A brief discussion on the re-staking token economy: Web3 projects should not keep their own safety cushion

Original author: 0xTodd , Partner at Nothing Research (X: @0x_Todd )

The recent Re-Re-staking projects that only give Holders a small percentage of tokens may be a wrong decision.

For many Re-Re-staking projects, TVL is everything to this project. If TVL is removed, all assumptions: AVS, Hub, Strategy, Liquid restaking token, L2, Restaking layer do not really exist. TVL is the real benefactor.

In the DeFi Summer, $YFI distributed 100% of its tokens within a week. Yes, 100%.

TVL, liquidity mining and governance each account for 1/3, which is simple, clear and effective. Everyone knows the rest of the story. In the following week, $YFI rose by 100 0x.

It is undeniable that Re-Re-staking has its own innovations, but its essence is not much different from Yearn. It does not generate any income itself. The essential innovation and core income come from other underlying layers, such as Eigenlayer. After penetrating the surface narrative, they are just some kind of financial aggregator.

What does a project need? It’s simple. It needs a cult-like community, not wavering temporary miners and airdrop hunters who retreat at any time.

But the important thing is that the two identities of devout supporter and ruthless miner can be converted into each other. The Schelling point of this transformation lies in the proportion of tokens held by the community.

As a project owner, you are surprised to find that the team owns 90% (the so-called thick safety cushion), while the community only owns 10% (the so-called small selling pressure).

——Then please stop complaining about why the community is not active and why the community does not support you.

Mining is a lot like trading:

Everyone who has actually traded cryptocurrency has this feeling. When you are optimistic about a certain token and buy it, after making 2x, your faith will begin to become extremely abundant.

Why do Bitcoin Holders always have the most faith? Nonsense, they got from $1,100 to $66,000, no FUD can wash them away, the earlier they buy, the more faith they have.

The mentality of mining is very similar:

– When people use $100,000 to mine $10,000 and then unlock it linearly, it will only urge them to sell it as soon as possible and keep the fruits of victory as soon as possible, which conveys the lack of confidence of the project party. In addition, investment also has management bandwidth. The only answer is to sell the small airdrop as soon as possible. One more minute is a waste of energy.

-When people use $10,000 to dig up $10,000, they are willing to slap their thighs on Twitter, half of which is really regretful, and half of which is a little secretly happy and Versailles, which makes many readers itchy and eager to try, and add it to their favorite lists.

– When people use $1,000 to mine $10,000, they will be willing to mention your project tirelessly at every dinner, every gathering, and every Space, and will continue to recommend this project to everyone around them for 1-5 years, and even record it in the family tree In a certain year and month, I dug up a magic mine. All relatives and friends will shed tears of envy, and then get on board with tears of FOMO.

Believe me, this is a true story.

Did you find out? The above three stories bring up three types of people, corresponding to:

– Ruthless airdrop hunter

– Passionate hardcore miners

– Loyal seed user

When you turn the sacred and important seed user token distribution into an early participant airdrop, you have actually lost at the starting line.

I don’t demand that current Re-Re-staking projects pursue Fair Launch. After all, only a few have the courage to do so.

However, using just a few chips will never buy you a loyal cult community, only ruthless diggers and drop hunters.

A little reference: $UNIs airdrop ratio accounts for 15%, and liquidity mining accounts for 2%, which means that 17% was initially given to the community.

I have been a consultant for many projects, and many founders have asked this question: How to draw a pie chart for token distribution?

There is no right answer to this question. It can be conservative, radical, or somewhere in between. Every radical plan is a social experiment, while the conservative plan is not seeking merit but seeking to avoid mistakes.

With all due respect, the not seeking merit but avoiding mistakes approach in the token economy is definitely a form of laziness .

Their characteristics are often:

– The team holds as many tokens as possible;

– The community gets as few tokens as possible (small base, strict lock-up)

– Leave room for backdoors for the national treasury and core authorities.

Because this always gives the team and founder the biggest safety cushion – I am still the biggest controller of the entire game.

Little do they know that this will take away the communitys safety cushion.

The safety cushion is conserved, there is only one piece. If you take it away, the community is gone.

Don’t bring Web2 stuff into Crypto. With a tight grip on equity, the founders will naturally maximize their own interests, but they will never be able to make their colleagues work hard for it, let alone loyal users and devout communities. My partner once commented on the reason for a certain failure: it only had angry employees and angry users.

I came to Crypto to change all that.

What exactly is the spirit of Crypto that we talk about all day?

Use the most fair distribution mechanism and unite all the people who can be united. Because of this incomparable power of unity, we can achieve a startup speed far exceeding that of Web2 companies, and then defeat Web2.

If you are still obsessed with maximizing the interests of the team and the safety cushion in the founders mind, it is recommended to return to Web2 entrepreneurship.

This article is sourced from the internet: A brief discussion on the re-staking token economy: Web3 projects should not keep their own safety cushion

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