With a fading bull run comes the pressure to do a token generation event at high valuations because otherwise if you are a VC backed project with 8 figs in funding, you are cooked without a binance listing since you definitely know your tech is only valued at the number of CEX listings and shady market makers you can get for the launch. Jokes and criticism aside, I have been diving into the price discovery for a mix of work and my own interests in the past few months and have been observing trends and advising teams on what might be a better way to get your token into the world.

Price discovery is the process of price determination based on the interactions of counterparties. In Crypto, price discovery is mainly the idea of having a distribution channel for your token and having counterparties trade and determine the market value of those tokens.

Token is one of the core pillars that defines any project in crypto that launches it, its either an exit for all the VCs you raised from or a way to reward the community who made your ecosystem what it is today,y and arguably some teams can pull off both at the same time which is no small feat.

My focus for now is on price discovery and how the market comes and interacts with your token/equity post-launch, I am in no sense an expert or even a respect person in this field but this post is totally my own observations and musings.

I will broadly divide the post into CEX/DEX , Airdrops, Liquidity & Market Makers

Exchanges are the distribution channels for the products ie tokens in crypto, where your goal as a good founder is to get the best distribution for your product without paying too much fee or getting ripped off in the process.

Centralized exchanges are the biggest distribution channels for any type of digital currency or even assets since they can handle users from multiple continents and offer the same products unlike securities exchanges and brokers who are tied to a specific jurisdiction which makes CEXs a highly preferred method for launch but that comes with Caveats. Each exchange has its own listing process and insider deals where Exchanges leverage their channels to extract or find the best deal for themselves from the token listings. In this case, each party has two totally different interest alignment

Founders -> Token prices pumping is the best KPI

Exchanges -> More volume = More revenue (token prices are not the direct incentive)

Definitely if the price goes up people are more likely to trade it more but for the exchanges the idea is to get as much volume as possible

Decentralised exchanges (DEXs) are the backbone of crypto, serving as one of the biggest use cases for on-chain blockspace. Uniswap alone consistently accounts for 10-20% of Ethereum’s total gas consumption, pretty much the biggest PMF in crypto.Most leading spot DEXs operate on an Automated Market Maker (AMM) model rather than an order book and matching engine. The primary reason is that Ethereum cannot fully support on-chain order books, despite being the largest liquidity hub in crypto. DEXs enable direct on-chain distribution, allowing anyone to participate in DeFi without the need for KYC or paperwork—one of the most unrestricted internet capital market innovations.

Permissionless access, allows users in restricted regions to trade their tokens freely. Each model has its own pros and cons, but as a founder, balancing on-chain liquidity with centralized exchange (CEX) listings is key. DEXs offer permissionless trading and fee-based incentives, while CEXs provide the best distribution and user traffic for your token. A common trend I’ve noticed is teams that neglect DEX liquidity entirely, funneling all volume into a single CEX they’ve partnered with. This exposes token holders—including community members and stakers—to indirect KYC requirements, as all liquidity exists on a CEX where KYC is mandatory for transactions. While anyone can technically launch AMM pools, retail investors often lack the liquidity to sustain them, leading to price imbalances and arbitrage-driven inefficiencies. Binance remains the biggest name CEX listings, with a listing there seen as the gold standard and a gateway to multi-billion-dollar FDV launches—whether sustainable or not. However, the problem isn’t solely with CEXs; much of the token generation event (TGE) process has become an exit strategy for VCs and teams since the interests are not aligned. Exchanges also require some sort of kickback to either Holder Airdrops or just multi million dollar listing fee. CEX listings are an entirely different world, each with its own complexities and trade-offs but its up to the nature of how a team sees their token.

One Insight ->

Rather than seeing your TGE as an exit, it could be the biggest driver of your ecosystem. Ie If all the new L1s moved all their trading on their Native DEXs ie Movement did around half a billion on the first day and so did Bera, 0.25% if the pool fee or trade fee with 500 mil volume you get 1.25 Mil fee literally on the launch day in your ecosystem revenue. If all the community members could use that airdrop to ie

• Either spot trade on the chain

• Use the token as a collateral to either borrow/lend

• Use it for Asset-backed perps or as a normal collateral for Perpetual trading?

