Crypto GTM: Mastering the Product-Token Launch Matrix

Transcript

[Music] [Music] Hello everybody. Oops. Glad you can hear me. It's great to be with you all today. I'm Camila McFarland. It's an honor to be at ECC8. This is my seventh ECC. I never thought we would end up in can, but at least we can all stay in this air conditioned room for a little bit. Today I'll be talking about crypto go to market. Um, the relationship between launching a product, launching a token, some best practices for how to do it successfully,

and how to approach the relationship between the two. I by way of introduction um after a few years in traditional finance at Bridgewater Associates, I've spent most of the last eight years in crypto helping founders and projects launch and grow their businesses. At first that was at consensus in the early ETH ecosystem uh where we did a lot of work helping bring Ethereum to market and a lot of those ecosystem projects and then join demand to cassid serotonin who you'll hear from later today to help launch projects across all parts of the crypto tech stack L1's L2 ecosystems defy gaming infrastructure application layer middleware uh many of which have tokens

that we launched more from the gotomarket marketing side. I now work at G20, the uh one of the leading market maker and trading firms helping projects launch their token from the other side of the curtain, from the capital market side, and also as an adviser and venture partner at Fabric Ventures. So to dive in, as we hear sometimes in crypto, the token is the product and the product is the token and launching either poorly hurts both. So today we'll cover why you should approach your token like a product and like a product launch. How to prepare for the most optimal token launch and your posttoken launch plan which is often neglected but crucially

important. So there are three parts of a successful crypto project. Product ideally is table stakes. You're building something innovative and novel and needed. brand, a strong brand and a differentiation within the market. There's so much out there that looks a little bit like each other. And often brand, a very strong brand is sometimes almost more important for reaching users and the market at large than product. We've certainly seen that happen a lot in the past cycle. And the third piece is the token, how you launch it, how it integrates with the project. And all three are crucially important non-negotiable parts.

Neglecting one of them undermines the power of the rest and certainly of the success of the overall whole. Today we won't spend too much time on product. You'll hear from a lot of fantastic visionaries on this stage about product and about product innovations. We won't go too much into brand. You'll also hear from Amanda Casset later today who will go much more into brand and the importance of narrative. But we'll focus specifically on token. In a lot of ways, the token price is the ultimate user experience in crypto. Whether we want it to be that way or not, this talk today is going to focus on the reality of what exists in our market. 90 to 95% of all crypto ecosystem participants interact with

your token, not your product. It's just the nature of the business. It's often the first user experience is with the token rather than actually being a user of your protocol. As an example, over 70% of Scrolls token holders in the first 30 days stopped using the DAP or interacting on chain with the product at all once incentives ended. Scrolls token traded well, 500 million in volume in the first 72 hours, but that did not convert to daily active users and that remained quite flat despite the trading volume. So, when it comes to user behavior in general, price really does lead product. We would not like it to be true, but often it does.

the token is your front door. You know, if the token price is good, the market thinks this is a fantastic product and if the token price is bad, they think it has something to do with your fundamentals, which of course again we see time and time again, fantastic product with poor token performance. And so the encouragement is really to approach market structure like product design. Poor launches, not sort of thinking about the plan or thinking is something you have to get out of the way. Poor launches can weigh down valuation even long after the chart stabilizes.

And weak token launches don't just cause sell pressure. They really kill narrative. They stall growth and development and adoption. And they scare away capital from potential other investors, institutional or otherwise. Tokens that drop over 40% in the first month often take up to a year on average to return to uh launch FTD levels. So, this is a scenario that obviously we want to avoid. Again, using our example of scroll, they're unfortunately my punching bag for today. Um, while they launched at about a 1.8 FTV, weak token utility as I explained and sell pressure led to sustained decline in sentiment in TVL and TVL onchain stagnated and stayed below about 50 million even two months

into two months into launch. Token incentives are not just engagement tools like airdrops or getting users. They're really retention drivers or should be. Tokconomics driven projects achieve two to fourx faster ecosystem growth than ones without. Projects like GMX used structured emissions and staking to reach 500 million in TVL in just under six months. and they've sustained around those levels, you can see on the chart below, consistently throughout their project, not really dipping below. Uh Ripple, one of our early greats of the industry, recently rolled out utility for XRP and

their on demand liquidity for crossra border payments, which created buy volume for XRP and long-term holding incentives with under 35% active token churn over the over the 12-month period. A key part of this of figuring out your token product interface is having the right partners on board at launch. Market makers have a spotty reputation in crypto and not without reason. There have been a lot of bad actors especially recently. But finding good ones that you trust that are high integrity that are professional capital markets participant is a key part of success. They are essential for capital infrastructure

because of the nature of token in our ecosystem. We don't just work in a tech and product world. We also work very closely integrated with capital markets. Working with market makers can reduce launch volatility by over two to 3x and tokens with again quality mms experience an average of 18 to 25% lower draw downs in the first 30 days post launch. To use two specific examples, Particle Network, which launched earlier this year, maintained about a one centralized decentralized liquidity ratio, limiting slippage and boosting investor confidence. I'm biased. They had very good market makers on board. They're one of our clients. Where if you compare to Scroll, which saw a 42% price drop in the first 10 days, was just weak demand

absorption across their markets and unclear lock mechanics, which created, you know, lack of sentiment. pre-launch mi pitfalls and misconceptions. If you're heading into launch or you're advising anyone heading into launch, we see this and hear this all the time. Centralized exchanges are greedy. They're evil. So, we're just going to launch on dexes and have them chase us and pursue us because of the brilliance of our project. or founders that are a little bit disillusioned about their launch valuation and they think that they can launch at a hund00 million launch valuation without any top tier exchanges they just won't be able to drive that volume and sustain those

prices or in selecting your MM again there's so many different groups out there and some choose their market maker because they've promised investment or they roll out the red carpet or they promise exchange listings all of which are not as important as finding ones you can trust that are good traders that'll be there in your books providing liquidity in a high integrity way or like you hear all the time we don't care about token price we're launching us for the product if we build it they will come which as Amanda Cassid will tell you about later today in the marketing and narrative is not always the case with beautiful product so you're heading into launch what should you do in addition to finding

your quality marketmaking partners create a plan across these five things One, what is your exchange strategy? Talk to exchanges early. Approach them with your best possible foot forward and secure those listings and your plan around launch between the two. Scenario plan with your capital markets partner, with your market maker. Model out float versus demand. Target about five to 10% float with buffers for liquidity and incentive programs. The key of this talk obviously think about your token utility. That one's not up to your partners. That one's up to you. And really try to have that token utility day one at launch. Ensure that there is staking governance or some

protocol use as you roll out your token to the market. Part of that, of course, is thinking your token incentives. What does distribution look like across airdrops, emissions, usage? How are you going to use that to bootstrap real adoption? And then, as we mentioned before, launch valuation. pragmatic initial market cap. I cannot stress enough, especially as we head away from sort of the era of lowflat, high FTV tokens hitting the market. Bringing your project to market with a responsible valuation benefits everybody involved, especially yourself over the long term. You kind of want to give the market a feeling like they're getting a good deal here and drives sustained momentum. Um, which is good for strong

week one, month one price action. And then a side note because there's a lot of discussion about this recently is the amount of venture capital money you've raised in the past has little to no impact on price returns over time. And so sometimes founders use that naturally as a gauge to the valuation they should launch at is some multiple of their last round. But it is worth discussion and consideration with your partners. Congratulations, you've launched your token. You may be celebrating in can with a glass of rosé with your co-founders, but it is super important to think about your postlon strategy. Again, common things we hear all the time across crypto.

