Berachain founder reflects: Don't let tokens drag down your project

Author: @SmokeyTheBera , Chief of @berachain

Compiled: zhouzhou, BlockBeats

Editor's note: This article discusses the recent issuance of tokens by multiple projects in the Berachain ecosystem, and reminds founders not to issue coins blindly. Tokens should drive growth when the product reaches market fit, otherwise it may affect user adoption. The market environment is sluggish, community funds are limited, and the decline in token prices will damage the product image. Tokens should avoid competition at the same time, ensure reasonable valuation, and focus on long-term value rather than short-term exit. The author supports Berachain’s development, but emphasizes that success requires patience and strategy, and advises the team to prioritize ensuring profitability and user growth.

The following is the original content (to facilitate reading comprehension, the original content has been compiled):

This is my first attempt at writing an article, which is mainly aimed at the Berachain ecosystem, but I hope some of these views will be inspiring for the wider community, especially those who are considering issuing tokens.

Recently, I have seen multiple teams within the Berachain ecosystem launching tokens or preparing to launch new token offerings in the coming weeks, with a total of about 8 projects. In a way, it is worth celebrating – new tokens can drive economic activity, trigger market speculation, and even promote the growth of the agreement. Tokens may bring wealth effects, and the Berachain ecosystem will also benefit from local tokens.

But on the other hand, we should open our perspective and think deeply about the value that token issuance can truly bring. After the token is issued, your product’s perception in the eyes of the public will inevitably be linked to the price. Few projects can escape this rule unless they have no direct competitors in the market or are extremely early pioneers (such as projects such as 1Inch and Compound).

In the current on-chain environment, most altcoins (even the entire market) cannot escape the influence of market gravity, and the low price of your token may directly affect product adoption.

The timing of token issuance is crucial

Ideally, the token should be launched when the product has shown its product market fit and is at an explosive growth node. It should be a feedback to early users, thanks for helping the product get to this point. At the same time, it should also be a tool to drive asymmetric growth, rather than a burden to hinder adoption.

Next, I'll talk about some realistic issues that are usually only mentioned in private chats.

The market doesn't wait for people, and the community can't save you

No matter how loyal your community is, a price curve that continues to fall will affect adoption. At present, most tokens are "only falling but not rising". More importantly, in the Berachain ecosystem, your tokens belong to the "alt on an alt", and top on-chain tokens like Solana are working hard to find buying. Are you sure this is a good time to issue them?

You should ask yourself a question seriously: "Who is the marginal buyer of my token?"

If you do not have a clear and differentiated answer and cannot ensure that token distribution can reach new potential buyers, then I suggest you think carefully and not ignore the long-term impact for the short-term "dopamine stimulation". Because the answer is definitely not "community".

The community will support you, use products on the chain, and make opportunity investments. But the community’s funds are limited and it cannot save your tokens. Project parties need to pay attention to long-term viability rather than short-term market opportunities.

Some people say that the market timing is unpredictable, and I partially agree. But you can create a "default survival" product that can be profitable, or even repurchased at the right time to truly create value for token holders (of course, the premise is legal and compliant).

I want to emphasize that is issuing tokens will not make your job easier, but will magnify everything:

• If the token price rises, your product is like the S-level king, the team is invincible and everyone is chasing you.
• If the token price falls, you will be called a liar, the product is considered worthless, the team is called mentally retarded, and someone will even attack you because you have taken the VC money.

Of course, the situation is not black or white. Some protocols do have core requirements for tokens, such as some DeFi products require tokens to operate normally. But these situations are a minority and do not apply to most projects.

How to correctly initiate token issuance?

If you really decide to issue coins, at least pay attention to the following points:

• Coordinate other projects within the ecosystem and do not arrange the issuance dates of multiple tokens too close to avoid dilution of market demand.
• Give the market time and space to allow capital to flow and rotate, rather than rushing together to grab market share.
• Don’t overestimate the valuation. If you have already conducted private equity financing, in the current market environment, going online at a flat valuation may be a more reasonable choice.

Summary of core points

• If your product is already making money, increase investment, increase revenue, and optimize distribution instead of hasty coin issuance.
• Let the product survive by default, it is best to be truly profitable and leave possibilities for future buybacks.
• The existence of tokens may affect product adoption. Some users will actively participate when seeing tokenless projects (looking forward to future airdrops), but if they see tokens with price drops, they may directly give up the project.
• In the current market environment, tokens in the 10M-200M market value range are basically in the "no man's land" of price discovery. Either everyone goes to stablecoin mining, or they are playing in the shitcoin with extremely small market value.

Wrong motive for issuing coins: investors put pressure on, community expectations, and teams want to cash out.

Correct motive for issuing coins: Products have proven PMF and have a clear roadmap to show how tokens can promote growth.

My concerns about the Berachain ecosystem

At present, there are too many tokens issued in the Berachain ecosystem, and I am worried that this will lead to many teams "destroying their own martial arts" on adoption and traction. Ultimately, this may form two extremes:

• At one extreme, an extremely loyal community formed within the Berachain ecosystem, slowly growing and growing.
• Another extreme is that after seeing the current situation, the future team was dissuaded from withdrawing and no longer chose to issue tokens on Berachain.

Of course, optimistically, these tokens may be able to exceed expectations and drive product growth, or at least allow founders in the ecosystem to learn real lessons from failures.

I write this because many people privately ask me what I think about the recent Berachain Ecological TGE. I have always supported Builders on Bera and I want them to succeed, but I want them to succeed in the long term.

Although this sounds a bit chicken soup, the crypto industry is a marathon, not a sprint. We have been working in this industry for three years and know the truth.