The standard playbook creates two classes of participants. Those who get discounted prices and favorable lockups, and those who provide exit liquidity. The terms determine who wins before the first trade. Fair launches eliminate this asymmetry by giving everyone the same terms from day one.
Projects have raised eight figures in a single afternoon using these mechanics, distributed across thousands of wallets. But the same tools that enable legitimate distribution also enable scams when misused. The following handbook is intended as a guide for both sides of the trade.
Most projects don't need a token. Tokens add legal complexity, community expectations, and operational overhead. They don't fix broken products or business models. Most tokens go to zero. The distribution method doesn't change this. Everything in this handbook assumes you've already determined a token is necessary.
I. Core Principles
What makes a launch fair. Equal access, transparent terms, no insider advantages.
A fair launch distributes tokens without structural advantages for insiders.
No preferential pricing. Everyone pays the same price or participates in the same price discovery mechanism. No presale discounts for VCs or early investors.
No allocation asymmetry. Public participants have access to the same percentage of supply as institutional buyers. Team and treasury allocations are transparent and capped.
Transparent mechanics. The distribution mechanism is documented, auditable, and verifiable onchain. No hidden terms or side agreements.
Sybil resistance without exclusion. Measures to prevent whale domination do not exclude legitimate small participants. Caps and attestations are proportional.
Time over capital. When tradeoffs exist, mechanisms favor time-based participation (longer windows, streaming) over capital-based advantages (first-come-first-serve, gas wars).
II. The Problem
Why traditional token launches fail retail participants.
Traditional token launches create extractive dynamics that benefit insiders at the expense of public participants.
VC dumping. Venture investors receive tokens at 50-90% discounts with short lockups. They exit on retail at multiples, often within days of public listing.
Presale bag creation. Multi-round private sales create cohorts of holders with different cost bases. Late participants become exit liquidity for early ones.
Whale domination. Public sales without caps allow large wallets to capture disproportionate allocation. Gas priority auctions favor wealthy participants.
Information asymmetry. Insiders know launch timing, tokenomics, and unlock schedules before public participants. This advantage compounds pricing inefficiencies.
Fair launch mechanisms exist to eliminate these dynamics. Done correctly, they are the most egalitarian and capital efficient mechanics in the history of economics. Done incorrectly, they become vehicles for scams.
This handbook exists to guide the decision-making process and establish a rubric for distinguishing legitimate fair launches from predatory schemes.
What the Data Shows
Analysis of 16,000+ token unlock events shows 90% are followed by price declines, often beginning 30 days before the scheduled date as markets front-run the supply increase. Team unlocks cause an average 25% price decline. Larger unlocks (over 5% of circulating supply) cause price drops approximately 2.4 times steeper than smaller ones. The data confirms that insider-heavy allocations with short vesting create predictable extraction patterns.
Why This Beats TradFi
Traditional capital formation is slow, exclusive, and extractive.
IPO / SPAC
VC Round
Fair Launch
Time to close
6-18 months
2-6 months
Hours to days
Public access
After insiders exit
None
Day one
Price fairness
Bankers set price
VCs negotiate
Market determines
Minimum investment
$10K+ (often $100K+)
$25K-$1M
No minimum
Geographic access
Accredited investors
Warm intros only
Global, permissionless
Transparency
Prospectus (delayed)
None
Onchain, real-time
Fair launches compress months into hours, remove gatekeepers, and let price discovery happen in public. A structural shift in how capital formation works.
The Bear Case
Critics argue fair launches just distribute tokens to retail who dump immediately.
VCs dump too. The alternative is not "no dumping." VC-backed launches see coordinated selling at unlocks, often with better information and larger positions. Retail selling is distributed and gradual by comparison.
Cost basis matters. When retail dumps a fair launch, they exit at market price. When retail dumps a VC-backed token, they exit below their entry because insiders already sold the top. Fair launches let retail be the first sellers, not the last buyers.
Price is not the only metric. Fair launches optimize for decentralization, community ownership, and legitimacy. Projects that need these properties accept short-term price volatility as a tradeoff.
Fundamentals still matter. Weak projects fail regardless of distribution method. Strong projects survive retail churn and emerge with genuine community ownership. The mechanism filters for long-term believers.
Skin in the game. Retail participants who buy at fair market price are more likely to be genuine users than airdrop farmers or allocation managers. Usage follows ownership.
Institutions are not the enemy. The problem is concentrated control and structural advantages, not institutional participation. Fair launches should eliminate preferential treatment, not exclude capital.
The bear case assumes price performance is the goal. For projects optimizing for decentralization and community, fair launches remain the most effective mechanism despite short-term volatility.
III. The Price Discovery Problem
Token pricing is broken. Auctions can fix it.
Price discovery in crypto is incomplete. Most tokens launch with prices set by market makers and centralized exchanges rather than through genuine supply and demand dynamics. This creates structural problems that fair launches alone cannot solve.
The Current State
Token prices at launch are typically negotiated between projects, market makers, and exchange listing teams. The process resembles backroom dealing more than market discovery. Retail participants see the price only after insiders have agreed on terms favorable to themselves.
This matters because the price at TGE determines who profits and who holds bags. When market makers set an artificially high opening price, retail becomes exit liquidity. When they set it too low, insiders capture the arbitrage. Neither outcome reflects the token's actual market value.
Comparison to IPOs
Traditional equity markets have problems, but they also have deeper liquidity infrastructure. IPOs involve a larger set of liquid funds capable of absorbing float. Institutional investors with multi-year horizons participate alongside retail. Price discovery happens through book building with sophisticated players who have experience valuing assets.
Crypto lacks this infrastructure. The pool of liquid crypto funds is small relative to the number of token launches. In late-stage markets, even fewer sophisticated players are actively participating. The marketplace is often determined by retail sentiment rather than fundamental analysis. This creates volatility and mispricing that hurts everyone except insiders who can time their exits.
The Low Float Problem
Low float, high FDV launches are now memetically recognized as predatory. The structure asks less capitalized market participants to absorb float at inflated valuations. When 5% of supply trades at a $1B FDV, the market is pricing the remaining 95% as if it will never sell. It will.
This dynamic transfers wealth from retail to insiders. Early investors and team members hold tokens at cost bases orders of magnitude lower than the trading price. As unlocks occur, they sell into a market that cannot absorb the supply at current prices. Sustained downward pressure continues until price reflects actual demand for the full supply.
Price discovery is not complete until a significant amount of supply has changed hands and the majority of supply is unlocked. Until then, the market price is a fiction that benefits only those with locked tokens.
The data supports this. Of 28 token launches at $1 billion or higher FDV in recent years, none traded above their listing price. Median drawdown was approximately 81%. Over 80% of tokens newly listed on major exchanges declined post-launch. Low float structures do not just create theoretical risk. They reliably destroy value for public participants.
The Vesting Problem
The standard 1-year cliff plus 4-year vesting schedule was designed as a regulatory solution, not a market optimization. It signals long-term commitment to regulators and investors. It does not optimize for healthy price discovery or fair markets.
This vesting structure creates a 4-year overhang of sell pressure. Retail participants who buy at launch are not investing alongside insiders. They are providing liquidity for insiders to exit over the next four years. Retail can sell immediately at market price, but insiders will be selling at that same market for years, pushing the price down continuously.
The alternative is faster unlocks. If everyone is liquid within 6 months, price discovery happens quickly. Those who want to exit can do so early. Those who want to hold can make that choice with full information about supply dynamics. The market reaches equilibrium faster, with less sustained pressure from scheduled unlocks.
Research on unlock events confirms this pattern. Price declines from unlocks typically stabilize within 14 days. The market absorbs supply shocks faster when they are predictable and concentrated. Four years of drip-fed selling creates four years of uncertainty. Six months of price discovery creates a stable base for long-term holders.
A Different Approach
Token launches involve three distinct functions that are often conflated. Capital formation raises money to fund development. Distribution gets tokens into the hands of users and community members. Price discovery finds fair market value through supply and demand.
Most launches optimize for capital formation at the expense of the other two. VCs negotiate discounts that maximize their returns. Distribution is an afterthought, with retail receiving small allocations at unfavorable terms. Price discovery is manipulated through low float and controlled market making.
Auctions can serve all three functions simultaneously. A well-designed auction raises capital (bids become funding), distributes tokens broadly (anyone can participate), and discovers price through the clearing mechanism. The resulting price reflects actual demand rather than negotiated terms.
Institutional Investors Are Not the Problem
The fair launch narrative sometimes devolves into "VCs bad." Institutional investors and venture capital are not inherently harmful. Sophisticated investors bring capital, expertise, and long-term commitment that many projects need.
When a single group controls a majority of the float, everyone else becomes susceptible to price manipulation. The issue is concentrated ownership, not institutional ownership. A launch where VCs hold 30% at the same price as retail, with the same lockups, is fairer than a launch where retail holds 100% but a few whales dominate through sybil attacks.
Sophisticated investors can improve price discovery when they participate on equal terms. They have experience valuing assets and longer time horizons. Problems arise when they receive preferential pricing that guarantees profits regardless of whether the project succeeds.
The goal is not to exclude institutions but to eliminate structural advantages. Equal pricing, proportional allocation, aligned vesting.
Implications for Fair Launches
Fair launches address distribution but often neglect price discovery. A token distributed fairly but priced by market makers is still subject to the same manipulation as any other token. The fairness of the initial distribution matters less if the price was never fair to begin with.
Projects should launch with higher initial float, accepting lower FDV in exchange for genuine price discovery. Compress unlock schedules so the market reaches equilibrium in six months, not four years. Use auctions to let the market determine price rather than negotiating with market makers. Allow retail to sell immediately and do not lock public participants while insiders vest.
Fair launches are necessary but not sufficient. The full solution requires rethinking vesting, float, and how prices are set at launch.
IV. Decision Framework
How to choose the right mechanism for your launch.
Use this framework to choose a distribution mechanism. Each question narrows the set of appropriate tools.
1. Do you need price discovery?
If you do not know what price the market will bear, or if setting a fixed price creates arbitrage risk, use a Dutch Auction or Liquidity Bootstrapping Pool. Both allow the market to find the clearing price. If you have high confidence in pricing, use a fixed-price sale with caps.
2. Do you need to raise a specific amount?
If you have a funding target that must be met, use a Dutch Auction with a hard cap, or an overflow model where deposits are pro-rata allocated. If the raise amount is flexible, LBPs and streaming launches work well.
3. How important is sybil resistance?
If preventing whale domination through multiple wallets is critical, add per-wallet caps combined with attestations like Gitcoin Passport, social verification, or proof of personhood. If sybil resistance is lower priority, wallet caps alone may suffice.
4. What is your timeline?
For short windows of hours to days, use Dutch Auctions or fixed-price sales. For extended windows of weeks, use LBPs or streaming launches. For indefinite distribution, use fair mint models where anyone can mint until supply is exhausted.
V. Mechanism Comparison
Side-by-side comparison of all major launch mechanisms.
Mechanism
Price Discovery
Sybil Resistance
Complexity
Timeline
Best For
Dutch Auction
Strong
Weak (needs caps)
Medium
Hours to days
Specific raise targets
Batch Auction
Strong
Medium (pro-rata)
Medium
Hours to days
MEV elimination, high demand
LBP
Strong
Medium
High
Days to weeks
Extended community sales
CCA
Strong
Medium
High
Hours
MEV-sensitive launches
Fixed-Price + Caps
None
Weak
Low
Hours to days
Simple, predictable sales
Overflow
None
Medium
Low
Days
Fair allocation without gas wars
Streaming
Varies
Weak
Medium
Weeks to months
Reducing sell pressure
Fair Mint
None
Weak
Low
Indefinite
Maximum egalitarianism
Strong price discovery means the mechanism finds market-clearing price. Sybil resistance indicates how well the mechanism prevents whale domination via multiple wallets. Complexity reflects implementation and UX difficulty. Combine mechanisms for better coverage. Dutch Auction plus wallet caps plus attestations addresses multiple concerns.
VI. Mechanisms
Deep dive into each distribution method.
