What can dealers use to save the criticized TGE?

Original title:Between Extremes: A DeFi-Native Blueprint for Sustainable TGEs
Original author: DougieDeLuca, member of Figment Capital
Original translation: rhythmic little Deep

Editor's note: The article reviews the advantages and disadvantages of the two TGE models, low circulation/high FDV and fair issuance, pointing out that the former is conducive to insiders to cash out quickly, and the latter is unsustainable due to insufficient funds and liquidity. Based on the market lessons, a DeFi native TGE solution is proposed, which uses on-chain liquidity, phased price unlocking and transparent smart contract mechanisms to balance the team's capital needs with the public's real price discovery, and at the same time motivates insiders to align with the project's long-term goals, thereby building a more sustainable token economic structure.

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

Why do you need to rethink TGE

TGE is often a defining node of a project life cycle. This is the most significant moment of the project’s shift from the private sector to the public sector. Different stakeholders have different expectations for TGE, and balancing these expectations is a complex task that requires careful coordination.

Over the past 18 months, we have seen two mainstream TGE methods – low circulation/high FDV issuance and fair issuance. These two methods are located at both ends of the spectrum, each with obvious advantages and disadvantages. However, in achieving long-term sustainable results, most of these two approaches fail to meet standards. As the crypto ecosystem continues to evolve, we think it’s time to take a step back, learn from history, and decide whether changes need to be made.

This paper proposes a TGE model of the intermediate route that utilizes on-chain liquidity to promote real public price discovery and ensures incentives for insiders – teams and investors – are aligned with long-term success. Before we dive into its mechanism, let’s take a look at how the two mainstream TGE methods collapse due to their own flaws, what the market reactions teach us, and why the on-chain-centric approach is the logical next step in pursuing lasting successful projects.

Defects in recent TGE models

Low flow/high FDV

The low circulation/high FDV model usually involves multiple pre-TGE financing rounds, with valuations gradually rising and the first-day circulation supply is extremely low. At first, this created the hallucination of scarcity and helped price surge. However, over time, the problem arises:

· Privately pre-TGE price discovery: The team conducted multiple rounds of financing at an increasingly high valuation and negotiated to ensure the launch of mainstream centralized exchanges (CEX) on the first day. By TGE, most price appreciation had occurred, with few marginal buyers in the public market.

· Expensive top exchange listing: Many projects listing top transactions require up to 10% or more token supply as a fee. This highly dilutes equity and often damages the long-term prospects of the project.

· Over-reliance on market makers (MM) transactions: To ensure initial liquidity, the project allocates a large number of tokens to third-party market makers on loose terms. These transactions lack transparency, often lead to incentive misalignment and put ongoing burden on projects.

· Investors hedge against locked positions: Because tokens have long locked positions, smart investors/funds short assets in external markets effectively neutralize their exposure, laying the groundwork for unlocked selling pressure.

Discount OTC (OTC) Sell: Investors and teams often sell at discounted prices to buyers seeking low prices through OTC, who then hedge against newly acquired discount positions and close positions when unlocked.

· Rebates to liquid funds: The team may provide liquid funds with "sweetness" or private transactions to induce early purchases after TGE, artificially pushing up prices. This potentially illegal activity provides insiders with a brief window to exit with an inflated valuation OTC.

· Investor unlocking triggers unbearable selling pressure: Once a large number of tokens are unlocked, retail investors need to consider whether the backlog of supply will flood the market. If the demand for products (or tokens) is insufficient, unlocking may cause prices to stagnate or collapse under the heavy pressure of selling.

Essentially, the low circulation/high FDV model has created an environment where insiders can cash out quickly. This often puts retail investors or late buyers at a disadvantage. Projects often struggle after the first year because early profitable insiders lack the motivation to continue to participate.

The transformation of fair issuance-and its own shortcomings

Disappointment with the failure of the low circulation/high FDV model prompted the market to turn to support fair issuance. Fair issuance aims to create an open, equal TGE structure, handing over tokens to the public from the outset, reducing insider advantages and large-scale private placement allocations. Despite its good intentions, this issuance strategy has gradually exposed its own shortcomings:

· Limited Funding: Fair issuance teams usually initiate TGE with very little or no funds. As the supply of tokens held by the team is usually low, it is extremely difficult to raise funds after TGE, resulting in damage to the long-term viability of the project, especially when token prices continue to fall.

