Best Time to Launch a Token: Low vs. High Market Sentiment?
Sticking to a roadmap or trying to time the market? What's the best approach.
This Substack article is sponsored by Crescendo.
Crescendo’s core mission is to support their clients on Web3 growth & strategy.
Crescendo recently lead Aethir's Cloud Drop campaign with 800k+ participants. Other clients include AI Arena, Fableborne, Immutable, & more. Free consultation.
To Launch or Not to Launch
Over the past nine months, we've observed over 60 gaming token launches. This trend began in late '23 when studios like Bigtime and ZTX launched their tokens, buoyed by the pre-bull run in early '24.
Of these 60+ token launches, more than 90% show an early peak followed by a consistent downward trend. This raises the question: is launching a gaming token during a hot narrative the right strategy?
Would one of the most popular Web3 games, like Pixels, have fared better launching its token during a period of low sentiment rather than amidst the mid-February hype? For reference, the token is down 60% as of today.
Narrative, sentiment, and market conditions play crucial roles in the liquidity available for a token launch. However, as more tokens launch within a similar timeframe, competition for liquidity intensifies, and projects risk alienating their communities when a token's value declines post-launch during a (pre-) bull market.
This latter point cannot be underestimated, as such charts can deter retail investors, impacting the long-term viability of a token.
The Consensus is…
The majority of Wolves found that launching during a period of lower sentiment, like now, is the optimal strategy. A token launch with a low Fully Diluted Valuation (FDV), medium to high circulating supply, and natural appreciation over time has the potential to reach all-time highs when the bull market arrives.
Of course, there is nuance to this approach. It assumes the project has a quality product with meaningful sinks/utility, or at least a compelling narrative. From a survival standpoint, a project solely based on pumpamentals wouldn't succeed.
Answer largely depends on product quality and strength of community, this usually goes hand in hand
Allowing believers (the community) to invest at a reasonable token price so their investments can appreciate over time is almost unheard of in this market. One of the few exceptions is $PIRATE.
In a period of lower market sentiment, the opportunity for quick and easy profits diminishes, attracting a different demographic of buyers. Typically, buyers during periods of fear have higher conviction, placing more importance on long/mid-term belief in the product rather than short-term price action.
When sentiment is low, everyone looks towards product
Dominating Mind Share
Another benefit of launching during a period of low sentiment is that it allows the project to dominate or capture a larger share of mindshare.
When it comes to token launches, $PIRATE comes to mind. For setting a token campaign in motion (e.g., through a P2A campaign), The Beacon and Fableborne are noteworthy examples.
Although the total liquidity pool is lower, a quality project can secure a larger portion of that pool.
Smooth Out Economic Flaws
The approach of a slow launch allows projects to refine their economy, addressing issues that can only be identified once it's live. In-game economies can be unpredictable and difficult to simulate accurately.
This process involves identifying and resolving bugs, exploits, bots, and P2E dynamics within the economy. Being able to work out these kinks early on, before the game scales, is crucial for the long-term stability of its economy.
The Beacon’s Playbook
The Beacon stands out as a noteworthy go-to-market (GTM) playbook from Spark that we've seen so far:
At the end of 2022, they launched early access to the game/demo and simultaneously introduced a low-cost mint (Founder's Characters at ~$40).
They continued building for over 1.5 years without going MIA.
They spent nearly 2 years cultivating their community.
Launched another playtest (P2A campaign) when the market picked up this year.
Held a mint (token presale) right after.
They plan to launch their token when the game launches in Q4.
This strategy cleverly leverages the game's development in tandem with market conditions.
Pushing the token launch as close to the product launch as possible, with robust token integration and utility/sinks, is also becoming a standard practice.
Of course, we can't predict the market conditions when their token launches in Q4.
Additionally, IcoBeast provides an insightful comparison between building on game-driven versus speculation-driven sentiment.
The Other Side of the Coin
It wouldn't be fair to overlook the arguments or benefits in favor of launching during a period of high market sentiment, which include:
High FDV helps with fundraising, which is crucial for survival in a bear market and for filling up a treasury for marketing spend.
Launching during low sentiment might result in less publicity and attention, causing the project to be overlooked.
Better sentiment can lead to higher valuations, a greater number of token holders, and increased reach and potential network effects.
Stakeholders with early unlocks (e.g., KOLs, presale buyers, airdrop farmers) benefit from a high FDV launch.
Of course, these upsides also have their downsides.
Contributors
Thanks to Sparkc, Icobeast, Sam, Apix, Tcaff, Thare, Striker, Hunter Solaire, Dr. Jay, 0xKepler, Charlie, and Brydisant for actively contributing to the discussion and providing valuable insights.
 | A guest post by
|
Great article!