Dutch Auctions
A Dutch auction starts at a high price and decreases over time until all tokens are sold or a floor is reached. Participants bid at the price they find acceptable. All successful bidders typically pay the same clearing price.
The auction begins with tokens priced above expected market value. The price decreases linearly or along a curve over a set duration. Participants commit capital at any point. When total commitments equal total supply at the current price, the auction clears. All participants receive tokens at the clearing price, with excess capital refunded.
No advantage to speed since bidding early at a high price is costly. Price discovery is market-driven and the clearing price reflects aggregate demand. Everyone pays the same, eliminating insider discounts.
Tradeoffs include requiring participants to monitor the auction and make timing decisions. Auctions can clear at unexpectedly low prices if demand is weak, or high prices if demand spikes. Whales can still dominate without per-wallet caps.
Use when you need price discovery and want to raise a specific amount. Works well for project treasuries and protocol-owned liquidity. Implementations include Gnosis Auction, Paradigm's Gradual Dutch Auction, and custom implementations on Balancer or Uniswap v4.
Batch Auctions
A batch auction collects orders over a fixed time window, then clears all orders at a single uniform price. Unlike Dutch auctions where price changes continuously, batch auctions determine price only at settlement.
Participants submit bids during the auction window. When the window closes, the mechanism calculates the clearing price where total demand equals total supply. All participants who bid receive tokens at this uniform price, allocated pro-rata if oversubscribed. Excess capital is refunded.
No timing advantage since early and late bids within the window are treated equally. Eliminates MEV because all orders settle simultaneously. Everyone pays the same clearing price regardless of bid timing. Oversubscription is handled pro-rata rather than first-come-first-serve.
Tradeoffs include participants committing capital without knowing final price until settlement, no price feedback during the auction window, and requiring trust in the settlement mechanism or verifiable onchain computation.
Use when eliminating MEV and timing games is critical. Ideal for high-demand launches where gas wars and frontrunning would otherwise dominate. Implementations include MISO, Gnosis Auction batch mode, Copper Launch, and custom implementations.
Liquidity Bootstrapping Pools (LBPs)
An LBP is a Balancer pool where token weights shift over time, creating downward price pressure that discourages early buying and frontrunning.
The pool starts with a high weight for the project token (e.g., 95%) and low weight for the collateral token (e.g., 5% USDC). Over the sale duration, weights gradually shift toward 50/50 or another terminal ratio. This weight shift mechanically decreases the token price unless offset by buying pressure. Participants can buy at any time during the sale.
Buying early means paying a premium that decreases over time, which discourages sniping. Price adjusts in real-time based on supply and demand. No gas wars since participants can buy throughout the window without competing for block space.
Tradeoffs include price volatility during the sale as arbitrageurs and speculators interact, complexity in configuring weight curves and initial pricing, and risk that participants lose value if they buy early and price continues to fall.
Use when you want extended price discovery over days or weeks. Good for community-oriented launches where participants should not feel rushed. Implementations include Copper Launch, Fjord Foundry, and custom Balancer pools.
Continuous Clearing Auctions (CCA)
CCAs are batch auctions where orders accumulate over a time window and clear at a uniform price. Uniswap v4 hooks enable onchain implementations.
Participants submit orders with price and quantity during a collection window. At the end of the window, orders are sorted by price. The clearing price is the highest price at which total demand meets or exceeds supply. All orders at or above the clearing price fill at the clearing price. Orders below do not fill.
Eliminates MEV because all orders clear simultaneously. No frontrunning since orders are sealed or accumulated before clearing. All successful participants pay the same price.
Tradeoffs include newer mechanism with less battle-tested tooling, participants needing to estimate clearing price when placing orders, and potentially thin order flow in early windows leading to volatile clearing prices.
Use when MEV protection is critical and you want uniform pricing without the complexity of Dutch auction timing. Emerging as a primitive for fairer launches on Uniswap v4. Implementations include Uniswap v4 hooks like Angstrom and CoW Protocol integrations.
Fixed-Price Sales with Caps
Tokens are sold at a predetermined price with per-wallet limits to prevent whale domination.
The project sets a token price (e.g., $0.10 per token) and a maximum purchase per wallet (e.g., 10,000 tokens). Participants deposit funds and receive tokens at the fixed rate until the supply is exhausted or the sale window closes.
In the overflow model variant, all participants deposit funds during a window. At the end, if deposits exceed supply, tokens are allocated pro-rata based on deposit size. Excess funds are refunded. This eliminates timing advantages and gas wars.
Simple and predictable since participants know exact terms upfront. Caps limit whale domination though not sybil attacks. Overflow model removes first-come-first-serve dynamics.
Tradeoffs include no price discovery so mispricing creates arbitrage opportunities, per-wallet caps easily circumvented with multiple wallets, and first-come models devolving into gas wars if demand is high.
Use when you have high confidence in the correct price and want simplicity. Overflow model is preferable to first-come-first-serve. Implementations include standard ICO contracts and custom sale contracts with cap logic.
Streaming and Vesting Launches
Tokens are released to purchasers over time rather than delivered immediately. This aligns incentives and reduces dump pressure.
Participants purchase rights to a stream of tokens. The stream delivers tokens continuously or in discrete unlocks over weeks or months. Participants can claim unlocked tokens at any time. Some implementations allow trading the stream itself as an NFT or position.
Reduces dump pressure since participants cannot sell full allocation immediately. Aligns incentives because participants remain engaged as tokens unlock. Can combine with other mechanisms like streaming Dutch auctions or streaming LBPs.
Tradeoffs include complexity for participants who want immediate liquidity, infrastructure requirements for stream management and claiming, and not addressing initial allocation fairness.
Use when reducing sell pressure is a priority and you want long-term holder alignment. Often combined with other mechanisms rather than used alone. Implementations include Sablier, Superfluid, Hedgey, and custom vesting contracts.
Fair Mint Models
Fair mints have no presale, no VC allocation, and no team allocation beyond a stated and capped percentage. Everyone mints on the same terms.
