Introduction: Why TGEs Need Rethinking

TGE is often a defining point in a project’s lifecycle. It is when a project makes its most pronounced shift from the private to the public sphere. Different stakeholders bring different expectations around TGE and balancing them can be a difficult task that requires careful coordination.

Over the last 18 months, we’ve seen two dominant approaches to TGEs emerge—Low Float/High FDV launches and Fair Launches. Sitting at opposite ends of the spectrum, they both have had their clear strengths and weaknesses. When it comes to delivering long term sustainable outcomes however, both approaches have largely fallen short. As crypto continues to evolve as a space, we believe that now is the time to take a step back, learn from history, and decide whether it is time for a change.

This article proposes a middle-ground TGE model that harnesses on-chain liquidity, fosters authentic public price discovery, and ensures insiders—both team and investors—are incentive-aligned around long term success. Before we delve into the mechanics, let’s see how two prominent approaches to TGEs crumbled under their own flaws, what the market’s reaction taught us, and why an on-chain-centric approach is the logical next step for projects pursuing enduring success.

The Pitfalls of Recent TGE Models

1.Low Float / High FDV: Quick Profits, Quick Disillusion

The Low Float/High FDV format typically involves multiple pre-TGE funding rounds at escalating valuations, followed by a minimal circulating supply on day one. Initially, it can create the illusion of scarcity and fuel a dramatic price spike. However, over time we see several issues arise:

• Private Pre-TGE Price Discovery: Teams raise multiple funding rounds at successively higher valuations and negotiate for guaranteed major CEX listings on day one. By the time TGE happens, a large share of price appreciation has already taken place leaving few marginal buyers in the public market.
• Costly Tier-1 Exchange Listings: For many projects, a day-one listing on a major exchange demands as much as 10% or more of the token supply as a listing fee. This is highly dilutive and oftentimes undermines the project’s long-term prospects.
• Over-Reliance on Market Maker (MM) Deals: To ensure initial liquidity, projects grant sizable token allocations to third-party market makers on generous terms. These deals often lack transparency, frequently misalign incentives, and can burden projects with perpetual overhead.
• Investors Hedging Locked Positions: As tokens remain locked over long periods of time, sophisticated investors/funds short the asset on external markets, effectively neutralizing their exposure and setting the stage for more sell pressure at unlock.
• Discounted OTC Selling: Investors and teams oftentimes sell tokens OTC to buyers seeking cut-rate deals—buyers then hedge their newly acquired discounted position and close the hedged position as unlocks begin.
• Kickbacks to Liquid Funds: Teams may offer strategic “sweeteners” or private deals to liquid funds to entice early buying post-TGE, and artificially pump the price. This type of activity, which is arguably illegal, gives teams just enough time for insiders to exit portions of their position OTC at artificially inflated valuations.
• Investor Unlocks Drive Insurmountable Sell Pressure: Once large swaths of tokens unlock, retail must consider whether the pent-up supply will flood the market. If demand for the product (or token) is underwhelming, an unlock can stagnate or collapse token prices under the weight of new sellers.

In essence, the Low Float/High FDV approach fosters an environment where insiders can capitalize quickly. This often leaves retail participants or late-stage buyers at a disadvantage. Projects often struggle beyond the first year because many insiders who profited early have little reason to remain engaged.

2.The Fair Launch Shift—and Its Own Shortcomings

Frustrated by the failures of the Low Float/High FDV model, the market responded by shifting its support towards Fair Launches. Aiming to create open, egalitarian TGE structures, Fair Launches put tokens into the hands of the public from the outset, minimizing insider advantage and large private allocations. While the premise was well-intentioned, over time this launch strategy has revealed its own set of shortcomings:

• Limited Funding: Fair launch teams typically TGE with limited or no capital raised. Since the team’s ownership of token supply is often minimal, it is very difficult to raise money post-TGE. As a result, the project’s long-term viability becomes compromised, especially as the token price proceeds to decline.
• Thin Liquidity & Poor Execution: In the absence of market makers and without an ability to seed liquidity, fair launched tokens often have thin liquidity through launch and maturation leading to heightened volatility and high slippage.
• CEX Perps Amplify Downward Pressure: Many fair-launched tokens—especially in the AI space—have had perpetual futures markets listed on CEXs before spot markets, enabling leveraged short sellers to bludgeon tokens with shallow on-chain liquidity and thus, drive down prices.
• Long-Term Price Ceilings: The combination of limited on-chain liquidity and leveraged short selling eventually creates an environment where demand struggles to outpace the suppressive sell pressure.

