@itsbasil

a founder's journey to & through tokenization: best practices been in crypto over six years, tradfi many years before that, through multiple cycles, different metas, different hype waves; this is what i've learned about tokenizing: what works, what doesn't & why most founders get it wrong... reality is: tokens are incredibly powerful instruments, but they'll likely destroy you if you don't think them through properly first, the fundamental question: why token? before anything else, before you even think about mechanics or launchpads or any of that—you need to answer one question: why does this need a token? and "i need money" is not the answer there are better capitalization vehicles than tokens. yeah they can help you raise, but that's not what they're for. the token does something fundamentally different: it exists to find pmf, identify & cultivate your loyalty cohort, discover your power users, build community & gather actionable data. think of the token as a discovery mechanism that provides optionality & flexibility traditional rails simply cannot match some common mistakes, or what not to do: the capitalization trap if you're looking at tokens because "i need money right now," you're doing it backwards. when teams sell tokens to fund operations, they create this perverse dynamic where they end up selling into momentum at exactly the time when the probability of new holder-to-user conversion is highest. this mutes your biggest signal moments at the time when your market cap & price become free top-of-funnel marketing. so when the team sells into strength, you're working against your own breakout opportunities moreover, when you give people a predetermined date when you'll sell, they'll front-run it. they'll sell before you do, short the token, or otherwise position against you this abstractly leads us to the fair launch fallacy: there is no "fair" — get over yourself; this is capital markets early experiments with completely fair launches revealed a critical flaw: they provide zero flexibility for scale. when founders retain no supply: there's no ability to execute otc deals nor will serious investors participate (why hold a token the founder doesn't own?): theres no alignment between founder & token performance & beyond that, now limited ability to adapt as the project evolves moreover, the optics matter enormously here. you want founders at the top of the holder base in doxxed personal wallets, actively buying more. a founder consistently dca'ing into their own token signals conviction: that's a founder worth backing; that's a founder that bets on themselves token allocation: how much should founders keep? do not be scared to keep 50% of your token supply. this isn't greed—it's strategic necessity. this gives you the flexibility needed as your project evolves, provides leverage as regulatory unlocks make tokens more valuable instruments, enables market signaling to demonstrate conviction & maintains optionality for strategic partnerships & otc deals your responsibilities: hold it, buy more, be visibly the most bullish on your own token & signal to the market through your actions. use deep lockups & long vesting schedules; maintain control & ownership of your token: steer the ship, it's your ship token utility models: the gamification standard most apps will use tokens as loyalty mechanisms—essentially replacing starbucks rewards, airline miles, referral systems & leaderboard mechanics. this is the most intuitive model, but it comes with serious constraints critical limitation: if your token only exists on the "faucet side" (you're just giving it away), you must solve for sustainability through token "sinks" (where is it spent?), recirculation mechanisms (how does it flow back?), and buyback programs (how do you replenish supply?). without these, when the broader market sells off, your token will collapse 95%. why? bc there is no intrinsic value & you've created infinite sell pressure the math is brutal: if you're only issuing tokens without recapture mechanisms, the system breaks. then, when you run out of tokens, the product dies moving beyond gamification, we find value accrual... with regulatory hurdles increasingly unlocked, founders can explore more sophisticated models—revenue capture & redistribution (effectively dividends), real utility in product functionality, token rights & access controls. the key is building intrinsic value into the token, making it a capture device for value the app generates in addition to a gamification tool what tokens are bad at: tokens are excellent for social engineering, incentive design, creating system malleability & rapid testing of different approaches. tokens are terrible as a medium of exchange in consumer products, anything requiring pricing stability, and day-to-day operational expenses critical principle: price hard goods & digital products in usdc, not your native token. you need to eat & pay rent. operations must move into stable currency for predictability. once stabilized, you can backtrack token incentives against that runway launch strategy: where & how ecosystem alignment rules everything around me the launchpad decision is not about who offers the most capital upfront, who has the most twitter followers, or who waives fees. it's about ecosystem alignment & community stickiness this is not a market driven by efficiency or "best product wins." it is driven by belief systems around key individuals & tokens, cult-like community dynamics & leverage through alignment. $200k upfront & 200k followers means nothing if you're not aligned with the ecosystem's values & community. these internet pockets are increasingly fragmented & tribal. every niche has its own community with its own loyalties converting users into loyalists happens through alignment. this is absolutely key the $CLANKER example if you're building on farcaster & launch via clanker, consider that basically every distribution tool on farcaster also launched on clanker. you're aligned with the ecosystem's distribution infrastructure from day one. think beyond first-order effects—that $200k grant might cost you significantly more in lost distribution & partnership opportunities fee considerations don't obsess over launch fees. they will compress towards zero over time through competitive forces anyway. wrt to fee revenue, use it to bootstrap initial growth & flywheeling, but don't rely on it beyond year one. that too, will trend towards zero as liquidity fragments & new pools open up. so use it to establish the token, then use the token to generate real sustainable revenue (or die tryin) on fee structure itself: avoid anything near 5% even on dynamic side (it's extremely high), 3% is absolute maximum for dynamic, and take static down to 1-2% depending on the app. but honestly, don't get caught in the weeds on fee optimization; alignment matters more (1/2) https://farcaster.xyz/dish/0x57252c88 https://farcaster.xyz/itsbasil/0xbf5c7945

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