Why Token Launches Fail and How to Get Them Right in 2026

Transcript

Perfect. Can we start? Yes. Okay. So, great and welcome everyone to my presentation about why token launches fail and how to fix them in 2026. Um quickly about myself. My name is Darius Mokhlessi. I'm a research and venture strategist at 21Shares, which is one of the largest issuers of crypto ETFs and ETPs. Um I got into crypto back in 2016 when I was a student actually reading the Bitcoin white paper and very quickly went over to Ethereum because Ethereum was way more exciting for me than Bitcoin. Bitcoin was like kind of boring. You can just send one coin to another address. While in Ethereum, like the whole idea of web three, decentralized world computer, really

catched me. Um I decided to spend my career in this space. So, I've been only working for crypto companies such as Smart Valor, EY Blockchain, Sygnum Bank, and now 21Shares. Um I've also been very active as an angel investor since 2020, both advising and investing in countless projects. I've interacted with over 100 projects in the last 6 years, which also some of the insights that I'm going to share in today's presentations are coming from those interactions. And I'm even going to share actually a Telegram message that I got from a founder 2 years ago. In my free time, I like to write about everything that's crypto related. So, you can find my editorials on CoinDesk and CoinTelegraph. I'm actually just publishing a new editorial on the relationship of token and equity next

week on CoinDesk, which also a little bit touches about today's topic. And as said, focused on venture and research at 21Shares, so there's also going to be some research insights from us in here. About the structure of today's presentation, we're first going to start about why is the TGE so important, okay? What is the state of TGEs? And I think if you saw the first slide and look at the market in the last 2 years, you should already know what have been happening lately. Um share some mistakes that founders have been doing from my own experience of advising them and interacting with early-stage projects. Um present the HODL mindset, which is a new framework which I think helps founders and team in designing their token. And then

summarize and end the presentation with some key takeaways and resources and tools that should help you designing your token launch. So, why is the TGE so important? And basically, there's two main points in my opinion. First of all, independent how good your product or service is, as soon as you launch your token, the public perception of the quality of your project will be tied to the token performance, okay? And this can be good and positive. So, obviously, if you have a shitty project but your token does well, you still get people using it. But also vice versa, it's the same. So, for some teams, I sometimes even advise them not to launch a token because I think the product just works and they don't

really need it. And I think there's more risk to launch a token than not having one. Um on the other side also it's important for project to know that a token is a product itself, okay? So, they they should treat it as their own product, which I feel like sometimes also not the case. The other important thing about why TGEs is so important is basically you have one shot. So, if you look at the stats here on the slide, it's from a Legion X article and they took the data from our Arca report. I will also feature later in this presentation. We see that actually less than 10% of tokens recover if their TGE failed. So, over 90% of them, they never recover if they have

failed TGE, which also shows like again, TGEs are very important because if you up the first time, it's a very low chance that you can recover. Second, your whole project's perception is very much tied to the token. Now, if you look at the state of TGEs token generation events in the last years, and this is actually a graph from Memento Research. They published this report end of last year and it got quite a lot of traction because I thought that the state of crypto launches are bad, but when I saw actually the numbers, I was actually shocked. So, 85% of all TGEs are trading or tokens are trading below their TGE valuation. Now, one could argue we are in a bear market

right now and they may be down 1 to 5%, but actually if you look at how much down they are, like the majority of them are actually down 70 to 99%. So, they're in the graveyard zone. They're dead. They won't recover. So, state of TGEs has been very bad lately. And I also say there's this like sentiments fundamentals gap because if you've been in crypto for quite some time, it's kind of weird if you look at like the low sentiment because a lot of the stuff that we always wish for, we now have. So, according to the a16z state of crypto report, we have 700 million global users of crypto. We have regulatory clarity. We have MiCA in Europe. We have the Genius Act, hopefully also Clarity Act in the US. Um we have great institutional adoption and

usage of blockchain. We have high throughput blockchain, so we even have like we can now compete with the web two centralized alternatives and have like millions of users interacting. So, we have all those great things on the left side, but if you look at the right side, sentiment is kind of low and we saw it like with the TGEs that failed, fear and greed index is very low. Again, can be also related to the current market regime. Um we have also like a different market than in the past. So, there's way more tokens out there, which also means that attention and capital is spread way more thin than we used to have it like back in the day in like the 2017 and also 2021 cycles. AI is taking a lot of attention away both in terms of investments, users, but also developers. And also we

have seen quite a lot of extractive behavior in the past. And there's even like some project like Across Protocol, which I believe it was just 2 weeks or 3 weeks ago, proposed a DAO vote to actually exchange their token with equity. So, which brings up the question, are tokens dead now, okay? And I would obviously argue the answer is no, but I believe that we are now at the tipping point if you look at the evolution of tokens. So, we started with Bitcoin and Ethereum, Bitcoin originally being digital money, Ethereum for fundraising for ICOs back in the day.

Then we had the utility token era. Right now, I believe we are at the convergence of switching over from those governance meme coins, how I call them, to actually value capture and tokenized equity, which also actually the topic of the editorial I'm going to publish soon. So, I believe that we're going to see in the future two types of tokens, tokens like Hyperliquid, which actually capture value, okay? And are not just pure governance play, but also tokenized equity. So, we're going to see equity, traditional equity being tokenized on blockchain rails. So, basically offering best of both worlds. So, I believe we are on this tipping point if you're zooming a little bit out. And coming now back to like the actual TGE topic. So, what are some common mistakes founders do? And again,

every TGE is very individual. So, every project is individual. There's different factors. You interact with like a lot of different stakeholders. There's the centralized exchanges, decentralized exchanges, your market maker, your community, KOLs, etc. So, it's very complex. And again, every TGE is unique, but those are four main mistakes that I've witnessed personally that founders do. And I think if they pay a little bit attention, they can like increase the probability of success for the TGE. And the first one, I think it's not a very surprising one, is launching at too high valuations or high FDV, low float. And the main reason for this is that there's like higher dollar sell pressure if you launch at a higher FDV.

And I also like to mention also like Bitcoin. Like Bitcoin started at a valuation of zero and it has been the most successful token launch in the history of crypto. And if you also look at the data actually. And this data is from the Arca How to TGE report, which was just published a month ago and I'm also going to share it later in this presentation, that actually projects that launched at an FDV of 100 million and below are three times more likely to have successful TGE than projects that launch at the FDV of 500 million and more. And actually also the data showed that the projects that launched at an FDV of over a billion, they're all down. Like all of

them, okay? Which also shows again like And also I think for for founders, isn't it nice if you start low and your token just goes up? Because the last couple years we just had like high launches and everything just went back. So, again, I I like to mention Bitcoin which started at zero just as a mental model. If you look at the float actually, low float is actually fine. So, it's not like we we need to do low FDV, high float, so the opposite of high FDV and low float. Low float, the data actually shows is fine because obviously if there's less supply out there at launch, there's also less sell pressure that's involved. So, so on this side, what makes sense for founders to launch at lower valuations? To be fair, sometimes you're pressured by investors because you always want to raise at a higher valuation, but just we

need to be realistic that just lately valuations in private market and public markets, there's just a too big mismatch. And we just not only see it in crypto, but we also see it with traditional equities. The second mistake that I often see founders do is that they underestimate the sell pressure at the TGE, okay? And what I mean with this is basically because I think they are personally so bullish on their project and token, they also believe that other stakeholders that they interact with are the same. And reality is it's not the case. So, I like to tell founders, and that's also one of the main messages of the Arca report, expect every token that you're giving away before your TGE, which is mainly airdrops, to market makers, and centralized exchanges to be sold ASAP.

And also here we see some data, so actually on airdrops, 80% of airdrops are sold in the first day, okay? So, these are not holders, okay? It's again, you can say if it's good or bad, whatever you you like to call it. Most stakeholders will sell it. Also expect the same for market makers and centralized exchanges. So, basically when you're doing your mathematics and calculation for your TG, expect every token that you're giving away to be sold ASAP. Okay, those people most likely won't hold. They have different reasons. They need to make a profit, etc. And I think that's also something that founders very often underestimate.

Third is founder overconfidence in market conditions. And that's a personal take from me because research here is actually contradictory. So, there's some research that's saying it's independent if you launch your token a bear or bull market, if it's a good project shouldn't make a difference. And there's examples in both direction. I still believe as a founder, if you can, launch your token in a bullish market environment. It doesn't need to be like a full-blown bull market, but your vertical sector should have some traction. And I will tell you like an example of um founder that I I did an angel investment in and this was like in the last cycle and I told him, "Don't launch.

Sentiment is very low." And he replied to me, "Thanks for sharing your concerns, but I believe the token will pump independent of the current market. People are so bullish." And token went to zero. So, they weren't so so bullish. And again, also here, founders in nature they need to be bullish on their project, hopefully, but they also need to be realistic. And I think very often they are neglecting a little bit advice by their advisors and investors. That's also something I've seen a couple times actually in the last bear market and to happen. And I believe they would have had a higher chance of succeeding if they waited a little bit or listened to some advisors.

Lastly, I'm launching too early. And basically what I mean with this is also when we look at the current market regime of like the old token playbook, I think nowadays you should wait till you have product market fit, ideally recurring revenue, people actually use your product without having a token. And ideally even people who use your product without any incentive, so not even having points that already hint that there's going to be an airdrop and then they can dump it like we've seen in the first 24 hours. So, I think very often projects does launch too early. Again, sometimes they are pressured by their investors, sometimes they run out of runway. They have to do. But basically a token should enhance a already working

business model. The token shouldn't be your business model. Even if you wanted to do this, it doesn't work anymore. It worked in 2017, 18, 2021. Again, a lot of hype, people didn't know they would invest into those governance meme tokens, how I call it. But now the old playbook doesn't work. Like even retail investors, they don't want to end up being liquid exit exit liquidity. So, really launching too early is is one of the main mistakes. The the framework that I wanted to share and it's actually more of a like a mental model is the hold mindset. And this was actually inspired by an article that I read on X a month ago and it's also linked at the end. And basically what I want to share or how I want to