Fair Launches initially felt like a breath of fresh air as they encouraged more “open” participation. However, they ultimately have also failed in creating a long term viable market structure. Seeing this, the market was once again left looking for alternatives.

Lessons from the Market’s Response

Both the Low Float/High FDV and Fair Launch approaches failed in their own ways. Having observed the market’s response to both, we have learned the following lessons:

1. Public price discovery is paramount: If public buyers cannot meaningfully participate in price discovery, they lose interest, especially once it is clear insiders took profits off the table early.
2. Depth & liquidity trump any temporary hype: Neither quick speculation nor artificial pumps fix a fundamentally shallow market. Sustained liquidity depth, especially on-chain, is crucial.
3. Teams need runway, liquid buyers need upside: Teams must raise enough capital for the project’s long-term viability while leaving meaningful upside for new entrants in the public market.
4. Market demands drive structural changes: The evolution from Low Float/High FDV toward Fair Launches demonstrated that if the market refuses to support questionable launches, teams will adapt. However, fair launches alone do not guarantee success when no strategy exists for building liquidity and a long term sustainable market structure.
5. Transparency must be non-negotiable: When insiders abuse an opaque market structure to exit swiftly, trust erodes. Fair launches represented a push for more on-chain openness, however, genuine accountability and clarity remain incomplete.

Why On-Chain Liquidity is the Logical Next Step

Reviewing these failures and the market’s pushback underscores a central principle: long-term sustainable markets thrive when price discovery is done publicly, on-chain, and when insiders cannot easily offload tokens behind closed doors. On-chain trading fosters real-time accountability regarding who holds what and at what price they’re selling.

Ensuring enough liquidity at every stage of a token’s lifecycle demands a structure that integrates:

• Transparent, on-chain market depth
• Robust mechanisms to rein in sudden sell pressure
• Incentives for teams and investors to remain engaged long after TGE

This leads directly to the concept of a DeFi-native TGE—an approach that melds capital raising and public liquidity formation, aligning insiders with the project’s long term fate.

Our Proposed DeFi-Native TGE

At its core, our proposal seeks to:

1. Convert would-be sell pressure into structured on-chain liquidity
2. Impose price/time-based unlocks instead of big cliffs
3. Propose a transparent and sustainable path to major CEX listings
4. Enable or even require insiders—investors and teams—to use on-chain mechanisms

Here’s how:

1.Phased Liquidity Provision (Single-Sided & Dual-Sided)

• Single-Sided LP: Investors can deposit only the native token into concentrated liquidity pools (e.g., Uniswap V3). By selecting specific ranges, they effectively set conditional sell orders—tokens only sell when the market reaches those brackets.
• Dual-Sided LP: For deeper liquidity and reduced slippage, participants (including the team) can pair tokens with stablecoins or other assets like ETH. This fosters immediate market depth.

2.Price-Based Unlocks & Locking LP Positions

• Incremental unlocks: Projects limit how much of each investor’s stake can be LP’ed at TGE. Over time or at certain price thresholds, more becomes eligible, preventing a sudden supply shock.
• Locking LPs: To mitigate exploitative behavior (like pumping price to hit an LP range), liquidity providers remain locked for a set duration even after their tokens convert. They cannot instantly withdraw and re-enter in stealth, maintaining consistent liquidity.

3.Encouraging Early Investors to Exit Pre-TGE

• Lower price targets vs. new investors: Teams can encourage early investors with very low cost bases to partially exit to new, higher-priced, oversubscribed rounds before TGE. This can be done via a transfer from an existing investor to a new investor that is ultimately approved by the team. In this scenario, early investors realize profits without selling into the public markets, and the new backers—who have higher entry points—are less inclined to offload early post-launch. It is important to note that these transfers have often been refused by teams historically.
• Healthier post-TGE structure: As a result, the investor base at TGE is more likely to hold tokens for higher multiples, reducing immediate sell pressure and distributing liquidity more evenly across price ranges.

4.Smart Contract Controls & Compliance

• Compliant pools & structured withdrawals: Using policy-enforced constraints (e.g. AML flow of funds checks), locked tokens can only flow into approved on-chain markets in a publicly visible, rule-based manner.
• Gradual access: Smart contracts govern how and when LPs adjust price ranges, claim fees, or withdraw, ensuring no wave of insider selling ravages the market.

