Why Your Token Is Doomed (And What to Do About It)

The Playbook Has Changed. Here's What Comes Next.

This cycle has been deeply frustrating. The strategies that worked in 2020 and 2021—buy, hold, 10x—just don’t cut it anymore. Your favorite coin doesn’t moon in a month. In fact, it might be underperforming every day (looking at you, ETH).

And if you’re a builder, it’s worse. Imagine pouring your soul into a protocol, getting amazing feedback during testnet, and then—after the TGE? Silence. Why? Because the token didn’t go up.

Sure, macro headwinds and weak marketing play a part. But let’s address the elephant in the room:

Does it make economic sense for your token to go up?

Are your tokenomics sound—or are you recycling broken models from past cycles? The fact that memecoins often outperform carefully designed altcoins is a flashing red signal. We need to rethink how we design and launch tokens.

The Core Flaws in Modern Token Design

Let’s break down the systemic issues plaguing most tokens today:

🚨 Common Tokenomic Pitfalls

Problem	Consequence
Token Inflation via Liquidity Mining	Constant sell pressure, no sustainable demand
Misaligned Airdrops	One-time users, no retention or engagement
High FDV + Low Circulating Supply	Retail exit liquidity for early investors
No Revenue Sharing or Value Accrual	No reason to hold the token long-term

1. Liquidity Mining = Short-Termism

Liquidity mining was once celebrated as a growth hack. Today, it's a primary reason for token collapse.

Imagine if Tesla gave away shares to every car buyer—sounds absurd, right?

Many protocols treat their tokens like coupons rather than equity. When emissions are unchecked and rewards have no vesting or alignment, it turns into a “farm and dump” game. The result?

📉 Chart Suggestion:

“Protocol Token Price vs. Emissions Rate” – Overlay price decay with rising emissions.

Without a mechanism to tie emissions to value creation, you’re paying users to leave.

2. Airdrops: From Generosity to Liability

Airdrops can build community—if done right. Unfortunately, most aren't.

Here’s the typical cycle:

1. Users complete low-effort tasks.

2. TGE happens.

3. Recipients instantly sell.

4. Protocol bleeds users and loses credibility.

Misaligned incentives = no loyalty.Without sticky utility or tailored vesting, airdrops become glorified giveaways.

✅ Case Studies That Worked:

• Hyperliquid: Rewarded actual traders, not opportunists.

• Kaito: Gave tokens to valuable contributors, not random Discord joiners.

📊 Chart Suggestion:

“Airdrop Distribution vs. Token Retention Rate” – Compare token-holding behavior post-airdrop between good and bad models.

3. High FDV, Low Circulating Supply = Retail Exit Liquidity

Projects often launch with eye-watering FDVs, minimal supply in circulation, and a mountain of VC allocations waiting to unlock.

High FDV = Low Upside + High Risk for Retail

When unlocks begin, retail buyers absorb the sell pressure from early investors. It’s not just unfair—it’s toxic to long-term value.

📉 Chart Suggestion:

“Token Price vs. Unlock Schedule” – Show the correlation between unlock events and price dips.

To fix this, tokens must have actual utility at launch and build organic demand before unlocks flood the market.

4. No Revenue Sharing = No Value Accrual

Here’s the question every investor asks (even if they don’t say it out loud):

Why should I hold this token?

If your answer is “governance,” you're probably in trouble.

Most governance tokens have little real power. Without fee-sharing, real yield, or in-protocol utility, they become speculative chips with no floor.

✅ Protocols Doing It Right:

• Aerodrome, Pharaoh, Shadow – Reward stakers with revenue-based APY, not inflation.

📈 Chart Suggestion:

“Staking APY vs. Token Price Stability” – Highlight how revenue-sharing creates buy-and-hold behavior.

A Better Model: Demand-Based Unlocks

Now that we’ve diagnosed the disease, what’s the cure?

✅ My Proposed Solution: Demand-Driven Unlocks

Tokens should only be unlocked when there’s actual demand.

Here’s the structure:

• No fixed unlock schedules – token supply increases only when demand supports it.

• No free rewards – instead of giveaways, offer discounted token sales to users who actively participate in the protocol.

• Align long-term incentives with users, not speculators.

This approach transforms token launches from short-term cash grabs into sustainable economic ecosystems.

The Smartest Minds in Crypto Agree

👤 Luigi DeMeo

• Criticized uncontrolled emissions and farming culture.

• Advocates for models with built-in value capture and delayed rewards.

👤 Vitalik Buterin

• Suggested selling tokens at a discount instead of giving them away for free—same principle as demand-based alignment.

👤 Andre Cronje

• Proposed Options-as-Rewards: liquidity providers get the right to buy tokens at a discount later, not free tokens now.

• This method directly links token rewards to long-term belief in the protocol.

Conclusion: The Token Game Has Changed

Investors today are savvier. Builders need to be too.

Tokens with:

• 🧨 Unchecked emissions

• 🎁 Misaligned airdrops

• 💰 High FDVs with no utility

• 🚫 No value accrual