A minting contract allows anyone to mint tokens at a fixed cost (or free plus gas) until supply is exhausted. There is no sale window or first-mover advantage beyond transaction ordering. Team allocation, if any, is minted through the same mechanism or transparently reserved at contract deployment.
Maximum egalitarianism with no insider terms whatsoever. Transparent supply and allocation from genesis. Community-first distribution by design.
Tradeoffs include no capital raised for development unless mint has a cost, gas wars on high-demand mints, and bots and sybils dominating without caps or attestations.
Use when community legitimacy and egalitarian distribution matter more than capital formation. Popular for memecoins, social tokens, and experimental projects. Implementations include ERC-20 fair mint contracts, inscription-style mints, and custom contracts.
A Note on ICOs
Initial Coin Offerings have a mixed reputation. The 2017-2018 ICO boom produced many extractive, predatory launches that left retail holding worthless tokens. But the mechanism itself is neutral. An ICO is simply a public token sale, and the structure determines whether it is fair or exploitative.
A well-structured ICO can be one of the fairest distribution methods available. Fixed price, public access, no insider discounts, clear terms. The problems arise when ICOs include hidden presale rounds, massive VC allocations, short lockups for insiders, or misleading documentation.
Do not dismiss ICOs as inherently bad. Evaluate each one on its structure. A transparent ICO with equal terms for all participants, reasonable team allocation with long vesting, and honest communication is a legitimate fair launch. The mechanisms in this handbook can all be applied to ICO structures to make them fairer.
VII. Sybil Resistance Toolkit
Tools and techniques to prevent whale domination through multiple wallets.
Sybil attacks occur when a single entity creates multiple wallets to circumvent per-wallet caps.
Wallet Caps
Per-wallet purchase limits. Simple to implement but trivially circumvented by creating multiple wallets. Useful as a baseline, not a complete solution.
Proof of Personhood
Attestations that a wallet belongs to a unique human. Gitcoin Passport aggregates multiple identity signals into a score. Worldcoin uses biometric verification via iris scan with strong uniqueness guarantee but controversial tradeoffs. BrightID uses social graph verification requiring in-person or video verification. Civic and Polygon ID offer KYC-based identity with onchain attestations. Ethereum Attestation Service provides generalized attestation infrastructure where any entity can create attestation schemas for identity, reputation, or credentials.
Social Attestations
Require participants to have established social presence. Minimum account age on Twitter, Discord, or GitHub. NFT ownership proving community membership held before announcement. Onchain history requirements including transactions, DeFi usage, and age of first transaction.
Time-Weighted Participation
Weight allocations by how long participants have been engaged. Snapshot-based allocations for existing community members. Linear vesting of purchase rights over the sale window. Higher caps for wallets with longer onchain history.
Quadratic Mechanisms
Sublinear scaling of allocation with deposit size. Quadratic funding where matching funds scale with number of contributors, not amount. Quadratic voting for allocation decisions. Square-root caps where depositing $100 buys 10 tokens and $10,000 buys 100 tokens.
Combine multiple mechanisms. Wallet caps plus Gitcoin Passport plus onchain history requirements create meaningful friction for sybils without excluding legitimate participants. Accept that some sybil activity is unavoidable and design for resilience rather than perfection.
Limitations
All sybil resistance methods can be circumvented. The most common workaround is smurfing: creating multiple accounts and distributing funds across them to participate by proxy. These methods increase friction and cost for attackers but will not stop determined actors with sufficient resources.
The cost of not filtering is measurable. LayerZero's 2024 airdrop identified 803,000 sybil addresses (13% of eligible wallets) through self-reporting and analysis. Self-reporters received 15% of their intended allocation. The ZRO token declined 16% in the month following launch. By contrast, zkSync implemented no sybil filtering for its June 2024 airdrop. Approximately 80 million tokens went to 47,000 sybil addresses. The ZK token fell 39% in the same period, and active addresses on the network dropped 78% within a month as farmers abandoned the ecosystem. The difference in outcomes quantifies the value of sybil resistance: 2.4x worse price performance and near-total user exodus when filtering is skipped.
VIII. Tokenomics Benchmarks
Reference ranges for allocations, vesting, and pricing.
Reference ranges for evaluating whether allocations and vesting schedules are fair. These are guidelines, not absolutes.
Allocation Ranges
Category
Fair Range
Aggressive
Red Flag
Team + Founders
10-20%
20-25%
>25%
Investors (all rounds)
0-15%
15-25%
>30%
Public Sale
>30%
20-30%
<15%
Treasury/Ecosystem
20-40%
40-50%
>50% without governance
Advisors
1-3%
3-5%
>5%
Vesting Schedules
The table below reflects industry conventions inherited from traditional venture capital, designed for regulatory optics rather than market health.
Recipient
Conventional Cliff
Conventional Vesting
Red Flag
Team
12 months
4 years linear after cliff
No cliff or <6 months
Seed Investors
12 months
2-3 years linear
<6 month cliff
Strategic/Series A
6-12 months
18-24 months linear
Immediate unlock
Advisors
6 months
2 years linear
No vesting
Public Participants
None required
Immediate or short
Longer than insiders
The Case for Faster Unlocks
The 1-year cliff plus 4-year vesting model creates a multi-year overhang of sell pressure. Retail participants who buy at launch spend four years watching insiders exit at their expense. The vesting schedule does not protect retail. It delays the inevitable dump while insiders capture the upside of a rising market.
Compress vesting so everyone is liquid within 6 months. The market finds equilibrium when all supply can trade. Those who want to sell can exit early. Those who remain are genuine long-term holders, not locked insiders waiting for their unlock date. When insiders are liquid, their behavior becomes a signal. Locked tokens hide intent. Retail can exit a bad investment quickly rather than watching the price decline for years.
This inverts conventional wisdom. Instead of protecting retail by locking insiders, protect retail by letting everyone trade on equal terms. The market determines who holds long term, not the vesting schedule.
Pricing Fairness
All participants paying the same price is ideal. Discounts under 20% represent early risk premium and are acceptable if vesting is proportionally longer. Discounts of 20-50% create significant advantage and require much longer vesting to be fair. Discounts over 50% are extractive. Public participants become exit liquidity.