5.TGE Pricing & Team Inclusion

• Attractive yet sustainable valuation: Projects might TGE at a lower valuation relative to the typical Low Float/High FDV—inviting real buyer interest. Over time, on-chain prices and volumes can organically rise, eventually drawing major listings.
• Including team allocations: Teams can apply the same LP constraints to their holdings, signifying genuine alignment. In an environment where the market demands transparency, the team’s positions may also be monitored publicly, discouraging silent OTC sales or abrupt insider exits.

6.Gradually Graduating into CEX Listings

• Delayed early listings: Minimizing large exchange presence initially helps the market discover price on-chain without an immediate off-ramp for insiders.
• Earned catalysts: As usage, trading volume, and community traction grow, listing on major CEXs becomes a true demand driver rather than a quick-flip scenario.

Perceived Benefits: Aligning Stakeholders for Enduring Value

This DeFi-native TGE format addresses many issues while supporting deeper public price discovery:

1. Authentic on-chain discovery: Launching at a fair price and requiring insiders to provide liquidity fosters real-time, transparent price formation.
2. Healthier unlock patterns: Price-based token unlocks reduce the fear of large cliff sell-offs. If buyers don’t push the price into certain ranges, insiders stay locked.
3. Stronger liquidity with reduced MM dependence: Key stakeholders become initial liquidity providers, lessening reliance on MMs who may have conflicting motives.
4. Team & investor unity: If core contributors also face liquidity constraints, they can’t stealthily abandon the project; success is mutual.
5. Robust market support: Combined with incremental CEX listings, projects experience incremental catalysts as they build a stronger on-chain reputation.
6. Room for experimentation: Because this approach is programmable, teams can adjust lockup times, price thresholds, or whitelisted pools in pursuit of the best results.

Most importantly, it orients everyone—founders, early investors, and new participants—toward sustainable long-term growth rather than quick, opportunistic exits.

Open Questions & Considerations

Even as this model addresses common TGE failures, it invites further exploration:

• Liquidity Concentration: Could many large holders cluster around a similar range, creating a price “wall”? If so, how can this be prevented?
• Orderbooks vs. AMMs: Is a concentrated liquidity AMM always superior, or might a hybrid approach better fit some tokens?
• Enforcement & Regulations: Are there any compliance requirements (e.g., KYC/AML) that must be met in order for investors to participate?
• Investor Education & Tools: Might specialized dashboards or third party managers become necessary to help less experienced or less resourced insiders handle advanced LP strategies?
• Team Transparency: While forward contracts or side deals may continue to their prevalence, demanding full or near-full disclosure from insiders pushes the needle in favor of honesty.

Conclusion: Toward a More Long Term Sustainable Future

From Low Float/High FDV to Fair Launch, crypto has swung between extremes—one yielding short-term profits for insiders, the other lacking sufficient funding or sustainable liquidity to succeed. Both options leave participants optimizing for extremely short-term outcomes, disillusioned with fleeting hype and manipulative practices.

By introducing a DeFi-native TGE—rooted in phased on-chain liquidity, incremental unlocks based on metrics, and enforced transparency—we chart a middle ground:

• Projects raise sufficient capital without leaning into exploitative deals.
• Genuine price discovery and liquidity develop on-chain, building trust with retail and institutional investors alike.
• Early investors with lower price targets can safely exit pre-TGE to newcomers with higher cost bases and valuation targets, optimizing for healthier secondary markets.
• Major CEX listings emerge as true catalysts rather than instant off-ramps.
• The market, as ultimate arbiter, can reward or reject offerings based on their alignment with these principles.

While no single TGE model will fit every project, it is evident that we need a blueprint that fosters genuine on-chain price discovery, robust market liquidity, and deep alignment amongst stakeholders. The DeFi-native TGE format aims to take a meaningful step toward these goals.

We invite readers to scrutinize these ideas, to propose refinements, and to experiment with real-world deployments. Crypto thrives on innovation and iteration. By challenging the norms of Low Float/High FDV and Fair Launch formats, we can pave the way for healthier incentive structures—ensuring that long-term value creation triumphs over short-lived hype.

Ultimately, if this article sparks discourse about bridging the best aspects of each TGE model, encouraging new solutions that reward genuine growth rather than quick exits, we’ve done our job. Let’s work together to craft a token launch environment where everyone stands to gain from sustained success, and the market can rightfully reward the builders, investors, and community members who champion crypto’s bright future.

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