Bitcoin was immaculately designed, in that the conditions of its launch can never be replicated. It’s mainly because no one cared then, which in hindsight was a real boost to his credibility.
Why is this important: The distribution of any new form of money is important. The more people who have it and use it, the more people each person who has it can transact with. Money needs a big footprint. When a new cryptocurrency is released, the creators put a lot of thought into how to get it into as many hands as possible (and outsiders put a lot of thought into how to game its distribution).
Rollback: In July 2020, Yearn Finance, which functions as a kind of advanced savings account for decentralized finance, decided to hand its keys to users by distributing a governance token to people with deposits on the platform.
- It was the first launch that received the moniker “fair launch” because none of the tokens, called YFI, were reserved for Yearn creator Andre Cronje.
- Cronje had funds at Yearn, so he earned some YFI, but on the same terms as everyone else. So it was “right”.
Yes, but: How fair was the YFI version in practice?
- Before Cronje announced YFI, Yearn managed just over $8 million. Shortly after announcing the token, deposits soared to over $300 million as deep-pocketed investors poured in funds — not because they actually wanted to use it, because they wanted YFI .
Looking back, other pitches have been called “fair”. For example, Bitcoin. It was only ever won by the people who exploited it. Anyone could join from day one, although few did for years.
- Yearn was different from bitcoin because people didn’t understand bitcoin when it launched, and even those doubted it would work.
- By the time YFI was created, people knew how to value tokens, so as of September 2020, YFI was trading at over $40,000 each.
Zoom out: Other blockchains that work like bitcoin have tried to emulate the fairness of its launch, but the world has changed.
- While Bitcoin was launched with maybe a few laptops, one investor estimated that Grin was launched with $100 million worth of mining equipment ready to grab as many coins as possible.
Just in design? Yes. In reality? Not really. Now the whole blockchain has a market capitalization of around $8 million.
The “fair launch” meme lives on. Just last month, a DeFi project named Grizzly.fi (which offers investment automation, similar to Yearn) distributed tokens in what it described as a $26 million fair launch, using a liquidity pool on Binance Smart Chain.
- To maximize fairness, crypto researchers Hasu and Arjun Balaji have argued that new forms of currency should put a lot of effort into raising public awareness and give people plenty of time to be as fair as possible.
What they say : “The concept of “fairness” is ultimately subjective and a “perfectly fair” launch [is] a chimera,” they wrote.
The bottom line: No one knows if a new form of money will catch on, and there will likely always be sour grapes from some once one does.