  They could have generated multi-millions in fee and kick-started their defi ecosystem with a pretty big bang and introduced better mechanisms around that.

Pre TGE discovery is one of the more interesting obscure parts, When teams raise at their decided valuations it unlocks the price discovery and speculation of that project.

• Private Raise → Normal Private funding rounds where a set of accredited investors and funds invest into projects, mostly that are yet to be open to public markets.

• Public raise → ICO type public sales where accredited and nonaccredited investors are able to invest in some sort of direct token sale. There are different platforms that provide different levels of tweaking here ie Echo allows you to raise from KYCed users and get more distributed participants in the round at an early stage. Coinlist is for later stage raise and closer to the TGE. One big idea of echo is that retail can invest at the same valuations as the Big name investors .

The normal flow in crypto has been raise 1-2 rounds from Private investors and Do a TGE or offer a public sale months before the token launches which allows a more organic price discovery since retail interest gives you a rough idea on what would happen on TGE.

I have been thinking and what I have realized would be a great approach is Having a Private and Public sale with a Dutch Auction Mechanism where the price drops or goes up based on the demand which allows for organic retail interest to be reflected in the price.

• Allowing More OTC rather than locked deals so folks who wanna exit can whenever they feel rather than are bound by contracts.

• having one more public round or Coinlist before TGE so the project can see the retail inflows and do a TGE at the right price rather than having a multi-billion dollar FDV without low volumes at the start which would lead to worse token sustainability.

One interesting scenario is Teams selling Foundation token allocation right before the unlock or just selling the airdropped tokens with full unlock with some arbitrary criteria, Quite a few big-name teams have done this in the past few months where they raise a 9 fig VC round post TGE and call it a strategic raise where a big part of the team also sells their token in the deal before the unlock so they do not have to deal with regulatory and sell pressure etc.

JUP team had the most interesting Token launches where rather than working on CEX listings, they used their own product Meteora to bootstrap the initial liquidity and price discovery for the Token.

• A single-sided LP pool containing 5% of all the liquidity

• As users start trading the LP pool starts converting a majority of the token into stables for initial price discovery and more organic discovery

• The team Removes Liquidity after 5-7 days and moves it into the DAO treasury with a 75% fee split set aside for the DAO.

https://x.com/JupiterExchange/status/1755497196928094667

Since there were no early rounds either private or public, all the price discovery took place onchain. Team removed the the usdc liquidity which was a pretty good cashout.

In crypto, projects die and live by liquidity. Thicker orderbooks and fat pools are something every degen loves but for every TGE a team has to go through hoops and loops to make sure there is sufficient float or give the illusion of sufficient float to show token volumes etc. Partnering with market makers is pretty common for liquidity but more and more predatory characteristics can be found in the market patterns where Teams sell a huge sum to Market makers in the form of liquidity provisions and form a call options where either Market Makers can sell the tokens back at a fixed price or just hedge on perp Markets.

This is a common pattern in a lot of recent TGEs

• After 1-2 days when most of the retail has sold their airdrop

• Funding rates start to go negative

• Price appreciates around 2-3x in the next coming days with funding rates averaging around >2000%. This gives a good picture of where Market Makers are trying to hedge their positions.

But regardless having a good Market Maker strategy to allow for sufficient price discovery and movement remains key, its varies how different teams try to find the best path towards that. I like Berachains approach quite a bit to bootstrap the initial liquidity. Berachain launched a clear defi incentive program where users were rewarded for depositing into locked vaults what would be bridged onto Berachain upon the mainnet directly into specific applications that were whitelisted from the Berachain Broposal.

• They had a clear net allocation for incentives set out

• Each vault had its own risk number where lending markets had the least AMMs/loopers got more yield but were also more risky

!Screenshot 2025-03-04 at 4.58.27 PM.png

This post was mainly my observations and musings on the past few months of the fiasco of Token launches and dumps, I might dive deeper and write another post.

