The dominant token distribution model in the cryptocurrency space today is the so-called "low-float, high fully diluted valuation" (low-float, high FDV) issuance. In this model, projects are launched with a low percentage of the total supply, with the majority of the supply locked up, typically unlocking gradually after a year. This low circulation is often combined with a high fully diluted valuation, and may even be explicitly designed to encourage this. According to CoinGecko's research, nearly a quarter of the industry's top tokens are low-float today. Notable recent issuances adopting this model include Starknet, Aptos, Arbitrum, Optimism, Celestia, and Worldcoin (as of now, an astonishing 95.7% of the supply is still locked up).

This model is fundamentally flawed. Restricting token liquidity distorts market signals, misleading actual and potential network participants who rely on these signals to make decisions. "Low-float, high fully diluted valuation" leads to a world where the upside potential of most newly issued tokens is captured by private investors, with little opportunity for the public market. Ultimately, this token issuance model inflates short-term metrics at the expense of long-term sustainability and public trust.

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The "Vesting" Fallacy in Cryptocurrency

The cryptocurrency "vesting" we refer to bears little resemblance to the actual function of vesting mechanisms in the traditional financial world. In traditional companies, vesting (e.g., Restricted Stock Units, RSUs) is used to align incentives and ensure that stakeholders fulfill their obligations. In particular, vesting in traditional companies comes with specific performance expectations, and if these expectations are not met, further ownership shares can be revoked. In contrast, vesting locks in cryptocurrency networks do not have such mechanisms — tokens are simply locked for a fixed period and then unlocked.

These locks, which should not be called "vesting," often distort market signals by giving people a false impression that demand is much higher than it actually is. If we understand price signals as the clearing point between the supply and demand of an asset, then the value of these signals to the market depends on both the supply and demand sides being able to freely express their preferences (e.g., selling when they want to sell, buying when they want to buy). Locking up prevents one side of the market from expressing its preferences, thereby reducing the quality of the signal. This may provide some short-term benefits in terms of market capitalization rankings or other metrics, but overall market quality is worsened due to the reduced information conveyed by price signals.

What's worse, these locking mechanisms actually harm the public. Token holders who join after a project's launch are at a disadvantage because the gradual unlocking provides them with an inaccurate price signal that does not reflect actual market sentiment. Sophisticated investors with locked tokens have access to non-public markets and information, giving them an unfair advantage, and they often sell these locked tokens in private transactions. To understand the true market signals, one must analyze who might want to sell but cannot, and speculate on what is happening in backroom deals. This analysis is too complex and time-consuming for most public market participants.

The Inevitability of Market PressureLock-ups do not prevent people from selling tokens; they merely delay the inevitable outcome. Vesting periods will eventually expire, and those who wish to sell will eventually do so, thereby exerting a continuous downward pressure on the market, often leading to an artificial "slow bleed" in market capitalization. Personally, I would hesitate to hold an asset or participate in a network, especially when many holders may want to exit but are unable to do so. This is also problematic for participants who need accurate price signals to sustainably forecast revenues and operating costs, such as validators.

If one of the goals in the cryptocurrency space is to produce meaningful products that provide genuine long-term value, then practices aimed at artificially inflating short-term metrics will not help us achieve this goal. To accurately assess the potential of any particular project, it is essential to determine whether people are genuinely committed to it. If you do not know whether people hold tokens because they truly believe in the project or because they are prohibited from selling, then you cannot do this.

The criticism of the low liquidity, high fully diluted valuation (FDV) orthodoxy is accompanied by calls for new "fair launch" token distribution methods. However, many of these proposals merely demand a higher percentage of circulating supply at issuance without questioning the legitimacy of the "vesting" lock-ups themselves.

This is not enough. Any form of market signal manipulation is still artificial manipulation of market signals. We need to break the cryptocurrency vesting "Overton window" through various new experiments.

Free Market Launch

The approach we call a "free market launch" has a significant advantage in that it allows everyone to freely express their preferences. If you want to sell, you can sell; if you want to buy, you can buy. Most importantly, you will be able to do so confidently because the price signals are meaningful, as everyone can transparently and in real-time express their preferences here and now.

The long-term benefits of building a sustainable community of stakeholders who truly believe in the project far outweigh the short-term risks of providing early exit opportunities for those who do not believe. We need projects that offer real utility and have genuine staying power, and the current vesting orthodoxy clearly does not provide enough (or even any) such projects.The free market approach is often confined to meme coins, leading to the perception that it is not suitable for "serious" projects. However, it can be reasonably argued that, beyond their meme appeal, the tremendous success of meme coins is partly because the market realizes that, in the long run, this model is more beneficial for token holders and tends to create more active and organic communities.

We should try new things, even if they are risky. I hope that free market issuance can open up discussions about new directions for moving forward. In today's cryptocurrency field, groupthink—a phenomenon driven by following the crowd rather than being based on specific ideas about why we do what we do—is harmful. If you plan to launch a project and exit within a year or two, following trends might be a reasonable approach; but if you want to bring real value to the world, this is not a good strategy. It's time for new attempts.