· Slim liquidity and poor execution: lack of market makers and initial liquidity, fairly issued tokens have weak liquidity during launch and maturity, resulting in high volatility and high slippage.

· CEX perpetual contracts amplify downward pressure: Many fair issuance tokens—especially in the AI ​​field—have launched the perpetual futures market in CEX before the spot market, allowing leveraged shorts to hit the shallow liquidity on the chain, thereby pushing down prices.

· Long-term price ceiling: The combination of limited on-chain liquidity and leverage short selling will eventually create an environment in which demand is difficult to surpass the pressure of suppressive selling.

Fair issuance initially was like a breeze, encouraging more "open" participation. However, it ultimately failed to establish a long-term sustainable market structure. The market is once again starting to look for alternatives.

Lessons learned from market response

Both low circulation/high FDV and fair issuance fail in their respective ways. Observing the market’s reaction to both, we learned the following lessons:

· Public price discovery is crucial: If public buyers are unable to effectively participate in price discovery, they will lose interest, especially after insiders obviously cash out in advance.

· Depth and liquidity beat short-term speculation: rapid speculation or artificial pull-up cannot repair a fundamentally shallow market. Continuous depth of on-chain liquidity is crucial.

· Teams need runways, and mobile buyers need room for upwards: Teams need to raise enough funds to ensure long-term survival of projects while leaving significant upward potential for new entrants in the public market.

· Market demand drives structural change: The evolution from low circulation/high FDV to fair issuance shows that if the market refuses to support problematic issuance methods, the team will adjust. However, fair issuance alone cannot guarantee success in the absence of liquidity building and long-term market strategies.

· Transparency is not negotiable: When insiders abuse opaque market structures and exit quickly, trust collapses. Fair issuance drives more on-chain openness, but true accountability and clarity are still incomplete.

Why on-chain liquidity is the next step

Looking back on these failures and market resistance highlights a core principle: long-term sustainable markets need to be publicly priced on-chain, and insiders cannot easily sell tokens privately. On-chain transactions facilitate real-time accountability, clearly showing who holds what assets and what price to sell.

To ensure adequate liquidity at all stages of the token life cycle, a structure that integrates the following elements is required:

· Transparent on-chain market depth

· A robust mechanism to curb sudden selling pressure

· Inspire teams and investors to participate for a long time after TGE

This directly leads to the concept of DeFi native TGE - a model that integrates capital fundraising and public liquidity formation, allowing insiders to align with the long-term fate of the project.

DeFi native TGE

The core of our proposal is:

Transform potential selling pressure into structured on-chain liquidity

· Replace large cliff-style unlock with price/time-based unlocking

· Propose a transparent and sustainable path to mainstream CEX listing

· Make insiders – investors and teams – enable or even use on-chain mechanisms

The specific methods are as follows:

Phase liquidity supply (unilateral and bilateral)

· Unilateral LP: Investors can deposit only native tokens into a centralized liquidity pool (such as Uniswap V3). By selecting a specific price range, they effectively set the conditional sell orders—only when the market reaches that range, the Times coins are sold.

· Bilateral LP: To provide deeper liquidity and reduce slippage, participants (including teams) can pair tokens with stablecoins or other assets such as ETH. This promotes the depth of the instant market.

Price-based unlocking and locking LP positions

· Progressive Unlock: The project limits the LP share of each investor when TGE is performed. As time or price thresholds increase, more shares are unlocked to prevent sudden supply shocks.

· Locking LP: In order to curb speculative behavior (such as pushing up prices to touch the LP range), liquidity providers still need to lock in for a period of time after the token is converted, and cannot immediately withdraw and secretly reenter, maintaining liquidity consistency.

Early investors are encouraged to exit before TGE

· Lower price target vs. New Investors: Teams can encourage very low-cost early investors to exit to new investors through partially oversubscribed high-priced rounds before TGE. This can be achieved through the transfer of existing investors to new investors, ultimately approved by the team. In this scenario, early investors do not need to sell in the public market to make a profit, while new supporters—higher entry prices—have a lower tendency to sell early after launch. It should be noted that such transfers have been rejected by the team in history.

· Healthier TGE post-structure: Therefore, the investor base in TGE is more likely to hold tokens to pursue higher multiples, reduce instant selling pressure, and distribute liquidity more evenly within the price range.