As said earlier I am no expert and this is just a braindum

With a fading bull run comes the pressure to do a token generation event at high valuations because otherwise if you are a VC backed project with 8 figs in funding, you are cooked without a binance listing since you definitely know your tech is only valued at the number of CEX listings and shady market makers you can get for the launch. Jokes and criticism aside, I have been diving into the price discovery for a mix of work and my own interests in the past few months and have been observing trends and advising teams on what might be a better way to get your token into the world.

Price discovery is the process of price determination based on the interactions of counterparties. In Crypto, price discovery is mainly the idea of having a distribution channel for your token and having counterparties trade and determine the market value of those tokens.

Token is one of the core pillars that defines any project in crypto that launches it, its either an exit for all the VCs you raised from or a way to reward the community who made your ecosystem what it is today,y and arguably some teams can pull off both at the same time which is no small feat.

My focus for now is on price discovery and how the market comes and interacts with your token/equity post-launch, I am in no sense an expert or even a respect person in this field but this post is totally my own observations and musings.

I will broadly divide the post into CEX/DEX , Airdrops, Liquidity & Market Makers

Exchanges are the distribution channels for the products ie tokens in crypto, where your goal as a good founder is to get the best distribution for your product without paying too much fee or getting ripped off in the process.

Centralized exchanges are the biggest distribution channels for any type of digital currency or even assets since they can handle users from multiple continents and offer the same products unlike securities exchanges and brokers who are tied to a specific jurisdiction which makes CEXs a highly preferred method for launch but that comes with Caveats. Each exchange has its own listing process and insider deals where Exchanges leverage their channels to extract or find the best deal for themselves from the token listings. In this case, each party has two totally different interest alignment

Founders -> Token prices pumping is the best KPI

Exchanges -> More volume = More revenue (token prices are not the direct incentive)

Definitely if the price goes up people are more likely to trade it more but for the exchanges the idea is to get as much volume as possible

Decentralised exchanges (DEXs) are the backbone of crypto, serving as one of the biggest use cases for on-chain blockspace. Uniswap alone consistently accounts for 10-20% of Ethereum’s total gas consumption, pretty much the biggest PMF in crypto.Most leading spot DEXs operate on an Automated Market Maker (AMM) model rather than an order book and matching engine. The primary reason is that Ethereum cannot fully support on-chain order books, despite being the largest liquidity hub in crypto. DEXs enable direct on-chain distribution, allowing anyone to participate in DeFi without the need for KYC or paperwork—one of the most unrestricted internet capital market innovations.

Permissionless access, allows users in restricted regions to trade their tokens freely. Each model has its own pros and cons, but as a founder, balancing on-chain liquidity with centralized exchange (CEX) listings is key. DEXs offer permissionless trading and fee-based incentives, while CEXs provide the best distribution and user traffic for your token. A common trend I’ve noticed is teams that neglect DEX liquidity entirely, funneling all volume into a single CEX they’ve partnered with. This exposes token holders—including community members and stakers—to indirect KYC requirements, as all liquidity exists on a CEX where KYC is mandatory for transactions. While anyone can technically launch AMM pools, retail investors often lack the liquidity to sustain them, leading to price imbalances and arbitrage-driven inefficiencies. Binance remains the biggest name CEX listings, with a listing there seen as the gold standard and a gateway to multi-billion-dollar FDV launches—whether sustainable or not. However, the problem isn’t solely with CEXs; much of the token generation event (TGE) process has become an exit strategy for VCs and teams since the interests are not aligned. Exchanges also require some sort of kickback to either Holder Airdrops or just multi million dollar listing fee. CEX listings are an entirely different world, each with its own complexities and trade-offs but its up to the nature of how a team sees their token.

One Insight ->

Rather than seeing your TGE as an exit, it could be the biggest driver of your ecosystem. Ie If all the new L1s moved all their trading on their Native DEXs ie Movement did around half a billion on the first day and so did Bera, 0.25% if the pool fee or trade fee with 500 mil volume you get 1.25 Mil fee literally on the launch day in your ecosystem revenue. If all the community members could use that airdrop to ie

• Either spot trade on the chain

• Use the token as a collateral to either borrow/lend

• Use it for Asset-backed perps or as a normal collateral for Perpetual trading?

