On February 14, the “Viva La Libertad” project launched Meme Token, $Libra in Solana, surged to a market capitalization of $19 in the first hour, with a fully diluted valuation of about $4.5 billion. However, the surge was short-lived as tokens collapsed more than 95%, sweeping out nearly $280 million in value and impacting 75,000 traders. Called the “cryptography” scandal, the launch raised concerns about insider trading and market manipulation, and formed a relationship between Argentinean President Javier Mairei and Web3 investment company Kelsier Venture. The evolution of token launches and recent episodes of $Libra tokens have been featured in the latest report from DWF Labs to propose a more transparent and fair token launch mechanism.
Reports reveal that certain wallets, including Kelsier Ventures, are profiting more than $110 million through liquidity provision and sniper tactics. This caused a political crisis for Mairay with accusations of fraud and demands for federal investigations. We further scrutinized Kelsier CEO Hayden Davis, and linked him to a previous celebrity-related token launch, including $Melania Token from First Lady Melania Trump. These events highlight ongoing concerns about the need for a more fair distribution model in crypto launches and the need for transparency in cryptographic launches.
Evolution of token launch mechanism
The crypto industry has been experimenting with multiple token distribution methods over the years, each with its own advantages and deficiencies.
Mining and pre-mining
Mining, the first token launch mechanism, appeared in Bitcoin (2009), rewarding participants with transaction validation. While effective, mining has led to energy concerns and centralisation of miners. Pre-mining allows projects to distribute tokens later before public sales, providing early funding, but raised concerns about fairness and transparency.
ICO boom and fixed price sales
The first coin offering (ICO) boom of 2017 introduced fixed-price token sales, providing investors with equal buying opportunities. However, false prices and volatility led to large investors’ domination. The rise of first replacement products (IEO) and early DEX products (IDOs) is aimed at restoring reliability through third-party surveillance.
Dutch auctions and fair launches
Projects like Algorand and Gnosis have introduced Dutch auctions. There, prices started high and gradually fell until demand was supplied. Meanwhile, platforms like Yearn Finance and Monero promoted fair launches, ensuring that tokens are distributed fairly among participants, including founding teams.
Fluid Bootstrap and Lock Drop Auction
Innovations such as the balancer’s liquidity bootstrap pool (LBPS) have allowed dynamic price discovery while discouraging early whale control. Additionally, LockDrop + Liquidity Bootstrap Auction (LBA) locked participants funds will adjust community incentives prior to launch to minimize volatility.
The rise of “Fair Launch 2.0”
As retail investors became more cautious about low float, high FDV (fully diluted) tokens, a shift has emerged to create decentralized tokens. Released in January 2024, Pump.Fun revolutionized fair launch with One-Click Token Launchpad. Tokens became available for trading on Pump.Fun’s platform and was later listed on Raydium when it reached a market capitalization of $100,000. This automated approach ensures transparency, liquidity and accessibility, reducing the risk for creators.
Inspired by pump.fun, new launchpads like flaunch.gg in uniswap v4 introduced buyback and revenue sharing models, encouraging traders to support diversified launches.
Persistent challenges in launching tokens
Despite these innovations, exploitation and manipulation continue to plague the launch of tokens. The concerns of $Libra Scandal and $Melania Token highlight the need for improved security and regulations.
Insider Trading and Information Asymmetry
In the case of $Libra, insiders obtained a critical token supply prior to a coordinated approval by President Milei. This encouraged retail profits, inflated the market capitalization of the token before early investors dumped their holdings, resulting in a delayed, large loss for buyers. Similarly, the $Melania supply concentrated on a single wallet (80%), raising concerns about centralisation of ownership.
Domination of bots and whales
New token launches are often exploited by bots and large investors. They use automated systems to acquire a large amount of tokens at launch before retail investors react. These tactics manipulate prices, create pump and dump effects, leaving depreciable assets to retail investors.
A fair launch future
Continuing concerns about $Libra Fallout and the token sales related to celebrities highlight the need for a more robust way token distribution. Emerging platforms are experimenting with on-chain governance, anti-rough mechanisms, and transparent liquidity management to ensure fairer access and long-term sustainability.
As the crypto industry matures, trust, transparency and fair distribution are essential to ensure reliability in future token launches.
