The world of Web3 has always been a dynamic frontier, constantly testing, breaking, and reinventing paradigms. As Adrian Newman eloquently outlines, the tokenomics and fundraising landscape has shifted significantly—from the initial boom of ICOs to today’s exploration of high-floating models and no-VC structures. This trajectory reflects the growing pains of a maturing ecosystem and a relentless pursuit of balance between innovation, sustainability, and community alignment.
As we decode the insights shared, let’s dive into the intricate dance of founders, investors, and communities as they navigate these radical transformations.
From ICO Boom to Tokenomics Lessons
The ICO frenzy of 2017-2018 was nothing short of a gold rush. It democratized access to capital, giving retail investors a front-row seat to early-stage projects. But, as Adrian highlights, this era was far from sustainable. With minimal lockups, VCs and insiders could cash out rapidly, creating misaligned incentives and undermining retail trust.
Key lessons from this period:
Trust is Paramount: The lack of regulation and transparency led to scams and rug pulls, eroding trust in the ecosystem.
VC Signaling Power: At the time, VCs served more as branding tools than strategic partners. Their involvement was less about funding and more about legitimizing projects for broader retail uptake.
Liquidity Scarcity: The limited number of tokens launching during the ICO boom concentrated demand, artificially inflating returns.
But the cracks in this model became apparent quickly, pushing the industry to adopt longer lockups, product-first approaches, and diversified funding structures.
The Current Landscape: Low-Floating Models and VC Dilemmas
Today, the market operates within what Adrian terms the “low-floating, high FDV” environment. While this model aimed to stabilize markets and protect investors from immediate dumping, we believe it has introduced new challenges:
Low Circulating Supply: While effective at preventing short-term volatility, this structure often leads to suppressed liquidity and organic price discovery.
VC Misalignment: Entering at lower valuations and enjoying early liquidity has led to a reputational crisis for VCs. Retail participants are increasingly wary of becoming exit liquidity.
Yet, the ecosystem has also seen the rise of memecoin-inspired launches and no-VC models. These approaches experiment with full or near-full initial token circulation and retail-first narratives, bypassing traditional VC structures.
Challenges Facing VCs
VCs, once the cornerstone of Web3 funding now face an identity crisis:
Reduced Dependency: Wealthier founders and retail-driven fundraising models are sidelining VCs. Successful projects like memecoins have shown that communities can be built without institutional backing.
Community Proximity: Traditional VCs often lack the grassroots connections needed to build strong, engaged user bases. Prominent angel investors, deeply embedded in the culture of Web3, are increasingly taking the reins.
Tokenomics Criticism: Poorly designed tokenomics, particularly low-float, high-FDV models, have led to predictable post-launch dumping. VCs need to advocate for more balanced, community-friendly structures.
What Lies Ahead for Web3 Fundraising
Adrian’s insights point toward an experimental phase as the ecosystem refines its fundraising and tokenomics strategies.
Here are some future models that could shape the next era:
Aligned Incentives: To rebuild trust, projects could ensure that VCs and retail investors enter at similar valuations. This alignment would encourage long-term commitment from all stakeholders, reducing the likelihood of immediate token dumps. While VCs may secure larger allocations, stricter vesting schedules could promote healthier market dynamics.
No-VC Models: The rise of no-VC launches like Hyperliquid and Universal Basic Compute signals a new wave of experimentation. These projects test whether markets can sustain price stability and growth without institutional backing. While promising, they also face challenges, such as day-one volatility and the lack of operational funding pools.
Memecoin-Inspired Structures: The simplicity and community-first ethos of memecoins are influencing more structured projects. Features like high initial float, treasury-free models, and retail-friendly allocations are gaining traction. However, non-memecoin projects will still need treasury and operational pools to ensure sustainability.
New Tokenomics Frameworks: Adrian’s proposed tokenomics blueprint suggests following areas to take into consideration.
Higher Initial Float (60-70%): This ensures liquidity and reduces manipulation risks while preserving some locked pools for operational needs.
Dynamic Treasury Structures: Projects may need to balance immediate liquidity with long-term funding mechanisms, adapting their strategies based on market feedback.
Volatility Management: Acknowledging that early volatility is inevitable, projects can design mechanisms to stabilize prices post-launch, such as gradual unlocks or market-making initiatives.
The Evolving Role of VCs
Despite the challenges, VCs are not obsolete. Instead, their role must evolve:
Active Engagement: VCs must operate as participants within the ecosystem, understanding the nuances of farming, trading, and growth hacking.
Strategic Contributions: Founders increasingly value VCs who offer operational expertise, tokenomics guidance, and go-to-market support.
Selective Involvement: Lean cap tables with a few high-impact investors are becoming the norm, favoring quality over quantity.
Conclusion: Bridging Innovation and Sustainability
The Web3 fundraising landscape is at a crossroads. As the ecosystem experiments with new models, the key will be finding a balance between innovation and sustainability:
For Founders: Lean cap tables and community-centric approaches will be crucial for long-term success.
For VCs: Adaptability and value-add strategies will determine their relevance in this evolving market.
For Communities: Empowered by retail-first models, they will play a pivotal role in shaping the future of Web3 projects.
As Adrian Newman aptly summarizes, the tokenomics and fundraising experiments of today are laying the foundation for a more equitable, transparent, and robust Web3 ecosystem.
The lessons learned and innovations adopted will define the next chapter of this decentralized revolution.
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