Smart contract control and compliance

· Compliance pools and structured withdrawals: Through mandatory policy constraints (such as AML fund flow checks), locked tokens can only flow into approved on-chain markets in a publicly visible, rule-based manner.

· Step by step access: How and when to adjust price ranges, collect fees or withdraw them to ensure that the insider sell-off wave does not destroy the market.

TGE Pricing and Team Inclusion

· Attractive and sustainable valuation: Projects may TGE at valuations below typical low circulation/high FDV to attract real buyers’ interest. Over time, on-chain prices and transaction volumes can naturally rise, ultimately attracting mainstream listings.

· Inclusion in Team Allocation: The team applies the same LP constraints to their positions, indicating true consistency. In an environment where the market demands transparency, team positions can also be publicly monitored to curb silent OTC sales or sudden internal exits.

Gradually move towards CEX listing

Delayed early listing: Initial reduction of exposure to large exchanges helps the market discover prices on the chain without an instant exit channel for insiders.

Catalyst: With usage, trading volume and community traction growing, mainstream CEX listing becomes a real driver of demand rather than a rapid sell-off scenario.

Expected benefits

This DeFi native TGE model solves many problems while supporting deeper public price discovery:

· Real chain discovery: Launched at fair prices and asked insiders to provide liquidity, promoting real-time and transparent price formation.

· Healthier unlocking mode: Price-based token unlocking reduces fear of big cliff sell-offs. If the buyer does not push the price to a specific range, insiders remain locked.

· Strengthen liquidity and reduce dependence on MM: Key stakeholders become initial liquidity providers, reducing dependence on market makers whose motivations may conflict.

· Team and investors unite: If core contributors also face liquidity constraints, they cannot quietly give up on the project; success is common.

· Stable Market Support: Combined with the gradual CEX listing, the project experiences incremental catalysts when building a stronger chain reputation.

· Experimental Space: Because this method is programmable, the team can adjust lock-up period, price threshold or whitelist pool to pursue the best results.

Most importantly, it directs founders, early investors and new players toward sustainable long-term growth rather than rapid opportunistic exits.

Questions and thoughts

Even though this model resolves common TGE failures, it triggers further exploration:

· Liquidity concentration: A large number of holders may gather in similar ranges to form a price "wall"? If so, how to prevent it?

· Order Book vs. AMM: Is centralized liquidity AMM always superior, or is the hybrid approach more suitable for certain tokens?

· Enforcement and regulations: Are there any compliance requirements (such as KYC/AML) that investors need to meet before they can participate?

· Investor Education & Tools: Are dedicated dashboards or third-party managers needed to help insiders with inexperienced or limited resources deal with advanced LP strategies?

· Team Transparency: While forward contracts or private transactions may continue, requiring full or near-complete disclosure by insiders will drive honesty.

Summarize

From low circulation/high FDV to fair issuance, the crypto world swings between extremes—one that brings short-term profits for insiders, and another that lacks enough capital or sustainable liquidity to succeed. Both options allow participants to optimize extremely short-term results and are disillusioned by short-term hype and manipulation behavior.

By introducing DeFi native TGE—rooted in phased chain liquidity, metric-based incremental unlocking and mandatory transparency—we have blazed a path:

· Projects raise enough capital without relying on exploitative transactions.

· Real on-chain price discovery and liquidity development, building trust with retail and institutional investors.

· Early investors with lower price targets can safely exit before TGE to newcomers with higher cost and higher valuation targets to optimize secondary market health.

· Mainstream CEX listing becomes a real catalyst, not an instant exit channel.

· The market, as the final arbitrator, may reward or refuse issuance based on the degree of alignment with these principles.

While there is no single TGE model for every project, it is clear that we need a blueprint that promotes real on-chain price discovery, robust market liquidity and deep alignment among stakeholders. The DeFi native TGE model is designed to take a meaningful step towards these goals.

The crypto ecosystem thrives with innovation and iteration. By challenging the norms of low circulation/high FDV and fair issuance, we can pave the way for healthier incentive structures – ensuring long-term value creation trumps short-term hype.

Ultimately, if this article inspires discussions on the best aspects of converging each TGE model, encouraging new solutions that reward real growth rather than rapid exit, we will complete our mission. Let us work together to create a token issuance environment where everyone can benefit from continuous success, and the market can justly reward builders, investors and community members who are striving for a bright future for crypto.