DeFi Innovation Strangler: Fair Launch
The emergence of SushiSwap has popularized a concept for everyone: Fair Launch. It means that the project is governed by the community from the start, and everyone can participate in the project fairly, with no pre-mining, no investors, and no self-retention (or very little).
Judging from the various popular DeFi forked coins recently, everyone attaches great importance to the concept of "fairness", or they prefer this kind of "three no projects".
Maybe it's because of the natural affection for the characteristics of the "Satoshi Nakamoto ancestral" project, maybe it's fed up with the endless fraudulent coin-rolling projects, or it's purely chasing short-term profit opportunities, no matter what the reason is, " "Fair launch" has become a major development trend of DeFi.
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1. For whom is it fair?
It's hard to believe that SushiSwap has been around for less than a month. As a fork of Uniswap, it quickly went through a boom-bust cycle with plenty of controversy, drama, and twists and turns.
However, the biggest role of SushiSwap is to promote the concept of "fair startup".
Uniswap raised $11 million from venture capital funds, but the community did not buy it, believing that the spirit of decentralization is more important, and tokens should be issued openly and fairly. Community members are attracted to SushiSwap because 90% of the tokens are given to Liquidity Providers (LPs).
Uniswap not only raised funds, but also delayed the token launch, and the community thought it was too greedy.
In the end, Uniswap turned the tide on two points.
First, SushiSwap’s “Developer Fund” ended up being Chef Nomi’s (SushiSwap founder) personal retirement fund. If it weren't for anger and potential discontent, the pseudonymous founder might have simply taken the funds used to improve SushiSwap.
Secondly, Uniswap still issued coins - and the issuance method is fairer than most DeFi protocols.
As we pointed out earlier, a "fair launch" will be the end of development incentives.
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2. The Reality of “Fair Start”
Most "fair launches" have only one goal: to make more money out of investors' greed. It is undeniable that the current market is in a bull market, which makes users keen to chase huge profits instead of real innovation.
However, the darkest side of "fair launch" is the effect it has on developers.
Imagine a new, cutting-edge DeFi protocol founder who poured blood, sweat, and tears into their product over the past two years. For the sake of decentralization and transparency, the founders open source all the code.
At token distribution, they distribute 60% of the tokens to the community through liquidity mining rewards. The founders sell 20% of the tokens to a group of investors to pay for staff as well as development, testing, auditing, marketing and operations. The remaining 20% is distributed to the founders and core team.
In the month since the token launch, the project has been running smoothly. Until there is an anonymous fork agreement. At this time, Anonymous said that it is unfair to give only 60% of the tokens to the community. Instead, their fork will issue 95% of tokens to the community, 3% to operations, and 2% to themselves.
The community hails Anonymous as a true pioneer of decentralization because he is not greedy. What people seem to miss is that earning 2% of the tokens by forking the code and playing the marketing game is not the same as earning 20% of the tokens by dedicating your life to innovative work.
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3. The cost of innovation is not just money
A "fair launch" means that founders should not raise money from VCs or institutional investors to launch, run a project, because for some reason it would be unfair to community members.
There is nothing wrong with forking a protocol and building a new design within it, at least it helps to test new versions of the same protocol in the market to gauge demand for such a service.
However, if a fork coin simply gives the community more distribution of tokens without making any changes, this does not really help except make a few users richer.
If DeFi users turn to these so-called "fair launches" to make quick money, it could cause a large number of developers to leave the ecosystem. Once there is a lack of builders, the DeFi field will definitely face bigger problems.
