Steve the Head Hype Man (12:27)
I mean, that is a better way because, you know, previously when ICOs were basically verboten, if you wanted to increase the float, that basically meant, okay, do a bigger airdrop. And doing a bigger airdrop, of course, as we've learned, has become less and less efficient at actually doing anything useful. So you're kind of just burning tokens in order to maybe solve a market structure problem that like, you know, how much is this actually a solution to that problem? Tbd. The other thing, of course is like, you know, what's the other side of tokens with no locks? The answer is meme coins. And okay, you go see a meme coin, everything's unlocked, everything's trading immediately. Is there all that much evidence that, okay, these things trade better or more stably or there's better price discovery or whatever, it's not really clear. But then also, if you look at previous generations of tokens, so just go look back at yearn or look back at stuff that is fully distributed, right? If it's true that high FTV low float is the primary cause of this last batch of tokens going poorly, then what you should see is dispersion. What you should see is that tokens that are mainly unlocked are doing better than tokens that are more recent that have this high FTV low float mechanic. And you do not see that. You do not see that like oh yeah, yearn and compound, which are fully distributed are doing really well relative to insert defi project from this vintage. You say actually no, they're all moving together and there really is no clear regressor you can run that says, ah, this explains why things are going poorly. So that was my principal critique of the low FTV high float story, is that these tokens have basically always been low float, high FTV. If you consider low float to be like 12%, 12% is a historical average. It was a historical average in 2018 and it's a historical average in 2024. 2025, I don't know, I didn't run the numbers, but I wrote this article in 2024. So I don't think the story is that simple. If it were, it would have a really simple solution. But there are no simple solutions for why tokens keep fucking going down. So my argument is that no, I think vesting is good. I think this is not something that we should not remove. I do think there are ways that we can improve it at the margin. I do think that the main way that you can improve it at the margin is with token sales. Right? If you do a token sale then one, it's a non wasteful way of getting more float out there. So you get more float out there immediately. You can actually make sure that it's going to real users by doing some kind of deduplication, civil resistance. And by getting those tokens out to real users, you get cash instead of just airdropping it to random people. Right? And then with that cache you can make the protocol better or in some ways even do some kind of market stabilization. Now, tbd, whether or not that's legally advisable, but I have to imagine that norms around this are going to evolve in some way. My guess is that at some point what happens is people find ways to get more creative about how to use very, very large token sales. So maybe let's say you sell not 7%, but let's say 15% of the token supply. And with that amount of cash, if it's a really big project that has a nominally high ftv, you use that cash in some way. That's not okay. We're in the market as a dealer just going out and buying back our token but there's some kind of programmatic way in which this is a stabilizing pool of capital for the token markets, right. That, that's not discretionary. I can imagine that that becomes a new norm in the market that both increases float, but also doesn't say, okay, I have this giant pile of money, but I'm not going to just burn it in a gigantic fat treasury that I, you know, just give out token grants and stuff that don't end up going anywhere. Because that is the other failure mode that we saw from previous cycles when projects would raise huge sums of money. And the ROI when you get into the hundreds of millions just plummets on your ability to actually drive meaningful outcomes.