  They could have generated multi-millions in fee and kick-started their defi ecosystem with a pretty big bang and introduced better mechanisms around that.

Pre TGE discovery is one of the more interesting obscure parts, When teams raise at their decided valuations it unlocks the price discovery and speculation of that project.

• Private Raise → Normal Private funding rounds where a set of accredited investors and funds invest into projects, mostly that are yet to be open to public markets.

• Public raise → ICO type public sales where accredited and nonaccredited investors are able to invest in some sort of direct token sale. There are different platforms that provide different levels of tweaking here ie Echo allows you to raise from KYCed users and get more distributed participants in the round at an early stage. Coinlist is for later stage raise and closer to the TGE. One big idea of echo is that retail can invest at the same valuations as the Big name investors .

The normal flow in crypto has been raise 1-2 rounds from Private investors and Do a TGE or offer a public sale months before the token launches which allows a more organic price discovery since retail interest gives you a rough idea on what would happen on TGE.

I have been thinking and what I have realized would be a great approach is Having a Private and Public sale with a Dutch Auction Mechanism where the price drops or goes up based on the demand which allows for organic retail interest to be reflected in the price.

• Allowing More OTC rather than locked deals so folks who wanna exit can whenever they feel rather than are bound by contracts.

• having one more public round or Coinlist before TGE so the project can see the retail inflows and do a TGE at the right price rather than having a multi-billion dollar FDV without low volumes at the start which would lead to worse token sustainability.

One interesting scenario is Teams selling Foundation token allocation right before the unlock or just selling the airdropped tokens with full unlock with some arbitrary criteria, Quite a few big-name teams have done this in the past few months where they raise a 9 fig VC round post TGE and call it a strategic raise where a big part of the team also sells their token in the deal before the unlock so they do not have to deal with regulatory and sell pressure etc.

JUP team had the most interesting Token launches where rather than working on CEX listings, they used their own product Meteora to bootstrap the initial liquidity and price discovery for the Token.

• A single-sided LP pool containing 5% of all the liquidity

• As users start trading the LP pool starts converting a majority of the token into stables for initial price discovery and more organic discovery

• The team Removes Liquidity after 5-7 days and moves it into the DAO treasury with a 75% fee split set aside for the DAO.

https://x.com/JupiterExchange/status/1755497196928094667

Since there were no early rounds either private or public, all the price discovery took place onchain. Team removed the the usdc liquidity which was a pretty good cashout.

In crypto, projects die and live by liquidity. Thicker orderbooks and fat pools are something every degen loves but for every TGE a team has to go through hoops and loops to make sure there is sufficient float or give the illusion of sufficient float to show token volumes etc. Partnering with market makers is pretty common for liquidity but more and more predatory characteristics can be found in the market patterns where Teams sell a huge sum to Market makers in the form of liquidity provisions and form a call options where either Market Makers can sell the tokens back at a fixed price or just hedge on perp Markets.

This is a common pattern in a lot of recent TGEs

• After 1-2 days when most of the retail has sold their airdrop

• Funding rates start to go negative

• Price appreciates around 2-3x in the next coming days with funding rates averaging around >2000%. This gives a good picture of where Market Makers are trying to hedge their positions.

But regardless having a good Market Maker strategy to allow for sufficient price discovery and movement remains key, its varies how different teams try to find the best path towards that. I like Berachains approach quite a bit to bootstrap the initial liquidity. Berachain launched a clear defi incentive program where users were rewarded for depositing into locked vaults what would be bridged onto Berachain upon the mainnet directly into specific applications that were whitelisted from the Berachain Broposal.

• They had a clear net allocation for incentives set out

• Each vault had its own risk number where lending markets had the least AMMs/loopers got more yield but were also more risky

!Screenshot 2025-03-04 at 4.58.27 PM.png

This post was mainly my observations and musings on the past few months of the fiasco of Token launches and dumps, I might dive deeper and write another post.

As said earlier I am no expert and this is just a braindum