FDV just benefits VCs and insiders and really hurts people because your real users cannot participate. And I think at some point the music stops, and once your community leaves, that’s it for your project,” Lu said. 

DRIFT’s price has climbed over the past week, though its exchange listings were somewhat staggered, and I won’t claim to know causally why the price is up. 

But maybe there’s no silver bullet to avoiding most tokens dumping after launch. If making the token price go up was as simple as punching numbers in differently, wouldn’t everyone be doing it?

— Jack Kubinec

One good DM

A message from David Lu, core contributor at Drift Labs:


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked Advisory.jpg

Research

ACP-125 represents a strategic opportunity to enhance Avalanche's competitive position in the Layer-1 blockchain ecosystem. Based on our previous ACP-77 analysis paired with an analysis of ACP-125, Avalanche is prioritizing kick-starting growth and network effects in its ecosystem while trading off short-term value accrual.

article-image

There are a few possible outcomes now that Trump will be moving back to Washington in January

article-image

Daily validator revenue has been in excess of $30 million every day since mid-October

article-image

As part of SIP-411, KWENTA tokens will be redeemable for SNX and subsequently deprecated

article-image

Ethereum’s 200th ACD call brought updates on the Pectra upgrade and the new Mekong testnet — just in time for Devcon in Thailand

article-image

Vance Spencer says Framework won’t be going anywhere

article-image

Mike Novogratz shared some remarks on Trump securing the presidency