Binance recently listed an NFP on Launchpool, and the community said "What is this?"
The core of this time is actually the subsequent promulgation of the “Fair Mode” and the corresponding token economic guidance report. It can be seen from this that Binance is trying to give more chips to retail investors by greatly increasing the ratio of retail investors vs. project developers & VCs. Improve the "Fair" level of the project
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This may become one of the core frameworks for currency listing on Binance Launchpad in the future, and will also bring new opportunities to BNB investors and hair-raising users. This article will explain all this in a simple and easy-to-understand way for you.
Based on the introduction of Fair Mode, NFP and token economic reports, the general idea can be summarized as follows:
Increase the opening circulation and reduce FDV, give more shares to Launchpool and airdrops, and give more chips to retail investors
Permanently lock the chips of some project parties so that they cannot be sold, thereby reducing the total supply in disguised form
With one increase and one decrease, the ratio of chips between retail investors and project owners may have increased by 10 times compared to the original project.
Token distribution issue
What were the problems with the previous Launchpad / Launchpool project? The chips are all in the hands of project parties and VCs
Take a look at Hook, which is often complained about. Launchpad only gave 5%, the project team & VC took 40%, and then the so-called ecology and community 55% were recently given to Binance by the project team, euphemistically calling it "adding liquidity" "In this way, the ratio between retail investors vs. project parties & VCs is 1:8. In fact, it may be 1:19, which means that the currency is basically under the control of the project parties.
Why should there be ecological and community distribution? Ideally, the project party would rationally use these funds to achieve growth, so that even if it is gradually unlocked later, it can be supported by fundamental growth. However, in fact, it has become a tool for the project party to ship goods.
In addition, because the initial circulation of the project is too small, it is usually easily pulled up to $1B FDV (full circulation market value) after being listed on Binance, which is close to the size of MakerDAO, one of the leading DeFi brothers. Even if the project team really puts the ecological fund Even if these are used properly, they may not be able to support the size of 1B in the long term, so there will probably be no Alpha benefits in the long run.
Increase opening liquidity and reduce FDV
how to solve this problem? User education is definitely not enough. Retail investors will only trade directly, so they can only increase the opening circulation. After all, buying orders are limited, and the corresponding circulation market value is also limited. Increasing circulation will probably reduce FDV.
Looking at the previous new currency projects of Binance Launchpad and Launchpool, regardless of the quality, the share is about 5%, so in the end the application projects were pulled to almost $1B. This is quite outrageous, it can be said that in the eyes of users The project is basically the shell value of the currency listed on Binance, regardless of the quality of the fundamentals, so Binance probably wants to give some differentiated valuations to projects with different fundamentals by adjusting the initial circulation model.
For example, NFP's launch pool + airdrop accounted for 21%, compared to Hook's 5%. Assuming retail investors allocate the same amount, NFP's FDV on the first day of opening may only be 1/4 of Hook's, which is about 200M-300M. This volume plus AI's Label, even if the project side falls flat in the future, there is still some hope to rely on narrative to achieve ATH.
Non-tradable long-term development fund
In addition, it can be seen from the NFP chart that 27% of long-term development funds are "not available for circulation" allocations. This note is worth reading carefully: Tokens of the "Long-term Development Fund" cannot be spent or sold , they will not enter circulation . After vesting, they can participate in the ecosystem through staking and other methods and share the rewards and benefits from the project, but they do not have any governance rights. The staking rewards it obtains can be used for the long-term operation and sustainable growth of the project.
What does this sentence mean? How does the ETH Foundation pay for development and operating costs now? Sell coins! Most project parties do the same thing. This is obviously not a long-term solution. After all, they will be gone if they sell out.
What Binance means is that the ETH Foundation will no longer sell coins, but will use its own ETH for staking, and use the money earned from staking to pay for long-term growth and operating costs. Of course, this should only apply to projects that can earn profits. The NFP report also said that it will support token “pledge sharing platform fees”. Taking a step back and saying that the project has no income, this part is almost like being directly destroyed.
In addition, if the project can really make money in the future, the project side of the short-term development fund that can be spent will probably be more cautious. After all, spending too much will dilute the Staking share of the long-term development fund, allowing it to obtain less income. This Block introduces a new game
All in all, the long-term development fund is to reduce the total supply in disguised form, and to reduce FDV in another sense, and then also encourages project parties to work hard on projects to make money and spend less money.
Significantly increase the chip ratio of retail investors vs. project parties
As previously calculated, the chip ratio of Hook retail investors vs. project parties & VCs is 1:8, but the actual ratio is 1:19. When it comes to NFP, the open card is (Launchpool 11% + airdrop 10%) 21% vs 25% (team + VC), which is close to 1:1 . The actual ratio is 21%: 52% (100%-21%-uncirculated) 27%), close to 1:2.5, and Binance stated in the report that the use of funds should be more strictly regulated, and the actual improvement in this area may be more
With each increase and decrease, the chip ratio of retail investors vs. project parties & VCs has increased tenfold. Although these still somewhat costly project parties cannot reach the level of Inscription or Meme Coin, compared to the original, it is indeed a lot "Fair", which can be regarded as It’s a tribute to FairLaunch, so there’s nothing wrong with calling it “Fair Mode”. This kind of project will have much less inflationary pressure in the future.
Summarize
Binance intends to give more chips to retail investors by significantly increasing the chip ratio between retail investors vs. project parties & VCs, improve the fairness of the project, differentiate the initial valuation, reduce inflationary pressure, and incentivize project parties to build in the long term.
For retail investors, they can either buy BNB to receive more free Launchpool shares, or participate more actively in airdrops to receive more airdrop shares. Both of these are expected to allocate more shares in the future.
