The events of the token generation (TGE) are increasingly criticized as exit ramps for crypto founders, leaving blockchains with minimal real activity.
Projects often make up with thin circulating -switching supply and inflated values, providing real supporters a little opportunity to see the sustainable return. Industry resources argue that low floats and automatic market makers (AMMs) help maintain temporary prices, but once unlocking unlocks begin, selling pressure usually hurts the market.
Some spikes to launching the hype and deficiency, but most slides continue as the supply enters circulation.
“It’s an endless cycle,” Brian Huang, co-founder of the crypto management platform Glider, told Cointelegraph. “A new chain becomes irrelevant, talent leaves, and the people left are stuck in a chain that is kept afloat by market makers and AMMs.”
The rising number of orphan chain post-tge
Last year, many founders faced the backlash for removing their projects soon after the token launched.
Jason Zhao, the founder of the story protocol, went away in his full-time paper almost six months after the token survived. Previous reports suggested his release as well as a half -year vesting cliff, even stories declined This, it is noted that the major contributors are subject to a cliff within a four-year vesting schedule.
Related: Crypto markets are preparing for Fed Rate Cut in the middle of Governor Shakeup
“In fact, the launch of the token should be the start of the project,” Huang said, talking about the goal behind the early removals.
Aptos founder Mo Shaikh also resigned on December 19More than two years after the launch of the token of Aptos and Mainnet. While his release was not as urgent as Zhao’s, critics mentioned it came soon after a major vesting milestone.
Sterling Campbell, a Blockchain Capital investor, identified that some founders were treating the launch of the token as cash grabs but argued the issue was wider.
“There is also the founder of fatigue, incorrect insnificence of incentives and, in some cases, the brutal realization that the product market fits are not there,” Campbell told Cointelegraph.
“The dynamic feeling is not much about individual malice and more about a system that makes it easy to get out early.”
Researchers in Mesari reported Token vesting is a matter for the performance of a token. A review of the 150 major tokens found that tokens with a higher allocation of the insider performed worse in 2024.
Does the post-tge release show too many blockchains?
The flood of events in the token generation has raised a broader question about whether the industry needs more blockchains. What the former launchpad for ambitious new networks is now criticized as the purpose of finishing itself, while the blockchain should support the background fading.
In a recent interview with Cointelegraph, Altius Labs co-founder Annabelle Huang (unrelated to Brian Huang) said the industry does not require more general objective blockchains such as Ethereum or Solana. However, he added that there is room for new networks developed for specific use cases.
Related: Institutional adoption is faced with blockchain bottleneck: Annabelle Huang
Some projects feature this change. For example, hyperliquid, gets traction not by the promise of a new chain of general purpose but by developing a derivatives exchange, then converting to its own chain. On the contrary, many new layers 1s and layer 2s launch without a breakout app to justify their existence on TGE.
“We see a lot of investment flows on hyperliquid apps and other projects that have real use. By contrast, many of the new L1 and L2S are in a waiting-and-see stage,” Brian Huang of Glider said.
Why new chains continue to draw venture capital is not so clear. Solana sometimes justifies its launch with the speed of the Ethereum advantage, but most newly blockchains are now performing at a similar level. As a result, investors can conquer towards networks with established distribution. At the same time, the competition intensifies as corporate -led chains from companies such as Stripe and Robinhood to enter the market that Equipped with massive user bases.
“They speed up the distribution and normalize the crypto for major users, (but) they endanger the ethos of unauthorized networks,” Campbell said.
“There is a real risk that Robinhood uses the open-source network we have built over the past 10 years and eats everyone’s lunch.”
TGE and vesting schedules weigh long -term supporters
Especially optics when an founder comes out of a multimillion-dollar project soon after a TGE, although the tokens are subject to vesting schedules designed to stagger insider sales.
Some of the community Remember Vesting terms are public and investors should be aware of the risks before purchasing.
The terms of vesting also create a powerful battle for true supporters of many modern chains. A May 2024 Binance Research report estimated that $ 155 billion worth of tokens was set to be unlocked by 2030. Without sufficiently requested to absorb them, the ongoing release of supply risks increases ongoing sale of pressure on the market.
That tension points to a deeper problem with the tges themselves. Designed as fundraising mechanisms, they especially act as liquidity events that reward the insider while leaving the ecosystems without their founding stewards.
Unless projects can show strong use beyond their launch, the pattern of inflated values, early release and fading of blockchains are likely to continue.
Magazine: 7 Reasons why Bitcoin mining is an awful business idea
