The dominant model of token distribution in the crypto space today is the so-called low-float, high FDV launch. In this model, projects launch with a low fraction of the total supply in circulation, where most of the supply is locked, typically unlocking gradually after a year. This low circulation is often coupled with, and perhaps even explicitly designed to encourage, a high fully-diluted valuation. According to research by CoinGecko, today nearly a quarter of the industry’s top tokens are low float. Notable recent launches using this model include Starknet, Aptos, Arbitrum, Optimism, Celestia, and Worldcoin (where an astonishing 95.7% of supply remains locked as of this writing).

This model is fundamentally broken. Restricting the movement of tokens distorts market signals and misleads both actual and potential network participants who depend on those signals for making decisions. "Low-float, high FDV" results in a world where most of the upside potential of new launches is captured by private investors, with little available to the public markets. Ultimately, this pattern of launching tokens inflates short-term metrics at the cost of long-term sustainability and public trust.

The Fallacy of Crypto Vesting

What we refer to as "vesting" in crypto has little resemblance to actual vesting mechanisms in traditional finance, where vesting aligns incentives and ensures stakeholder obligations are met. Vesting in traditional companies (e.g., RSUs) comes with performance expectations and the ability to revoke further stakes if those expectations are unmet. Vesting lockups in crypto networks lack such mechanisms; tokens are simply locked for a fixed period and are unlocked afterward.

These types of lockups often lead to a false impression of demand, distorting market signals. If we view price signals as the balance point between asset supply and demand, their value depends on both sides being free to express their preferences (e.g., sell if they wish to sell, and buy if they want to buy). Lockups prevent one market side from expressing their preferences, degrading signal quality. This may temporarily enhance market cap ranking or other metrics but diminishes overall market quality due to the information conveyed by price signals.

Worse still, these lockups disadvantage the public. Token holders joining post-launch face inaccurate price signals that do not reflect market sentiment. High-capacity token holders with access to non-public markets often gain unfair advantages and may sell locked tokens off-market. To discern the true market signal, one must analyze who might want to sell but cannot, speculating on backroom deals—an analysis too complex and time-consuming for most market participants.

Market Pressure Inevitability

Lockups do not prevent selling; they merely delay the inevitable. Vesting terms expire, and those wishing to sell will eventually do so, exerting constant downward pressure on markets and causing an artificial slow bleed in capitalization. Personally, I would hesitate to hold an asset or engage in a network where many holders want to exit but cannot.

If one goal of the crypto space is to generate meaningful products that provide real, long-term value, practices inflating short-term metrics will not help achieve that. To accurately evaluate any project’s potential, one needs to ascertain whether stakeholders genuinely support it, which becomes impossible if they cannot sell.

Criticism of the low-float, FDV orthodoxy has inviting calls for new, 'fair launch' strategies to token distribution. However, many of these proposals merely seek a higher percentage of circulating supply at launch, failing to challenge the legitimacy of vesting lockups per se.

This does not suffice. Any form of market signal manipulation remains artificial. We need to disrupt crypto's vesting paradigm with varied new experiments.

The Free-Market Launch

This method, referred to as the "free-market launch," enables all stakeholders to freely express their preferences. If one wants to sell, they can; if one wants to buy, they can. This approach guarantees meaningful price signals since all stakeholders can express their wishes transparently and in real-time.

The long-term advantages of cultivating a sustainable community of genuine stakeholders outweigh the short-term risks of providing early exit opportunities for those disinterested. We must pursue projects that deliver true utility and long-term viability, which is evident that the current vesting orthodoxy fails to yield enough of them.

Historically, the free-market approach has been limited to meme coins, reinforcing the perception that it lacks suitability for serious projects. However, one could argue that part of meme coins’ undeniable success is attributed to market recognition that, for the long haul, this model benefits token holders and fosters vibrant, organic communities.

We should explore new avenues, regardless of the risks, and I hope the free-market launch stimulates discussions on new pathways forward. Groupthink—adhering to the same patterns as everyone else not for any solid justification but due to collective momentum—remains detrimental in the current crypto landscape. Emulating the crowd may seem reasonable for launching and exiting a project within a year or two, but it's ineffective for creating real value. It’s time for new ventures.