A Fair Launch allows small retail investors to participate in buying tokens fairly. Learn more about this token sale model in the following article.
What is a Fair Launch?
A fair launch is a method of distributing tokens or launching a project in the cryptocurrency market where all participants have an equal opportunity to acquire tokens or participate in the project.
Unlike methods such as private sales or ICOs, a fair launch does not reserve any tokens for large investors, the development team, or investment institutions beforehand.
Key characteristics of a fair launch:
- No preferential treatment: Everyone has the same opportunity to participate.
- Transparent distribution: Information about the token supply and distribution method is publicly and transparently disclosed.
- No pre-sale: There are no private sales or pre-mining, ensuring fairness for all investors.
One notable project launched through a fair launch is Bitcoin. Bitcoin had no initial investors, no private funding rounds, and anyone could participate in mining from the very beginning. This transparency and fairness helped Bitcoin become a symbol of decentralization and financial freedom.
YFI (Yearn Finance) is another prime example. The YFI token was launched without any rewards reserved for the development team. All YFI tokens were mined by the community, building significant trust in the project.
Should Newcomers Participate in Fair Launches?
This question depends on several factors, such as the level of understanding about the project, risk management capabilities, and preparation before participating. Fair launches offer equal opportunities, with no preferential treatment for large investors or the development team, but they also come with certain risks.
Successful participation often occurs when individuals choose reputable and transparent projects, like Yearn Finance (YFI). All 30,000 YFI tokens were distributed through a liquidity mining mechanism, with no portion reserved for the development team or large investors.
The YFI token price surged after its fair launch, from around $30 to over $40,000 within a few months, demonstrating the success of the fair launch model in attracting the community and building trust.
However, losses can occur when participants don’t thoroughly research the project or encounter significant price volatility, as exemplified by the SUSHI token of SushiSwap. SUSHI was distributed through a liquidity mining mechanism, with 10% of the total supply allocated to the development team.
Despite initially attracting significant interest, the project faced controversy when the founder sold a large amount of tokens, leading to a sharp decline in the price of SUSHI. This raised questions about the “fairness” of the token distribution.
Newcomers should participate in fair launches only if the project has undergone a smart contract audit, has an active community, and provides transparent information. Conversely, without sufficient knowledge or a high risk tolerance, newcomers are susceptible to losses due to sharp price fluctuations or even scams. Invest cautiously and only use funds you can afford to lose to minimize risks.
Where and How to Participate in Fair Launches in Crypto
Finding fair launch opportunities requires exploring platforms and communities that support transparent and equitable token distribution. There are many platforms where projects can conduct a fair launch token distribution, or projects can also conduct fair launches on their own websites.
Decentralized exchanges are the most common venues for fair launch projects:
- Uniswap (Ethereum)
- PancakeSwap (Binance Smart Chain)
- SushiSwap
Tip: Monitor new liquidity pools or upcoming tokens on these platforms to avoid missing out on opportunities.
To participate in a fair launch, you need a cryptocurrency wallet that supports the project’s blockchain, for example:
- Ethereum: Use MetaMask or Trust Wallet to participate in projects on Ethereum.
- Binance Chain: Use a BSC-compatible wallet like Binance Wallet or MetaMask.
- Solana: Use Phantom Wallet or Sollet Wallet for projects on Solana.
Alternatively, you can use a multichain wallet like Coin98 Super Wallet for easier participation in fair launches.
You need to prepare:
- Tokens for purchase: The native currency of the project’s blockchain (ETH, BNB, SOL, etc.) to buy or mint tokens, or USDT, USDC, etc., depending on the project’s requirements.
- Gas fees: Set aside a sufficient amount of cryptocurrency to pay for transaction fees. For example:
- On Ethereum: Gas fees can range from a few USD to tens of USD.
- On Binance Chain: Gas fees are usually lower, around $0.1 – $1.
Each fair launch project may have different requirements:
- Token holding requirements: Some projects require you to hold a certain token to participate (e.g., SUSHI to participate in a project on SushiSwap).
- Participation timeframe: Fair launches often have limited timeframes, so stay updated to avoid missing out on opportunities.
Depending on the project’s mechanism, you can participate by:
- Minting tokens: Execute a transaction directly on the smart contract to mint new tokens.
- Staking or providing liquidity: Some projects require you to stake assets or provide liquidity to receive tokens.
Example: SushiSwap distributed SUSHI tokens through a liquidity mining mechanism.
Some tips when participating in fair launches:
- Do your own research (DYOR): Carefully read the whitepaper, check the development team, and assess the project community.
- Avoid FOMO: Don’t participate in a project just because you’re afraid of missing out.
- Choose reputable projects: Participate in projects that have been audited and have strong communities.
- Manage your capital: Only invest what you can afford to lose.
Advantages and Disadvantages of Fair Launches in Crypto
Fair launches promote fairness and decentralization, which are core principles of blockchain. The absence of preferential treatment for any group helps reduce the risk of power concentration and prevents large investors from manipulating prices or withdrawing capital after the token price increases.
Fair launches also help build strong communities. When all participants have equal opportunities, the community will feel more connected to the project, supporting its long-term development. Additionally, the transparency of fair launches helps projects avoid criticism about unfairness or fraud.
However, fair launches are not without their challenges. One issue is the high level of competition. When tokens are released publicly, participants must act quickly to execute transactions, which can give an advantage to those with better tools and technical expertise. This can sometimes create difficulties for ordinary users.
Furthermore, the lack of pre-allocation can make it challenging for project development teams to raise initial capital. They have to rely on other sources such as transaction fees or future token value appreciation. This can slow down the project’s development progress.
Fair Launches and the Future of the Crypto Market
Fair launches embody the core spirit of blockchain: fairness, decentralization, and transparency. In a context where more and more projects are criticized for concentrating power or lacking transparency, fair launches are an ideal model for building community trust.
However, not all projects are suitable for this model. Fair launches require a balance between transparency and fundraising capabilities. To be successfully implemented, projects need a clear strategy to secure long-term development resources without compromising the spirit of fairness.
Fair launches are not just a method of token distribution but also a way to promote community participation, build trust, and create momentum for sustainable development in the crypto market. They not only encourage widespread participation but also lay the foundation for a more decentralized and transparent ecosystem.
Read more: It’s Time We Need a More Effective Token Sale Model.
