Fjord Foundry V2 by the numbers: Is LBP good or not?

Original author: HYPHIN

Original translation: Luffy, Foresight News

The lack of early-stage investment opportunities for retail investors has always been a long-standing problem, while private equity has flourished due to abundant funds. Web3 has tried to democratize early-stage venture capital, but what are the results?

introduce

There are many different ways to obtain funding and introduce tokens to the public market, each with its own unique advantages and disadvantages. Venture capital backing is often sought after, but is generally out of reach for most projects. As a result, platforms such as Launchpad have become a way for some projects to obtain external capital, with Fjord Foundry having long been a popular choice for builders thanks to its reputation and strong platform. Through Liquidity Bootstrapping Pools (LBPs), many protocols have entered the market and received large cash injections.

Funds raised on jordFoundry V2

The overall goal of this post is to provide an objective overview of the token issuance conducted on Fjord Foundry V2 and its price behavior after the initial sale ended.

All eyes on LBP

Before analyzing any token issued by a protocol, there are some important details to consider in order to understand the unique dynamics associated with Fjord.

Expert support

To build trust and awareness on the permissionless platform, Fjord has carefully selected a group of knowledgeable professionals specializing in a variety of fields to curate the token sale.

4 out of 5 projects on Fjord Foundry V2 are curated.

In addition to agency, curators can also provide marketing or consulting services when necessary. In order to achieve a certain degree of transparency, project applicants can provide personal identification or any other relevant information requested by the spokesperson and hold relevant parties accountable in the event of malicious behavior.

Due to changes in UIs over time, some past sale events do not show any public information related to KYC status as it was not documented and required at the time. In recent offerings, the vast majority of projects have a doxxed team.

Curators activities vary, with some taking on more sales tasks than others.

Curator activity on Fjord Foundry V2

These vetted third parties will be compensated with project tokens derived from transaction fees generated during the sale, meaning they are directly incentivized to attract a large amount of attention and participation.

First is not best

Contrary to fair launches and IPOs, in the LBP space, being early to market does not bring rewards. To promote fair token distribution, we adopt a high-to-low pricing strategy and dynamic token weight transfer to prevent price manipulation and other bad behavior.

By aggregating data from all past token issuances, we can paint an average scenario to gain an intuitive understanding of asset pricing trends and the most common purchase cost ranges.

In most cases, prices remained relatively stable after 12 hours, only showing signs of stronger demand near the end of the sale. The average and median cost basis highlighted on the chart shows that most participants fit similar entries, confirming the concept this pricing model is trying to illustrate.

Private placement round behind the scenes

It is important to note that projects hold private rounds for marketers and strategic partners before public sales, where early contributors can receive tokens at a discount. Information about these sales is sometimes included in the Transparency section of the token page.

1 in 4 curated projects publicly display token vesting details.

Sales data with disclosed terms, anecdotal evidence on Twitter, and promotional materials circulating in Telegram chats suggest that the following often occurs:

Terminology Note:

• TGE: Token Generation Event

• Cliff: The time interval between TGE and the start of the release of locked tokens

• Example #1 ~ Radical

• * TGE: Release 20%

• * Cliff: 1 month

• * Vesting period: 3-6 months

• Example #2 ~ Conservative

• * TGE: Release 0%

• * Cliff: 3 months

• * Vesting period: 4-12 months

• Example #3 ~ Fjord Mean

• * TGE: Release 26.25%

• * Cliff: Unknown

• * Vesting period: 8.53 months

• Example #4 ~ Fjord Median

• * TGE: Release 15%

• * Cliff: Unknown

• * Vesting period: 7.46 months

• Private placement discount

• Average: 33.4%

• Median: 60.22%

The above is Fjords disclosure information, for reference only

While legitimate projects will often attempt to recruit individuals who are more aligned with the team鈥檚 long-term vision and who will not target their audience for exit liquidity, the value these vested interests provide and the impact they may have on token prices is difficult to determine.

How does LBP work?

The participation rate of the token launch is largely determined by the publicity on social media. There is a lot of interest in the tokens that will be launched on Fjord, and a large number of independent participants are attracted.

As of the time of writing, 81 orchestrated token sales have taken place in the six months to date. Data from these campaigns will serve as the basis for our analysis.

These indicators show that LBP works very well, often resulting in a large amount of agreement fees and funds for builders who want to start a project.

This is very attractive for teams seeking financing, but what does it mean for investors?

Price performance

It has been shown that token issuances often provide lucrative opportunities for speculators to make a quick profit or acquire a long-term position at a favorable price. To determine if this is also the case with LBP, the average and median performance can be calculated using the final asset value on Fjord as a reference to the trading activity on decentralized exchanges.

The huge discrepancy between the two metrics means that only a few coins have generated positive returns, while the rest have suffered significant losses.

Only about 13.2% of these tokens are now priced higher than they were before listing on decentralized exchanges.

What鈥檚 causing this continued negative performance? It鈥檚 hard to pinpoint, but early price action may offer some clues.

Price performance within 14 days after token sale

Typically, these assets are either issued at a discount or immediately sold off, leaving most early buyers stranded at the outset. By watching what happens next, it鈥檚 clear that the selling pressure is very intense, with few buyers stepping in to absorb the pressure and turn the tide. Tracking the wallet balances of those who participated in the token offering can give us some insight into what鈥檚 going on.

LBP Participant Wallet Position Changes

On average, nearly 15% of all LBP participants exited their positions on the first day, and by the 14th day, this proportion reached 29.42%. This is inevitable and can be understood as a second wave of distribution to attract latecomers.

In these adverse scenarios, fully diluted overvaluation plays a major role as the market is unwilling to take the lead. Sellers will continue to dominate the situation unless a fair value is found or sufficient interest is generated from external parties. As the number of unlocked tokens begins to increase over time, investors begin to cut losses, which can also exacerbate the situation of long-term price declines.

Many projects fall into a trap where they focus on the initial coin offering of Fjord and ignore the role of subsequent operations, which ultimately leads to an initial valuation that is too high and difficult to maintain after the launch.

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