Float and FDV
At least 30-50% of supply should be circulating at launch. Higher is better. Low float creates artificial scarcity that benefits insiders at the expense of price discovery. If FDV exceeds 50x the amount raised, valuation is likely inflated. Low float, high FDV is the canonical predatory structure.
The market cannot absorb low float at high FDV. When 5% of supply trades at a $1B valuation, the market is pricing the other 95% as if it will never sell. As unlocks occur, price falls to reflect actual demand. Projects that launch with higher float accept lower initial FDV in exchange for sustainable price discovery.
Unlock Impact by Category
Not all unlocks affect price equally. Analysis of over 16,000 unlock events reveals consistent patterns.
Unlock Category
Average Price Impact
Notes
Team
-25%
Most severe. High motivation to realize gains.
Investor
-15% to -20%
Varies by round. Earlier investors have lower cost basis.
Ecosystem/Development
+1.18%
Often deployed rather than sold. Slight positive signal.
Large (>5% of supply)
~2.4x base impact
Size amplifies effect.
Price declines typically begin 30 days before unlock dates as markets anticipate supply increases. Stabilization occurs within 14 days post-unlock. Frequency of unlocks matters more than relative size beyond the first week. Continuous small unlocks create less disruption than periodic large ones.
IX. Red Flags Checklist
Warning signs that a launch may not be as fair as advertised.
For retail participants evaluating whether a launch is fair.
Presale Terms
Is there a presale or private round? At what discount to public price?
How much of total supply went to presale participants?
What are the lockup terms? Short lockups (under 6 months) are a warning sign.
Allocation Distribution
What percentage goes to team? Reasonable range is 10-20%. Over 25% is aggressive.
What percentage goes to VCs and private investors? Lower is better.
What percentage is available to public? Under 20% public allocation is a red flag.
Is there a treasury or ecosystem fund? Is its use governed by token holders?
Mechanism Transparency
Is the sale mechanism documented and auditable?
Are contracts verified on block explorers?
Is there a clear timeline with specific dates and parameters?
Whale Protections
Are there per-wallet caps?
Is there sybil resistance beyond simple caps?
Can large holders dominate through multiple entities?
Post-Launch Dynamics
When do insider tokens unlock? Cliff and vesting schedules matter.
Are there any agreements for market making, liquidity, or price support?
Is the token immediately tradeable or is there a lockup period for all participants?
If insiders (team, VCs, advisors) have more than 50% of supply, shorter lockups than public participants, or significant price discounts, the launch is not fair regardless of marketing claims.
X. Fairness Score
A 15-point rubric to evaluate any token launch.
Rate any token launch. One point per criterion met. Share your score.
Pricing (3 points)
No presale or private rounds
All participants pay the same price (or same auction)
Price determined by market mechanism, not team
Allocation (3 points)
Public allocation exceeds 30%
Team allocation under 20%
No hidden advisor or "ecosystem" insider buckets
Vesting (3 points)
Team cliff of 12+ months
Insider vesting longer than public lockup
No TGE unlocks for insiders
Transparency (3 points)
Contracts verified and audited
All insider wallets disclosed
Sale announced 7+ days in advance
Access (3 points)
Per-wallet caps prevent whale domination
No whitelist favoring insiders
Mechanism prevents gas wars / MEV
13-15 Exemplary fair launch
10-12 Reasonably fair with minor concerns
7-9 Significant fairness gaps
4-6 Insider-advantaged structure
0-3 Avoid
XI. Common Mistakes
Avoid these errors that undermine fair launches.
Caps That Do Not Cap
Setting per-wallet limits so high they are meaningless. A $100,000 cap on a $5M raise means whales face no real constraint. Effective caps should limit individual participation to a small fraction of the total raise (1-5%).
Vesting Theater
Insider vesting that appears long but has loopholes. Partial immediate unlocks (20% TGE), short cliffs marketed as long vesting, or ability to stake locked tokens for yield. Vesting should be simple. Cliff, then linear release, no exceptions.
Hidden Advisor Allocations
Advisor tokens buried in "ecosystem" or "community" buckets. If 15% is labeled community but 10% goes to unnamed advisors, the tokenomics are misleading. All insider allocations should be explicitly labeled with vesting terms.
Team Treasury Control
Large treasury allocations (30-50%) controlled by the team without governance constraints. This is effectively team allocation with extra steps. Treasury use should require token holder approval or be governed by transparent multisig with independent signers.
Short Private Sale Windows
Announcing a public sale with 24-hour notice while VCs had weeks to prepare. Information asymmetry in timing is as unfair as information asymmetry in pricing. Public announcements should precede sales by at least one week.
Fake Price Discovery
Using an LBP or Dutch auction but setting parameters to ensure a predetermined outcome. Starting price too low, weight curve too flat, or auction duration too short. Mechanism legitimacy requires honest parameterization.
Retroactive Terms Changes
Modifying vesting schedules, adding new token categories, or changing allocation percentages after the public sale. Terms at sale time should be immutable. Any changes should benefit public participants, not insiders.
Liquidity Extraction
Team providing initial liquidity, then removing it after price appreciation. Liquidity commitments should be locked or burned. LP tokens in team wallets are a liability, not an asset.
XII. Pre-Launch Checklist
Everything to have ready before announcing your launch.
Contracts and Security
Complete audit from reputable firm with public report
Contracts verified on block explorer (Etherscan, etc.)
Ownership renounced or transferred to multisig/governance
No privileged functions that can modify sale terms
If upgradeable, timelock on upgrades (48h minimum)
Tokenomics Documentation
Complete allocation breakdown with percentages
Vesting schedules for all categories (cliff + duration)
Unlock calendar with specific dates
All investor rounds disclosed with pricing
Treasury governance mechanism documented
Sale Mechanism
Mechanism parameters published in advance (caps, duration, pricing)
Start time announced minimum 7 days before
Per-wallet caps set relative to raise size
Sybil resistance mechanism selected and documented
Refund mechanism for failed transactions or oversubscription
Post-Sale Commitments
Initial liquidity plan (amount, duration of lock, who controls)
How you communicate a fair launch matters as much as the mechanism itself. Poor communication creates confusion and erodes trust even when the underlying structure is sound.
