the myth of the trade fair start

Bitcoin had an immaculate conception as the terms of its launch can never be replicated. This is mainly due to the fact that nobody cared about it at the time, which – in retrospect – gave his credibility a real boost.

Why it matters: The distribution of any new form of money is important. The more people have and use it, the more people each person who has it can trade. Money needs a big footprint. When a new cryptocurrency is launched, the creators worry a lot about how to get it into as many hands as possible (and outsiders worry a lot about how to play its distribution).

Flashback: In July 2020, Yearn Finance, which operates as a sort of advanced decentralized finance savings account, decided to hand over its keys to users by issuing a governance token to people with deposits on the platform.

  • This was the first launch to earn the nickname “fair launch” because none of the tokens called YFI were intended for Yearn’s creator, Andre Cronje.
  • Cronje had some money in Yearn, so he earned some YFI, but on the same terms as everyone else. So it was “fair”.

Yes but: How fair was the YFI share in practice?

  • Before Cronje announced YFI, Yearn had just over $8 million under management. Shortly after he announced the token, deposits skyrocketed to over $300 million as deep-pocketed investors plowed in funds — not because they actually wanted to use it, but because they wanted YFI.

Look back, other launches were labeled “fair.” For example Bitcoin. It was only ever earned by the people who mined it. Anyone could join from day one, but few did for years.

  • Yearn was different from Bitcoin because people didn’t understand Bitcoin when it first came out, and even those who did doubted it would work.
  • When YFI was formed, people had a grasp of how to value tokens, so as of September 2020, YFI was trading at over $40,000 each.

Zoom out: Other blockchains that function like bitcoin have tried to emulate the fairness of its inception, but the world has changed.

  • While Bitcoin entered the market with maybe a few laptops, one investor estimated that Grin entered the market with $100 million in mining gear ready to snag as many early coins as possible.

Fair in design? Yes. As a matter of fact? Not as much. Now the entire blockchain has a market cap of around $8 million.

The fair start meme lives on. Just last month, a DeFi project called Grizzly.fi (which offers investment automation similar to Yearn) distributed tokens in what it called a $26 million fair launch using a liquidity pool on Binance Smart Chain.

  • To maximize fairness, crypto researchers Hasu and Arjun Balaji argued that new forms of money should put a lot of effort into the public consciousness and give people plenty of time to be as fair as possible.

What you say: “The concept of “fairness” is ultimately subjective and a “perfectly fair” start [is] a pipe dream,” they wrote.

The bottom line: No one knows if a new form of money will catch on, and there will likely always be sour grapes from some as soon as one of them does.

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