Forward the Original Title ‘Your token sucks (and everybody cares)’

This cycle has been frustrating, as the old playbooks no longer work. Your favorite coin doesn’t 10x in a month—in fact, it lags behind daily (looking at you, ETH).

If you’re a builder, this is even more frustrating. Imagine pouring your heart and soul into a product, getting great feedback from testnet users and after TGE…nobody cares anymore. Why? Because token does not go up.

Sure, macroeconomics and marketing do play a huge role, but let’s talk about the elephant in the room. Does it actually make sense for your token to go up? Are your tokenomics sound, or are you re-hashing models proven ineffective? The fact that people would rather hold memecoins than your alts highly signals we should be taking a closer look at how we design our tokens.

In this article, I will explain the major flaws in current token designs and propose a different approach.

So, what are these inherent problems in the token designs?

• Token Inflation - Liquidity mining
• Sell Pressure - Vanilla Airdrops
• High FDV Low Supply
• No revenue sharing or value accrual

Let’s be honest here. Investors are mostly interested in the token price, not the tech. They are putting their money into teams so that these tech-savvy guys can build the technology. In the end, both sides should win. Investors should at least see a fair ROI, while tech-savvy guys can build what they want.

Let’s analyze those problems separately:

• Liquidity Mining

No legitimate project should hand out its tokens indefinitely without a sustainable plan. You don’t see Tesla giving away stock to car buyers, so why do some DeFi protocols treat their tokens like free handouts?

Tokens are meant to have value, yet many teams flood the market with “incentives” that amount to unsustainable dilution. If the team treats its token as disposable, why should investors see it any differently? This creates a cycle where recipients have no reason to hold—only to dump.

Liquidity mining has been a major reason for the downfall of altcoins. When poorly structured, it creates a race to the bottom: new users farm rewards, sell, and move on, leaving loyal holders with nothing but losses. Without mechanisms to align incentives for long-term value creation, this trend won’t change.

• Vanilla Airdrops

Airdrops aren’t inherently bad, but they often fail to drive long-term engagement. The problem isn’t just that recipients sell—it’s that many airdrop models reward short-term farming behaviors rather than meaningful participation.

Here’s the usual cycle:

1. Users (often opportunists) complete basic tasks to qualify.

2. The protocol distributes tokens at TGE.

3. Many recipients cash out immediately.

4. The token loses value, and the protocol struggles to retain users.

Sound familiar? The real issue is misaligned incentives—airdrop recipients often have no reason to stay because either the product doesn’t provide real utility or the airdrop wasn’t structured to encourage long-term participation.

Not every protocol should do an airdrop, and those that do need to reward genuine usage, not just transactional engagement.

Hyperliquid and Kaito are prime examples of protocols that effectively redirected existing user behavior rather than incentivizing inorganic actions. By rewarding traders already active on the platform (Hyperliquid) and writers already contributing insights (Kaito), they fostered genuine engagement and long-term token holding (unlike models that distribute rewards to mercenary capital for actions users wouldn’t normally take).

• High FDV Low Supply

Many projects raise massive sums upfront to fund development, while early investors seek to maximize short-term returns. This often results in high FDV (Fully Diluted Valuation) but low circulating supply, creating an inflated market price at launch.

The issue? A high FDV limits early upside for retail, as much of the supply is locked with private investors who bought in at a fraction of the price. Once unlocks begin, these investors often sell into retail demand, causing price compression. The result? Token go down and everybody cares.

There’s no perfect solution, but protocols with high FDVs need strong fundamentals and demand-driven token utility to avoid becoming exit liquidity for early investors.

• No revenue sharing or value accrual

Now, let’s talk about the most important question: why should your token exist at all?

If it has no revenue sharing, no value accrual, and no real utility, then why would anyone hold it long-term? If your token is nothing more than a speculative placeholder, it’s only a matter of time before it trends to zero.

Many founders avoid revenue sharing to retain full control over profits, which is understandable, but without a compelling reason to hold, the market will price the token accordingly. At the end of the day, value accrual isn’t optional. Whether through revenue sharing, real yield, or meaningful in-protocol utility, a token must justify its existence.

And no, “governance” alone won’t cut it. Most governance tokens hold little real power, and even when investors do decide on the model, it’s almost always about turning on a fee switch—which still ties back to revenue sharing.

MetaDEX models are doing a pretty good job with revenue sharing to token stakers such as Aerodrome, Pharaoh and Shadow Exchange. This allows them to create demand for the token and increase staking percentage.

Ok, Caesar, you’ve talked enough. What’s the solution?

My solution is pretty simple: demand-based unlock schedules.

Instead of releasing tokens on a fixed schedule, supply should enter circulation only when there is real demand from active users of the protocol.

Additionally, tokens should not be given away for free through liquidity mining rewards. Instead, users should be able to purchase them at a discount, ensuring that only those genuinely invested in the protocol become holders.

Three industry leaders who proposed similar solutions:

• Luigi DeMeo shares a similar perspective, emphasizing that most token models suffer from uncontrolled emissions, leading to inflation and weak value accrual. He highlights how liquidity mining often attracts short-term participants who sell immediately, draining protocol resources without ensuring lasting engagement. Without market-driven demand and revenue-sharing, token holders see little real value.
• Vitalik Buterin tweeted that protocols should consider discounted sales instead of giving tokens away for free, which supports the main thesis of this article.
• Andre Cronje has addressed this issue directly. He argues that liquidity mining attracts temporary participants who farm rewards and exit once incentives dry up, leading to constant sell pressure. As a solution, he proposed “Options as Rewards”—where liquidity providers receive options to buy tokens at a discount after a set period instead of being given tokens outright. This mechanism aligns their incentives with the project’s long-term success, as their rewards gain value only if the protocol thrives.

At Stable Jack, we are implementing a solution called Discount Tickets—a system designed to make token distribution sustainable, demand-driven, and resistant to mercenary capital.

How it works:

• Only active users earn Discount Tickets, granting them the right to buy $JACK at a discount to market price.
• The protocol doesn’t give away tokens—it sells them at a discount, ensuring committed users accumulate meaningful positions.
• No new tokens enter circulation unless there is real demand for $JACK—this is what demand-based unlocks look like.
• No unnecessary supply pressure—loyal users aren’t dumped on by short-term participants.

The result? Believers, not mercenaries, become holders. No uncontrolled emissions. No free handouts. Just a model that prioritizes long-term alignment between users and the protocol. Moreover, the protocol can amass a protocol-owned liquidity to mitigate sell pressure and to sustain product development.

To learn more about Discount Tickets, you can check this article.

Conclusion

For years, altcoins have struggled under flawed token models—unsustainable liquidity mining, poorly structured airdrops, and uncontrolled emissions have drained value instead of creating it. The solution isn’t to remove incentives but to align them with long-term participation and real value accrual.

We need to shift from time-based unlocks to demand-based unlocks, ensuring tokens enter circulation only when there’s real market demand. Instead of handing out free tokens, projects should sell them at a discount to committed users while incorporating revenue-sharing mechanisms that give holders a tangible stake in the protocol’s success.

Always eager to have productive conversations with other builders, community members and fellow (over)thinkers so let me know your thoughts in the comments. I look forward to hearing from you!

Disclaimer:

1. This article is reprinted from [Caesar]. Forward the Original Title ‘Your token sucks (and everybody cares)’. All copyrights belong to the original author [Caesar]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. The Gate Learn team does translations of the article into other languages. Copying, distributing, or plagiarizing the translated articles is prohibited unless mentioned.