For educational purposes: How to issue cryptocurrency, teacher, this is very serious.
We're talking about popular science, popular science, popular science about the historical evolution of token issuance. The "new" things Zama and Infinex have done these past few days are indeed interesting experiments in this bear market, but there's nothing new under the sun; they're all old foxes, don't try to play games with me.
DWF has an old article that outlines various token issuance models, which is quite interesting. I've excerpted and adapted some parts of it.
Let's start with a simple introduction!
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From Bitcoin to Pumpfun, the issuance of crypto assets has taken many forms over the past decade, some closely resembling traditional finance, others closely linked to code and mathematics. Regardless of the approach, whoever controls asset issuance undoubtedly occupies the upper echelons of the crypto food chain. Few understand this: the most profitable activity in the crypto is issuing tokens (at least for a period of time).
Today, launching a coin is too easy, requiring only a few clicks, but operating a coin well is too difficult, with costs piling up: listing on exchanges, auditing, marketing, market making... Looking back at Bitcoin, the most difficult thing has become the simplest.
Is this also a cycle of value?
Mining
The earliest method of token issuance was "mining," a model first demonstrated by Bitcoin in 2009. It uses a proof-of-work consensus mechanism, where miners expend computing power to verify transactions and compete to propose new blocks on the blockchain. If successful, they receive newly minted tokens as a reward. To put it simply, coins are not "issued" but rather "mined."
However, the mining model has many drawbacks. Miner centralization, high energy consumption, and environmental concerns have plagued this model and remain a subject of debate to this day. Besides BTC, there are still many PoW chains like LTC, ETC, and DOGE that persist, supporting the traditional mining machine industry.
Pre-mining
Following traditional mining, the pre-mining model was used to distribute tokens to the team, advisors, and investors before TGE. Initially, pre-mining was criticized for being dishonest and overly centralized, but this has since improved due to more transparent allocation. Pre-mining projects have their merits, as they can lock up development funds in advance, build strategic reserves, and incentivize early contributors.
Pre-mining is common in mature projects; XRP, ADA, and EOS are typical examples of this model. It is now mostly used for foundation reserves and early-stage incentives. Under regulatory pressure, projects must move towards transparent disclosure, and new projects are also beginning to experiment with hybrid models, such as ICOs.
Fixed Price Sales
This model encompasses various ICOs, IEOs, IDOs, etc. ICOs/IEOs declined due to high regulatory risks, while IDOs were active on various launchpads such as Buidlpad and Kaito. Combining KYC and vesting, this model is almost the mainstream issuance method now. Its true origin is Ethereum, that landmark ICO.
The ICO boom of 2017 introduced the fixed-price sale model, where tokens could be sold to the public at a predetermined price. ICOs played a significant role in rapidly raising funds between 2017 and 2018, but by 2018, due to widespread fraud, ICOs were almost entirely replaced by more transparent decentralized exchange (Decentralized Exchange) issuances (IDOs) and more compliant exchange-issued IEOs.
It's worth noting that Monad relaunched ICO Glory on Coinbase, and although the results weren't great, the model seems to be reviving.
Dutch Auction
Dutch auctions, pioneered by projects like Algorand and Gnosis, introduced a new way to market-price tokens. This method starts at a high price and gradually decreases until a reserve price is reached, allowing users to buy at any price they deem the token worth.
If demand exceeds supply before the end of the timeframe, the final token price may be higher than the reserve price. Compared to fixed-price sales, Dutch auctions are more inclusive and help reduce post-issuance price volatility. This approach is best suited for founding teams confident that the public market can make informed valuations of the assets they are selling. However, because pure Dutch auctions are too inefficient, Hyperliquid and other platforms have implemented improvements, integrating them into more complex models such as LBA and LBP.
Fair Launch
Fairness and efficiency are cyclical. Projects like Yearn Finance ushered in an era of fair issuance, aiming for transparent and equitable token distribution, ensuring no single group has absolute control over the protocol. This is an evolution of fixed-price sales and Dutch auctions, as all parties need to acquire tokens through purchasing or participating in liquidity mining at TGE. The community gains power to determine the protocol's direction, ensuring early supporters remain aligned with the protocol's growth.
This could be a double-edged sword. While it ensures decentralization, it could also skew decision-making in the hands of a few "whales" who can buy token supply to directly influence voting decisions. In fact, this has happened, and quite absurdly.
Fair Launch 2.0
As users become disillusioned with low-circulation, high-FDV tokens, we are seeing a shift in issuance models towards "community-first" fair issuance. Fair Issuance 2.0 can be defined as a decentralized token creation and trading process combined with innovative acceleration mechanisms. Pumpfun, which launched in January 2024, introduced a "one-click" issuance platform, allowing anyone to issue tokens.
The entire process reduces the time and knowledge required for token creation, automates liquidity management, and makes it more transparent than before, marking a shift in power from centralized entities to decentralization.
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Clearly, the Fairness 2.0 launch phase did not resolve the fairness issue. The exposure of scandals like $LIBRA has made us realize a fundamental fact: success depends on human intervention. Any issuance model can be monopolized or controlled by power, capital, resources, or even technology. It brings us back to the initial point: the changes are merely rhetoric used to dump products on the secondary market.
Interspersed among these models are some very minor ones. Overall, asset issuance is becoming simpler and more transparent, but the inequality in cognition and resources means that these models have not solved the original problem: how to fairly allocate assets and provide sustained incentives.
The old A8 is still the same A8. Today, more and more people are beginning to miss Bitcoin, a somewhat inefficient and clumsy way of issuing assets. At least it didn't have so many scoundrels causing trouble. Making money has quietly shifted from "issuing" to "making," so we've seen all sorts of amazing market makers raking in money in the second half of this year, and we've also seen many projects with decent fundamentals become cash cows for others, turning into ATMs for speculative manipulators.
Understanding these concepts will help you better comprehend the asset models in the crypto.
Wish us luck!
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Author: anymose | A softcore science writer. This article is for popular science purposes only and does not constitute any investment advice. Always remember DYOR!
