The cryptocurrency industry is at a crucial point, with experts and industry leaders calling for a big change in how tokens are distributed. They’re concerned that the current focus is too much on short-term profits and quick price jumps, rather than building lasting value and growth.
This year, many new tokens have been launched using a strategy called “low float, high fully-diluted value (FDV).” This means only a small portion of the tokens are released, but they’re priced high, which creates an inflated FDV. While this can generate a lot of excitement at first, it often doesn’t lead to long-term success.
The Problem with the ‘Low Float, High FDV’ Model
The “low float, high FDV” approach has been widely criticised for its misleading nature. According to reports, the model creates an illusion of value by highlighting the high price per token and the project’s multi-billion dollar valuation. However, many investors fail to consider the large portion of tokens that remain locked or uncirculated, which can significantly dilute the value once released.
While this strategy can create significant initial excitement, the advantages often disappear quickly. Projects that follow this model usually see a steep drop in value once the initial hype dies down. According to officials, this is not a sustainable approach and shifts attention away from the true goal of any cryptocurrency project: developing long-term utility and encouraging widespread adoption.
Bitcoin, for instance, took years to build a strong user base and earn the community’s trust. In contrast, many new projects try to achieve similar success in a much shorter time through a single, highly publicised token launch. This emphasis on quick profits diminishes the chances for real, lasting success.
A Shift Towards Sustainable Token Distribution
There is growing recognition within the industry that a new approach is needed—one that prioritises long-term utility and organic growth over speculative gains. Some projects are already experimenting with alternative models that could set a new standard for the industry.
For instance, FRIEND, a blockchain-based social platform, adopted a radically different approach by launching with 100% float. This means that all tokens were distributed to the community from the outset, ensuring that the token’s value was driven by its utility and the strength of the community, rather than speculative pricing.
Another example is Lava Network, which implemented a market-derived FDV approach through decentralised exchange (DEX) trading. By ensuring a higher initial float and a capped supply, this model focuses on the token’s intrinsic utility and the project’s real-world potential, rather than on artificially inflating prices.
The Path Forward: Building a Stronger Blockchain Ecosystem
The experiences of projects like FRIEND and Lava Network offer valuable lessons for the broader crypto industry. According to data, these alternative token launch strategies have shown that it is possible to build a sustainable ecosystem that benefits all participants, without relying on speculative tactics.
The key to success lies in shifting the focus from short-term price gains to long-term value creation. By prioritising utility, transparency, and community engagement, blockchain projects can build a more resilient ecosystem that attracts genuine users and fosters widespread adoption.
Industry leaders are now calling on all blockchain protocols to reconsider their token distribution strategies. Officials say that by adopting more responsible and sustainable practices, the industry can move away from the speculative mindset that has dominated the space for too long.
Conclusion: The Future of Token Distribution
As the cryptocurrency industry continues to evolve, it is clear that a new approach to token distribution is urgently needed. The “low float, high FDV” model may have its short-term appeal, but it is not a sustainable path forward. Instead, projects should focus on creating real value through long-term utility and community-driven growth.
The time has come for the crypto industry to make bolder bets and embrace new standards for token distribution. By doing so, we can build a stronger, more resilient blockchain ecosystem that benefits everyone involved. For those interested in staying updated on the latest developments in the cryptocurrency world, deythere.com remains your go-to source for high-quality news and insights.