present the hold mindset is like design your token in a way that people make money by holding your token and not by selling. Because if you look in the past, how do you make money with most tokens? Basically by selling it, okay? And then we have this race to the exit because the investors, the early investors, they want to sell before the public. The public want to sell before the team. Everybody looks at the vesting schedules and at the unlocks. It's basically a race to the exit to like to zero. And also shareholders are not really aligned. And I think what we need to change is that we need to tie the token to real fundamentals. In the past there was like regulatory issues like you didn't want to end up being classified as

unregistered security. So, there were like new no revenue share, no buybacks, etc. We see now this changing. Again, I think Hyperliquid is a great example. So, try when you're designing your token, try to have this mental model of designing a token where people everybody makes money by actually holding the token and not by selling, which I think is very valuable and it's actually very simple thought, but I think a lot of people they just don't think this way because again, just by selling your token, you will mostly see what you've what we've seen the last two years with most TGs um happening. Um I asked AI to make a nice graph of this, but again, it's it's basically moving away from this race to sell to the power of holding

or holding. And And this basically you do if you actually accrue value by holding the token versus just selling it, which we've seen in the past. Um quick um checklist before we wrap up the presentation. So, when should you launch a token? When shouldn't you launch a token? I believe you should launch a token if you have achieved real product market fit. Again, users use your product without a token, there's real demand and the token just enhances an existing working system. Um second, you should have ideally real and sustainable revenue.

I mean, if it if you're close to generating is also fine, but ideally you should already be profitable and have sustainable revenue again outside of like short-term incentive of like potential airdrop and whatsoever. And third, launch at a defensible and realistic valuation. I would even argue launch at even a lower one that you think it's fair because again, wouldn't it be nice that you start at a very low valuation and just the price goes up? Um so, to wrap it up, what are the key takeaways from this presentation? First, the old token playbook is over. So, if you believe that if you're launching a high FDV, low float governance meme token, if it work, no, it won't work.

We've seen the data. It will go to zero. So, even if your intent is just making money, I think it's better to do something else or maybe pivot to AI. This model doesn't work anymore. Second, achieve true product market fit, sustainable revenue, and have users without short-term incentive before launching a token, which will massively increase the success rate of your token launch. And third, again going back to this hold mindset, create a token where investors make money by holding the token, not by selling it. And I think Hyperliquid is a great example of this.

And lastly, for all founders and teams that are here in the audience or are watching this call, what are some great resources and tools? And these are actually all very current and and and late. So, we have The Oracle's report how to TG, which was just launched 1 month ago. It's over 80 pages and very diligent. The how to fix token X article that inspired me about the hold mindset. The token launch playbook by A16Z Crypto, which you can find on their website. Um tokenomics for builders, which is a free ebook by the founder of Legion, Matty. And lastly, Delphi Digital has a sell pressure simulator, which is also for free. You can put in all the numbers and data of your TG and they're going to show you like different scenarios and also likelihood.

Um we are now at the end. I really hope this was insightful and also if you're a founder and team that this increases the likelihood of your TG because again, I think we as an industry we don't want to end up as just being like a extractive casino and like proving those people right that were like criticizing us for the last couple years. And I think now especially with the legal clarity, there's a lot of potential on how basically to make TGs successful again. With this I end the presentation and thank you very much for attending. Yeah? >> [applause] >> Actually, I was quicker than I thought, so we have a time for one question. So, if somebody has a question, happy to answer.

Yeah, thanks for the talk. I I completely agree with you. Um there's a gap or a question though, which is if I launch the token later, um and I want to be sustainable at that point, which again, I think is like make makes a lot of sense. Um how do I fund the project? Um because like many projects in the past have have launched a token as soon as there was maybe some traction or something like that. And then you launch the token on some kind of public market and then you can use the token for let's say fundraising to finance OPEX or even for incentives, right? You can use your own token, which then

is is like attractive to people because there's a public market to actually sell the tokens if you have to, etc. So, so what's the alternative? Do we do we stay in the private market for longer or like like what do we do? I think there's a couple of like um solutions to this. Like one is like the upcoming of like public token sale platforms. So, like ICOs are actually back. So, we have Echo, Legion, Metadao, etc. So, that's like alternative way to raise funds and you can like link um the token release to certain like KPIs, which we see with Metadao. So, you can raise funds, but not have like VCs behind you. And again, I also want to say like I'm I'm a VC myself. I don't think VCs are bad per se, but you need to align with them and make sure that

you're not not pressured into. Again, like it's a general question and every TG and project is like different and unique. Like token plays different roles. The way that I presented it, I was just arguing that you have probably a higher likelihood of succeeding if your token is basically like independent of your core offering and just enhances it, okay? So, basically think of just doing like a traditional like Web2 business and then add the token on top. Obviously, like there's also more like crypto native ways where the token is also more of a product, but again, like it's it's way harder, okay? So, that's why I was like rather like suggesting like this, let's say Web2 let's have mental model, but then adding a token token on top after you achieved already like certain like check

marks like the product market fit, recurring revenue, etc. But, it's really case by case, yeah. >> [applause]