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Here's the problem that Fair Launch Capital is trying to solve: In the past few weeks the broad sentiment in DeFi has gone from anti-token; to tokens only when it’s absolutely necessary in a tried and tested platform; to tokens designed to drive (crazy) activity which results in (crazy) speculation; to tokens before there’s even a platform.
While this has attracted a flood of capital and traders to the space, it’s also spurred a fair amount of concern since releasing protocols with no audits is no longer frowned upon, it’s almost sought after by yield-hungry traders. Meanwhile, vegetable-themed coins are flying about, and the more crazy and and “valueless” the token is, the more money it attracts.
It’s got some ICO veterans clutching their pearls, but not only that—it’s also prompted a group of DeFi investors to take action.
Not a VC
Gavin McDermott and Joe Gerber, investors at IDEO CoLab Ventures, and renowned crypto advisor Reuben Bramanathan today announced Fair Launch Capital—but don’t call it a VC fund. The group provides "fair launch capital," as in money that goes toward funding audits before platforms go live.
The aim is to provide another option for founders, who today often have to choose between distributing a token before their project is safe enough for users, and raising money from VCs, with the likely result of concentrating ownership of their protocol.
No Strings Attached
The team makes a no-strings-attached grant for founders to cover the costs of audits, without taking an early allocation of tokens or equity. Fair Launch investors have the option of buying tokens along with everyone else in the market.
Besides the core team, the group is made up of advisors including Aave’s Stani Kulechov and Synthetix’s Kain Warwick, who will help founders find the right partners and builders for their projects.
Pay it Forward
After the launch, the project’s community decides via a governance vote whether it will pay the grant forward to the next project that wants to do a Fair Launch. Teams could decide to pay part of the grant, the full amount, or more than what they were awarded.
While investors will be buying tokens along with everyone else, there’s the potential for them to meet quality crypto teams early on, and also the value that’s gained from belonging to a group of DeFi natives sharing ideas and connections.
Fair Launch Capital highlights at least two trends we’ve covered recently in The Defiant; it’s an example of how the sharing economy is the yin to crypto capitalism’s yang, and it shows that communities are becoming increasingly valuable, whether the group comes together because of shared goals, or because they all hold vegetable-themed tokens.
[This story was written and edited by our friends at The Defiant, and also appeared in its daily email. The content platform focuses on decentralized finance and the open economy and is sharing stories we think will interest our readers. You can subscribe to it here.]