Announcement Timing
Announce the sale at least 7 days before it begins. This gives participants time to research, prepare funds, and ask questions. Shorter windows favor insiders who already know the details. Include the exact start time in UTC and link to a countdown.
Tokenomics Documentation
Publish a single, comprehensive document covering total supply and whether it is fixed or inflationary, allocation percentages for every category, vesting schedules with cliff and duration for each category, unlock calendar with specific dates, contract addresses for token, vesting, and sale contracts, and audit reports with links to full documents.
Do not scatter this information across multiple blog posts, tweets, and Discord messages. A single source of truth prevents confusion and makes verification easier.
Mechanism Explanation
Explain how the sale works in plain language. Most participants are not familiar with Dutch auctions, LBPs, or batch auctions. Cover how to participate step by step, how the price is determined, what happens if the sale is oversubscribed, when and how tokens are distributed, and how to verify the transaction succeeded.
Include a FAQ addressing common questions. Update it as new questions arise during the announcement period.
Wallet Disclosure
Publish a list of all insider wallets including team members, investors, advisors, and treasury. Label each wallet with its owner and allocation. This allows the community to monitor movements and verify that vesting is being respected. Projects that refuse to disclose wallets are hiding something.
Communication Channels
Designate official channels and stick to them. A Discord server or Telegram group for questions, a Twitter account for announcements, and a documentation site for reference. Do not make important announcements only in Discord where they get buried. Cross-post everything significant to Twitter and your docs.
Post-Sale Communication
After the sale, publish a summary including total raised, number of participants, final clearing price if applicable, and distribution statistics. Continue regular updates on development progress and treasury usage. Projects that go silent after raising money lose community trust quickly.
Handling Problems
If something goes wrong during the sale, communicate immediately. Acknowledge the issue, explain what happened, and describe the fix. Silence during problems is worse than admitting mistakes. Communities forgive technical issues handled transparently but not cover-ups or delays.
XIV. Implementation Resources
Platforms, contracts, and tools for running fair launches.
Real examples of fair and unfair launches, and what made the difference.
Fair Launches
Uniswap (UNI) - Retroactive Airdrop
In September 2020, Uniswap distributed 15% of total supply (150 million UNI) to historical users via retroactive airdrop. Every address that had interacted with the protocol before September 1, 2020 received a minimum of 400 UNI, regardless of transaction volume or value. Liquidity providers received additional allocations proportional to their contributions.
The airdrop was announced without prior warning, making it impossible to game. Snapshot criteria were based entirely on historical onchain activity. No presale rounds existed, and no investors received discounted tokens. The remaining supply was allocated to governance treasury (43%), team with 4-year vesting (21.5%), and future liquidity mining (10%).
At launch, UNI traded around $3, valuing the 400 UNI minimum airdrop at $1,200. Users who had made a single failed transaction still qualified. The distribution reached over 250,000 addresses, creating one of the broadest initial token distributions in DeFi history.
Why it worked: Retroactive criteria eliminated gaming. Uniform minimum distribution ensured small users benefited equally. No capital requirement for participation. Team tokens vested over 4 years with 1-year cliff, aligning long-term incentives.
Liquity (LQTY) - No VC, No Presale
Liquity launched in April 2021 as a decentralized borrowing protocol with zero VC funding and no private sale rounds. The team rejected traditional fundraising, instead bootstrapping development and launching directly to the public. Total supply is 100 million LQTY with a fixed, non-inflationary cap.
Token distribution occurred through two mechanisms: protocol usage rewards and a public Balancer LBP. Stability pool depositors and frontend operators earn LQTY emissions over time. The LBP ran for 3 days, allowing fair price discovery without first-mover advantages. Starting price was set high and declined until market equilibrium.
Team and early contributor allocation was 23.7% with a 1-year cliff followed by 3-year linear vesting. No tokens were sold at a discount. The protocol itself is immutable with no admin keys, governance tokens, or upgrade mechanisms. Liquity operates as permanent, unstoppable infrastructure.
Why it worked: Rejecting VC money eliminated insider discounts entirely. LBP mechanism prevented gas wars and sniping. Long vesting aligned team with protocol success. Immutable contracts removed trust requirements and rug risk.
Bitcoin - Fair Mint
Bitcoin launched on January 3, 2009 with no premine, no presale, and no insider allocation. Satoshi Nakamoto announced the software on a cryptography mailing list and anyone could begin mining from block zero. The genesis block contained a newspaper headline as proof of the launch date, establishing transparency from the start.
Distribution occurred exclusively through proof-of-work mining. Early blocks rewarded 50 BTC, halving every 210,000 blocks. Satoshi mined early blocks but did so publicly using the same software available to everyone. Estimated Satoshi holdings of ~1 million BTC came from early mining, not allocation. These coins have never moved.
The supply schedule was coded immutably: 21 million maximum supply, predictable issuance curve, no mechanism for modification. No foundation, company, or team controls the protocol. Development occurs through open-source contribution and rough consensus.
Why it worked: Zero information asymmetry at launch. No privileged access or discounted terms. Pure proof-of-work distribution rewarded computational contribution. Immutable monetary policy removed discretionary control. Founder coins remain untouched, demonstrating long-term alignment.
Based Money ($BASED) - DeFi Fair Launch
Launched in August 2020 during DeFi summer, Based Money combined Ampleforth's rebase mechanics with YFI's fair distribution model. No premine, no VC allocation, no founder fees. The developers burned the contract private keys across four Ethereum transactions, making the protocol permanently immutable and exit scams impossible.
Distribution occurred through two staking pools. Pool 0 distributed 25,000 BASED to Curve sUSDv2 LP stakers on a 24-hour halving schedule. Pool 1 distributed 75,000 BASED to Uniswap LP stakers on a 72-hour halving schedule. For the first 24 hours, deposits were capped at 12,000 LP tokens per account to prevent whale domination.
The protocol implements a rebase mechanism targeting 1:1 parity with sUSD. Supply adjusts proportionally for all holders, so relative ownership percentages remain constant regardless of rebase direction. Rebasing was disabled until 97% of tokens were claimed, allowing stable initial distribution.