We're only using our treasury to give out grants and fund the ecosystem almost like a slush fund into affinity to stimulate growth and development. Or proudly, we've never sold a treasury token. Um because holding only our native token, we believe in the project long term to do otherwise with signal that we don't, which in my view as capital markets is just simply quite irresponsible and a little bit ludicrous. We'll get into it in a little bit why. Um again, for the promotion of the long-term protocol development and growth and sustainability or we're an onchain protocol. We only want to approach treasury from an onchain perspective which again I completely understand uh from a value alignment standpoint and everything but

your toast post token launch plan should be responsible and informed again with the singular goal of project development and protocol development over the long term. On the treasury management side, which I mentioned, I like to think of it as approaching it more like a sovereign wealth fund than just a trust fund you dip into. You should build your runway, fund your ecosystem, and support your token. And that can be based on yield from asset management on your treasury. Yield can come from a range of tailored solutions, which should be customized to your own protocol. It could be from diversification. Again, depending on your project's ecosystem alignment, maybe diversification into majors. Uh Tezos, who you'll hear from, has you

10,000 Bitcoin on their balance sheet. Um, and so think about diversification not just as a hedging strategy, but also as an opportunity for yield for Bitcoin staking or whatever it might be for ETH or for ETH staking or for stable coins. Um, it also helps with downside protection depending on what happens in the market in the future. None of us have a crystal ball crystal ball. And then you can also approach things even not onchain like options, calls, puts, other hedging strategies. Again, the goal is what I like to think of as sort of the concept of a forever treasury where you raise venture capital money, you launch a token, and you sustainably and responsibly manage your treasury with the right approach to ris risk to continue to fund protocol development,

salaries, hiring, growth, whatever it might be in a sustainable way. The second thing to token post token launch plan are token buybacks. Again, there's something that the crypto market if you're crypto native or you come up in the tech ecosystem, this seems um like a questionable activity. It is completely normal capital markets behavior. Stock buybacks happen all the time from listed equities and you can recirculate value like recent projects like Hyperlid does. use your protocol fees to buy back your or stake and burn your token or from a forementioned treasury yield uh to reinforce buybacks and long-term value into your project.

Also, prepare for unlocks. As I mentioned, we're sort of coming off of that lowflat high FTV era of the ecosystem and there's about 150 billion in token unlocks coming over the next five years. And so if that's you, if that's your project, you should be working with your market makers to absorb uh absorb and manage that sell pressure as it does hit the market through things like quoting deep order books, getting ready for liquidity across exchanges, and rebalancing inventory, and getting prepared to absorb those unlocks into your project. Also, a hot topic increasingly these days are liquid funds. And I don't mean liquid trading firms or hedge funds, but liquid funds and the growing popularity uh almost acting like venture investors

looking at projects and their core fundamentals and their underlying tech of listed tokens and going in in size to buy those projects because they believe in it long term. So how do you make yourself attractive to liquid funds outside of building a phenomenal project? You build robust options market. You build healthy liquidity which signals institutional readiness for these players for reduced slippage to come in in top of order book. And then of course you've launched your token. You should be constantly monitoring liquidity holding your market makers accountable through ideally real time or daily transparency across spreads depth slippage everything else.

An example that I'll quickly give uh of a phenomenal product token integrated approach is across protocol. They had a really integrated elegant solution uh for staking locking tokens which aligned incentive and created long-term engagement. They validated demand before price discovery. So at launch they had their infrastructure and agent framework live which had over 500,000 transactions 10,000 users before they launched their token. Um the ACX token itself is used as a core protocol primitive. It powers gas, staking, governance, agent rewards, uh, and use of drives demand, not just based on emissions and airdrop hype.

They use their liquidity to also promote onboard usage, not just speculation. They launched with great centralized and decentralized exchange listings, had an earned Binance listing afterwards, um, and had low slippage and managed their relationships across exchanges throughout. They also has adapt adaptive incentives which caused high retention. Rewards were tied to compute and agent and user output not just idle holding. So phenomenal use case to dive in. Heartland is a great founder uh a great project that really has the relationship between liquidity incentives and utility as part of the token and as a key driver for the product.

So in short as we wrap not all token holders of course need to be network participants as we saw in the beginning vast majority won't be but aligning incentives does enhance network security increances increases transaction volume and sustains liquidity. If the product is the token and the token is the product it should work on day one and not just as an accessory for future utility. And like good product design and product UX, a well-designed token incentives guide user behavior towards generating actual uh value actions. Usage becomes stickier, value acrew acrual becomes structural and the mercenary floating crypto capital gets filtered out with more sustainable growth.

And so to wrap, it was great to be with you all. I think I'm now at time. I will leave you in much better hands at the next speaker. And thank you all for coming. [Music] [Music]