Article Rewritten:
Author: HYPHIN
Translator: Luffy, Foresight News
The lack of early investment opportunities for retail investors has always been a major issue, while private capital has flourished due to ample funds. Web3 has attempted to democratize early-stage venture capital, but what have been the results?
Introduction
There are various methods to obtain funding and introduce tokens to the public market, each with its unique advantages and disadvantages. Endorsement from venture capital is often coveted, but difficult to attain for most projects. Therefore, platforms like Launchpad have become a way for some projects to obtain external capital, with Fjord Foundry being a popular choice for builders due to its reputation and robust platform. Many protocols have entered the market through Liquidity Bootstrapped Pools (LBP) and have received significant cash injections.
The overall goal of this article is to provide an objective overview of the token issuance on Fjord Foundry V2 and its price performance after the end of the initial sale.
Everyone is focusing on LBP
Before analyzing the issuance of tokens for any protocol, it is necessary to consider some important details to understand the unique dynamics associated with Fjord.
Expert Support
To build trust and increase visibility on a permissionless platform, Fjord has carefully selected a group of knowledgeable professionals from various fields to plan token sales.
Four out of five projects on Fjord Foundry V2 are curated by specialists.
In addition to serving as agents, curators can also provide marketing or consulting services as needed. To achieve a certain level of transparency, project applicants may provide personal identification or any other relevant information requested by the spokesperson, and hold relevant parties accountable for malicious behavior.
Due to changes in the user interface over time, some past sales events did not display any publicly available information related to the KYC status, as there were no records or relevant requirements at that time. In recent products, the majority of projects have a team that has been vetted through human verification.
Curators’ activities vary, with some taking on more sales tasks than others.
Third-party curators will receive project tokens as compensation, sourced from transaction fees generated during the sale period. This means they are directly incentivized to attract attention and participants.
The earliest is not always the best
Contrary to fair distribution and initial exchange offerings, early listing in the LBP space does not guarantee returns. To promote fair token distribution, we adopt a pricing strategy from high to low and dynamic token weight transfers to prevent price manipulation and other malicious behaviors.
By aggregating data from all past token issuances, we can depict a scenario under average conditions to intuitively understand asset pricing trends and the most common buying cost ranges.
In most cases, prices remain relatively stable 12 hours after, showing signs of increased demand only near the end of the sale. The highlighted average and median cost bases on the chart indicate that most participants share similar entries, confirming the concept that this pricing model attempts to explain.
Behind-the-scenes private rounds
It is important to note that projects hold private rounds for marketers and strategic partners before public sales, where early contributors can acquire tokens at a discount. Information about these sales is sometimes included in the “Transparency” section of the token page.
One out of every four curated projects will publicly display token ownership details.
Sales data with disclosure terms, evidence of rumors on Twitter, and promotional materials circulating in Telegram chats indicate that the following situations frequently occur:
Terminology:
TGE: Token Generation Event
Cliff: Time interval between TGE and start of token lockup release
Example #1 ~ Aggressive
* TGE: Release 20%
* Cliff: 1 month
* Vesting period: 3-6 months
Example #2 ~ Conservative
* TGE: Release 0%
* Cliff: 3 months
* Vesting period: 4-12 months
Example #3 ~ Fjord Mean
* TGE: Release 26.25%
* Cliff: Unknown
* Vesting period: 8.53 months
Example #4 ~ Fjord Median
* TGE: Release 15%
* Cliff: Unknown
* Vesting period: 7.46 months
Private round discounts
Mean: 33.4%
Median: 60.22%
Above information disclosed by Fjord for reference only
While legitimate projects typically attempt to attract individuals who align with the team’s long-term vision and do not consider the audience as liquidity exit objects, the value provided by these beneficiaries and their potential impact on token prices is difficult to determine.
How does LBP perform?
The participation rate in token issuance largely depends on promotion on social media. People are highly interested in tokens about to launch on Fjord, attracting a large number of independent participants.
As of the writing of this article, there have been 81 carefully curated token sales in the past six months. The data obtained from these activities will serve as the basis for our analysis.
These metrics show that LBP is highly effective, often bringing in significant protocol fees and funds for builders looking to launch projects. This is appealing for teams seeking funding, but what does it mean for investors?
Price performance
It has been proven that token issuance often provides profitable opportunities for speculators, enabling them to profit quickly or acquire long-term positions at discounted prices. To determine if LBP also does this, the final asset value on Fjord is used as a reference, calculating average and median performances from decentralized exchange trading activity.
The significant difference between these two indicators suggests that only a few tokens have generated positive returns, while the rest have suffered significant losses.
Only about 13.2% of these tokens are currently priced higher than they were before being listed on decentralized exchanges.
What causes this sustained negative performance is difficult to determine, but early price trends may provide some clues.
Price performance within 14 days of token issuance
Usually, these assets are either issued at a discount or immediately sold off, putting most early buyers in a difficult position from the start. By observing the subsequent situation, it is clear that there is significant selling pressure, with few buyers intervening to absorb the selling pressure and reverse the situation. Tracking the wallet balances of those involved in token issuance can provide deeper insights.
In an average scenario, nearly 15% of all LBP participants exit their entire position on the first day; by day 14, this proportion reaches 29.42%. This is inevitable and can be understood as a second wave of distribution to attract latecomers.
In these unfavorable circumstances, overvaluation plays a crucial role as the market is unwilling to take over. Sellers will continue to dominate unless fair value is found or sufficient interest is generated from external parties. As the number of unlocked tokens increases over time, investors start to cut losses, potentially exacerbating the long-term price decline.
Many projects fall into a trap, focusing solely on the initial token issuance on Fjord and neglecting the role of ongoing operations. This ultimately leads to an initial overvaluation of the project, making it difficult to sustain after issuance.
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