TL;DR

Bm folks,

Trying the article format out for the first time, let’s see how it goes.

While this collection of thoughts is largely directed at the Berachain ecosystem, I hope that the broader points are relevant to a wider community of folks thinking about their token launches.

I’ve seen a number of teams in the Bera eco recently launch their tokens, or gear up for a new launch within the last couple of weeks, to the tune of ~8 projects. On one hand, this is something to be celebrated - new tokens can be a great engine for economic activity, speculation, and even growth of a protocol. They might have wealth creation effects for an ecosystem. Berachain wins if its native alts perform well.

On the other hand, it’s increasingly important to zoom out and try to understand what value you’re getting out of a token launch. Upon launching a token, the public’s perception of your product becomes irrevocably coupled to your price in some manner. There are few examples that disobey this rule, perhaps with the exception of ecosystems lacking alternatives to a given product, or for extremely early first movers (a la 1Inch, Compound types). And in a risk-off on-chain world where the vast majority of alts (and perhaps coins as a whole) are extremely subject to the forces of gravity, your token can nontrivially inhibit the adoption of your product.

A token launch should be used to turbocharge something that’s already demonstrating PMF at its greatest inflection point. It should return value to the users of the platform who helped it get to that point of PMF. And it should be utilized to fuel asymmetric growth opportunities.

And then I’ll say some of the hard truths that often come out in DMs alone.

No matter how die-hard your community is, a down-only chart will limit your adoption. Most charts are by default down-only at this point in time. In the case of Berachain tokens, you’re thinking about launching an alt on an alt while tokens like Solana are struggling to catch a bid.

It’s truly worth asking yourself: “Who is the marginal buyer of my token?”

And unless you have a meaningfully differentiated answer around distribution and getting your token into the hands of new bidders, I’d recommend thinking longer about the potential long term consequences of a short term dopamine hit. Because I can tell you that the answer is not “the community”. The community is supportive, actively utilizing the chain, and taking opportunistic bets.

But the community’s capital is finite. It will not save you.

People say you can’t time the market, and I agree with that to a point.

However you CAN build a product that is default alive, profitable, and at some point, perhaps even has the potential for buybacks which directly provide value for tokenholders (legal structures permitting etc).

The biggest thing I’d say is that as a founder, it doesn’t get easier when you issue a token. It just amplifies everything. If your token is up, suddenly your product is S-class, your team is infallible, and you’re never going to lose.

If your token is down, you’re a scammer, your product is trash, your team is retarded, bonus points if you get roasted for raising venture capital as well.

My take also leaves some nuance to be desired; sometimes protocols have a particularly key use for their tokens, or some require that token to even launch their dApp. No advice is truly perfect, so please take this with a grain of salt.

Finally, if you’re going to launch a token, coordinate amongst other teams that are also planning on launching tokens. Don’t line your stuff up on the same day/week and force demand to split between two opportunities. Give the market time, allow capital rotations to take place, and avoid knee-jerk reactions. Don’t launch at a high valuation - if you raised funds privately, launching flat right now is probably pretty reasonable.

My thoughts can more or less be tl;dr’d into this

1. If you have a product that is generating revenue, double down on that. Make more money. Find ways to increase distribution. Ensure that you’re default alive, and ideally meaningfully profitable. Set yourself up for buybacks as a possibility.
2. A token can hurt a project. People who see a token-less project may engage by default if the product is good (even if it is in hopes of an airdrop at times). People who see a product with a token that goes down form an initial first impression that can turn them off irrationally.
3. There’s very little price discovery in the “middle” ranges right now, ie MCs between 10-200m etc. People are either very risk off and stable farming or buying large caps, or risk on and aping 100k MC shitters.
4. Investors, community and your own desire for exit liquidity etc are the wrong reasons to launch a token. The right reasons to launch a token are clear signs of PMF and a bulletproof roadmap as to how it helps your protocol grow.
5. If you’re gonna launch a token (which I think is a bad idea for the majority of people right now) then coordinate it with your ecosystem and colleagues, space out your launches, and make sure you give enough time for CEX listings etc.

I worry that the number of launches in the Bera eco right now are going to result in a number of teams shooting themselves in the feet around traction and adoption. As I see it, it’ll either form an incredibly die hard community base which can slowly grow over time, or it’ll turn off future teams from launching tokens on Bera.

Optimistically, these tokens could outperform all expectations and turbocharge their products, or at the very least, pass on valuable lessons to eco founders which can only truly be learned by going through the fire themselves.

I dropped this article because a lot of folks have asked me about my views on recent eco TGEs. I’m always supportive of people building and launching things on Bera and I want to see them win. But I want to see them win long-term, and sometimes that requires saying the thing that people don’t want to hear. Its a marathon, not a sprint, as corny as that may sound, and I can say that with confidence; we’ve been at it for 3+ years and know it all too well.

Don’t lose sight of the forest for the trees.

Berachain.

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