The only way to create a community-driven launch

One of the biggest problems for many crypto startups is how to get funding and a reliable solution has been to launch a presale that attracts venture investors and whales.

So yeah, the money comes pouring in and there’s the surge of excitement within the team but what happens beneath all that is a long-term paralysis that affects the strength of the community and the project at large.

Well, it doesn’t seem so reliable, huh

Dirk A. Zetzsche, Ross P. Buckley, Douglas W. Arner, and Linus Föhr in their paper “The ICO Gold Rush: It’s a Scam, It’s a Bubble, It’s a Super Challenge for Regulators” noted the explosive growth of presales as ICOs.

In their discussions, they highlighted that while presales have raised significant amounts of capital, they are also characterized by high volatility and speculative behavior.

You see, these presales are mostly driven by speculative investment rather than the intrinsic value of the projects.

That’s why they are called “Investors.” Understand that an Investor doesn’t owe your project any form of loyalty.

Their major goal isn’t just to trade or sell your project tokens. Nah, these guys hold them and deploy them strategically when there’s the potential for high returns.

These behaviours hurt the market sentiment of your project.

According to the “Cryptocurrency Presales: Strategic Early Investments and Market Manipulation” paper, the market faces high manipulation risks and liquidity issues.

It further explained that early investors might sell their tokens immediately after the presale at inflated prices, causing a temporary price spike followed by a crash.

Large presales can lead to a concentration of tokens in the hands of a few investors, impacting liquidity and market stability.

Ultimately, since the focus has been on investors from the outset, the community becomes weak, and the project loses advocates that will validate nodes, and create networks...

The way to combat this is to employ the mechanics of a “fair launch.”

Fair Launch is simply launching your project with your community at the center of it. Your community becomes the primary initial investor in your startup.

Fair launches focus on helping you build a solid community while presales focus on getting you the liquidity needed to run the project up till launch.

Hence the dilemma; how to get enough funding to run the project for a successful fair launch.

How To Get Funding for Your Crypto Project

While there are diverse ways of getting funds for a crypto startup, I’ll briefly talk about the most effective ones.

Leveraging DAOs

According to Primavera De Filippi and Samer Hassan’s paper on “The Decentralized Autonomous Organization and Governance Issues,” DAOs play an efficient role in funding crypto projects.

The paper explores how DAOs enable decentralized decision-making and funding allocation.

Unlike centralized organizations, DAOs distribute governance among their participants, who vote on proposals and funding allocations based on predefined rules encoded in smart contracts.

One of the significant edges here is that funds are allocated based on the perceived value of the project.

Remember how I said presales foster speculative investment rather than the intrinsic value of the projects? Great!

Well, here you get funded based on how you can effectively communicate your vision to the DAO community and win their hearts over.

Cool, huh?

Ethereum Crowdfunding

In the “Ethereum: A Next-Generation Smart Contract and Decentralized Application Platform” paper, Vitalik Buterin explains how Ethereum helps raise capital by leveraging blockchain technology and token economics.

Through Ethereum’s platform, developers can issue tokens via Initial Coin Offerings (ICOs), decentralized fundraising mechanisms, or community contributions.

These tokens represent various utilities or assets within dApps, enabling crowdfunding for projects directly on the blockchain without traditional intermediaries.

This democratizes access to capital and aligns incentives between project developers, the community, and users.

This is a more inclusive and community-focused method because it allows anyone with an internet connection to participate in fundraising efforts.

Democratization of these funds can attract a diverse range of advocates and supporters — those who truly believe in the project’s vision — to accelerate its development.

So now, you have the fair launch strategy to help build a solid community and ways to get funding for your project, but you aren’t still out of the red.

You see, your brand is also in danger from crypto beginners, popularly called hamsters.

They pose as much threat as the whales from presales because they can decide to dump the token all at once which will hurt the market.

To curb the wreck from hamsters, you need to create a brand story.

You see, these “hamsters” are quite new to the space and might not connect with the technical jargon you have to say.

But a compelling brand story gets them emotionally invested in your project’s vision and ultimately prevents them from dumping.

A great brand story makes it easy to connect with the purpose and values of your project and gets them to stick by it.

Chainlink is an example of a project with an awesome brand story

Chainlink is a decentralized network that acts as a bridge between smart contracts to real-world data. Their brand story is focused on their mission to create a more connected and trustworthy world, powered by smart contracts.

But sharing a compelling story isn’t the only way to contain hamsters. You can also go ahead to provide some education to help them understand the market better.

Fair launch is a growing narrative in the space and projects now more than ever are realizing the power of a solid community in fostering continuous growth.

It’s also possible to get whales to invest in your project but remember that their input should be secondary while your community’s should be primary

Else it’ll deter crypto enthusiasts from being a part of your project when they see that these whales and investors hold most of the cards and can dump on them at any time.

Cheers from my screen to yours!