Why it worked: Burned keys removed trust requirements. Anti-whale caps on day one. Staking-based distribution required active participation. Community remains active five years later, demonstrating long-term sustainability of fair launch models.
Jay Pegs Auto Mart ($DONA) - Batch Auction
In September 2021, Jay Pegs Auto Mart launched $DONA tokens via batch auction on MISO (SushiSwap's launch platform). The auction raised 865 ETH (~$3.1M) in less than an hour with wide distribution across participants. No VC allocation, no presale rounds, no insider pricing.
The batch auction mechanism collected all bids during a fixed window, then cleared at a uniform price. Every participant paid the same rate regardless of when they bid. Pro-rata allocation meant oversubscription was handled fairly rather than through gas wars or first-come-first-serve dynamics.
The project demonstrated that fair launches can be both fast and capital efficient. Traditional fundraising at this scale would require weeks of VC negotiations and due diligence. The batch auction accomplished the same result in under an hour while distributing ownership broadly.
Why it worked: Batch auction eliminated timing advantages and MEV. Uniform clearing price meant no insider discounts. Pro-rata allocation prevented whale domination. Speed proved fair launches are not inherently slow.
Hyperliquid (HYPE) - Usage-Based Airdrop
In November 2024, Hyperliquid distributed 31% of HYPE supply to users of their perpetual futures DEX via airdrop. The project was entirely self-funded with zero VC investment. No presale rounds occurred, and no investors received discounted tokens at any stage.
Airdrop allocation was based on trading activity over time, rewarding actual platform usage rather than capital deposited or social metrics. Users who traded on the platform over months received proportionally larger allocations than those who appeared shortly before the snapshot. The time-weighted approach made last-minute farming ineffective.
Team allocation was 23.8% with multi-year vesting. The remaining supply went to community grants and future incentives. At launch, the airdrop reached tens of thousands of addresses, creating broad distribution without the typical VC overhang that depresses prices post-TGE.
Why it worked: Self-funding eliminated VC pressure and insider discounts. Usage-based criteria rewarded genuine users over airdrop farmers. Time-weighted distribution prevented last-minute gaming. Team vesting aligned long-term incentives. No presale meant no cohort of holders with lower cost basis waiting to exit.
The distribution statistics reflect genuine breadth: 94,000 wallets received tokens, with an average of 2,915 HYPE (approximately $20,000 at launch price) and a median of 64 HYPE (approximately $400). The 45x gap between average and median indicates a long tail of small holders alongside larger recipients, typical of usage-based distributions. Post-airdrop, TVL remained at $1.6 billion and the token price rallied rather than dumped, peaking near $50. This outcome contrasts sharply with VC-backed launches where prices typically decline 30-50% in the first month.
Unfair Launches
ICP (Internet Computer) - VC Extraction
ICP launched in May 2021 with 24.7% of supply going to early contributors and seed investors at an estimated $0.03-0.04 per token. Public launch price was approximately $700. Early investors saw ~20,000x paper gains. Retail participants who bought at launch faced immediate and sustained selling pressure as insider tokens unlocked.
What went wrong: Massive presale discount. Compressed unlock schedules. Retail became exit liquidity for insiders.
EOS - Misaligned Incentives
EOS ran a year-long ICO from June 2017 to June 2018, raising approximately $4 billion. Block.one, the company behind EOS, retained 10% of tokens plus the entire $4 billion in proceeds. The SEC later fined Block.one $24 million for conducting an unregistered securities offering.
Rather than deploying capital to develop the EOS ecosystem, Block.one used ICO funds to purchase Bitcoin and other investments. The company sat on billions while the network struggled to gain adoption. Questions about wash trading during the ICO raised further concerns about the legitimacy of reported demand.
What went wrong: Misaligned incentives between issuer and token holders. No accountability for use of funds. Company enriched itself while ecosystem languished. SEC settlement confirmed regulatory violations.
EIGEN (EigenLayer) - Insider Favoritism
EigenLayer launched EIGEN in May 2024 with 55% of tokens allocated to investors and team, while early stakers who made the protocol successful received just 5%. Tokens were non-transferable at launch, giving insiders an advantage: they could wait for better prices while retail was locked out of price discovery.
Users from the US, Canada, and China were excluded from the airdrop despite being allowed to use the protocol and contribute liquidity. Evidence of suspected insider trading emerged when a whale deposited 4000 ETH, then withdrew one day after the snapshot. The foundation revised allocations after backlash, adding 100 EIGEN per user, but the damage to trust was done.
What went wrong: Extreme insider allocation (55% vs 5% community). Geographic exclusions punished contributors. Non-transferability advantaged insiders. Suspected information leaks before snapshot.
ZK (zkSync) - Airdrop Dump
zkSync launched ZK in June 2024 with 16.1% to team and 17.2% to investors. The airdrop reached only 695,000 wallets out of a 7 million member community. Within hours, 41% of top airdrop recipients dumped their entire allocation. The token crashed 34.5% and TVL dropped from $200 million to $128 million as users fled the ecosystem.
The launch lacked Sybil filtering, with approximately 80 million ZK tokens going to 47,000 Sybil addresses. Loyal users who had traded significant amounts and paid heavy gas fees over years were excluded while farmers captured outsized allocations. The community labeled it "ZkScam."
What went wrong: Insider-heavy allocation. No Sybil resistance. Loyal users excluded while farmers rewarded. Immediate mass dumping by recipients. Community trust destroyed.
The absence of sybil filtering had quantifiable consequences. Within one month of the airdrop, 78.7% of active addresses disappeared from the network. The ZK token fell 39%, more than double the decline seen in comparable launches with filtering. Approximately 80 million tokens went to 47,000 addresses flagged as sybils on other networks. The launch demonstrated that skipping sybil resistance does not save effort. It transfers value from legitimate users to farmers and destroys the community the airdrop was meant to build.
Most 2021-2022 VC-Backed Tokens
A common pattern: 20-40% to VCs at 80-95% discount to public FDV. 6-12 month cliffs with 2-3 year vesting. Launch at high FDV with limited public float. Sustained selling pressure as unlocks occur.
What went wrong: Structural advantage for insiders. Public participants have no way to compete with VC cost basis. Tokenomics designed to maximize founder and VC returns rather than community value.
Gas War Launches
First-come-first-serve launches without caps or batching. Examples include many 2021 NFT mints and token launches. Participants compete on gas fees. Wealthy participants and sophisticated bots capture allocation. Average users are priced out or fail to participate.
What went wrong: Capital advantage determines allocation. Value extraction to miners/validators. Excludes participants who cannot afford gas premium.
Airdrop Recipient Behavior Patterns
Academic analysis of nine major protocol airdrops (including Uniswap, Arbitrum, Optimism, dYdX, and Lido) reveals consistent behavioral patterns that vary by mechanism design.
Sell rates on first action post-claim ranged from 25% to 66%. Lido saw the highest immediate liquidation (65.75%), followed by 1inch (58.67%) and Optimism (48.21%). Protocols with usage-based criteria and longer engagement requirements showed lower immediate sell rates.
TVL impact was similarly varied. Uniswap retained approximately 85% of TVL post-airdrop. Arbitrum and dYdX each lost 15-17%. The difference correlates with recipient quality: airdrops to active users who needed the protocol retained value, while airdrops to farmers who had no ongoing use case saw capital flight.
Claiming speed also varied. Arbitrum, Arkham, and Lido saw 70-87% of eligible addresses claim on day one, suggesting automation and farming infrastructure. Uniswap and ENS showed gradual claiming over weeks, indicating more organic recipient bases.
Implication: Mechanism design affects post-distribution behavior. Usage-weighted, time-based criteria create recipients who hold. Capital-weighted, snapshot-based criteria create recipients who sell.
XVII. Post-Launch
What to monitor after the token goes live.
Fair distribution is the starting point. What happens after TGE determines whether fairness persists.
Monitoring Unlocks
Track insider unlock schedules and watch for selling patterns. Large unlocks should be announced in advance. If team or investor wallets start moving tokens to exchanges before scheduled unlocks, something is wrong. Tools like Arkham and Nansen can alert you to wallet movements.
Liquidity Health
Initial liquidity commitments should remain locked for the stated duration. Monitor LP token holders and lock contracts. If the team removes liquidity early or the pool becomes thin relative to market cap, exit risk increases. Healthy projects maintain or grow liquidity over time.
Governance Transition
Projects with treasury allocations should transition to community governance. Watch for: governance proposals going live, multisig signer changes to include community members, and treasury decisions being made onchain rather than by team fiat. A project that promised decentralization but still operates with team-controlled wallets after 12 months has not delivered.
Supply Integrity
Verify that no new tokens are minted outside the stated schedule. Check total supply on block explorers against documented tokenomics. Some contracts have hidden mint functions or admin keys that were not disclosed. If supply increases unexpectedly, the tokenomics were not as described.
Communication Patterns
Teams that go quiet after raising money are a warning sign. Regular updates on development, treasury usage, and roadmap progress indicate ongoing commitment. Sudden changes to announced plans, especially regarding token unlocks or allocations, should be scrutinized.
XVIII. Community
Forums, research, and data sources for fair launch discussions.
MetaDAO - Futarchy-based launches with pro-rata allocation (Solana)
Platforms like Echo and Legion are useful for bootstrapping and distribution, but they do not enforce fair launch standards. Projects selling through these platforms may or may not follow best practices. Participants still need to evaluate each launch independently using the criteria in this handbook.
XIX. Glossary
Definitions of key terms used throughout this handbook.
Cliff
A period before any tokens vest. A 12-month cliff means zero tokens are released for the first year, then vesting begins.
Batch Auction
An auction where all orders are collected over a time window and settle simultaneously at a uniform clearing price. Eliminates timing advantages and MEV.
CCA (Continuous Clearing Auction)
A type of batch auction with recurring clearing windows. Orders accumulate and clear at uniform price on a schedule. Eliminates MEV and frontrunning.
Dutch Auction
An auction where price starts high and decreases over time until all tokens are sold. Buyers bid at the price they find acceptable.
EOA (Externally Owned Account)
A regular wallet controlled by a private key, as opposed to a smart contract wallet or multisig.
FDV (Fully Diluted Valuation)
Market cap calculated using total token supply (including locked/unvested tokens), not just circulating supply. Often inflated relative to actual liquidity.
Float
The percentage of token supply that is freely tradeable. Low float enables price manipulation.
LBP (Liquidity Bootstrapping Pool)
A Balancer pool where token weights shift over time, creating natural downward price pressure that discourages early sniping.
LP (Liquidity Provider)
Someone who deposits tokens into a decentralized exchange pool to enable trading. LP tokens represent their share of the pool.
MEV (Maximal Extractable Value)
Value extracted by miners/validators through transaction ordering. Includes frontrunning, sandwich attacks, and arbitrage at the expense of regular users.
Multisig
A wallet requiring multiple signatures to execute transactions (e.g., 3 of 5 signers). Reduces single points of failure.
Overflow
A sale mechanism where all deposits are collected, then tokens are allocated pro-rata if demand exceeds supply. Excess funds are refunded.
Premine
Tokens created before public launch and allocated to insiders. The opposite of fair distribution.
Rebase
Automatic adjustment of all token balances to target a specific price. Holder percentages remain constant while absolute balances change.
Smurfing
Creating multiple accounts (smurf accounts) to circumvent per-wallet caps by distributing funds and participating by proxy.
Sybil Attack
Creating multiple fake identities (wallets) to circumvent per-person limits. Named after the book about multiple personality disorder.
TGE (Token Generation Event)
The moment tokens are created and become transferable. Often used interchangeably with launch date.
Timelock
A delay between proposing and executing a contract change. Gives users time to exit before changes take effect.
Vesting
Gradual release of tokens over time. Linear vesting releases tokens at a constant rate; cliff vesting has an initial lockup period.
Whale
A holder with a large position relative to total supply or liquidity. Can significantly impact price through buying or selling.