Mo Money, Mo Problems

Prompt

‘Low Float, High FDV’ tokens are an issue, but what are some solutions?

Primer

In the last few weeks, a chart by @tradetheflow_ has been circulating on crypto Twitter, showcasing the performance of newly launched tokens on Binance. The majority of these tokens have underperformed both in market and dollar terms. Among the tokens tracked, only four showed positive returns: two were memecoins, one had no top-tier VCs, and the other was Jito, which benefited significantly from the Solana narrative.

The fact that the majority of new Binance listings that have underperformed are ‘VC Tokens’—which raised capital from large crypto VCs—while the best performers have largely been projects without insider allocations has reignited discourse around ‘Low Float, High FDV’ tokens. These tokens are defined as projects with a low initial circulating supply but a high valuation, indicating that most of the 'value' is held in unvested tokens, likely owned by the team, early investors, and DAO treasuries. The poor performance of these Low Float, High FDV tokens has led many retail participants to express dissatisfaction with the current market structure, where retail buyers have little opportunity and are stuck allocating to projects that have already reached high valuations.

There are two primary issues that stem from the market structure created from Low Float, High FDV tokens: