What are the various methods for launching crypto tokens? Launching a new token is a critical step
What are the various methods for launching crypto tokens?
Launching a new token is a critical step for any blockchain project. Token launches enable projects to offer their native assets to early users, investors or supporters while securing capital or encouraging community growth.
From initial coin offerings (ICOs) to fair launches and airdrops, each approach carries different levels of transparency, accessibility and risk. Since projects differ in their goals and target communities, several token launch models have evolved over time.
Some focus on decentralization and wide community offering, while others aim for optimized fundraising or targeted allocation. Elements such as market swings, bot interference and regulatory pressures influence how tokens are brought to the market.
The sealed-bid token launch is a growing trend in this crypto fundraising landscape. Unlike public presales or airdrops, where participants see pricing or allocation terms in advance, sealed-bid models keep each bid confidential until the process ends. This approach is increasingly favored for enabling better price discovery, limiting front-running and curbing manipulation, especially for in-demand tokens.
Did you know? Sealed-bid auctions are a crypto twist on traditional finance. They have been used for government bond sales and initial public offerings (IPOs). Now they are redefining token launches by hiding bidder-related information and transparency.
Sealed-bid token launch, explained
A sealed-bid token launch is a method of distributing cryptocurrency tokens where participants submit private bids without knowing what others are offering. This approach, derived from traditional sealed-bid auctions, involves participants offering secret bids, and the highest bidder typically wins.
Auction systems, such as sealed-bid launches, are increasingly built on blockchain platforms like Ethereum, using privacy-enhancing technologies such as Zama’s fhEVM (fully homomorphic Ethereum Virtual Machine) to ensure confidentiality and fairness. Unlike open auctions, where public visibility can escalate prices through bidding wars, sealed-bid formats prevent strategic bidding based on competitors’ actions. In crypto, a sealed-bid token launch leads to fair and transparent token allocation, minimizing price manipulation and front-running.
Systems enforce a single bid per participant by leveraging cryptographic techniques like commitments and smart contract logic to prevent multiple bids and enforce payment obligations. Each participant specifies desired token quantities and prices. After the bidding window closes, bids are revealed and assessed using predefined rules, like clearing prices or allocation tiers. This method often reduces bot interference and promotes equitable access during high-demand launches.
A key feature of a sealed-bid token launch is its “one-shot” bidding process. Bidders cannot revise their offers or view others’ bids beforehand, which sets up a level playing field. However, it also brings in strategic uncertainty, as participants must estimate optimal bids without cues about other bids.
In April 2024, Conor McGregor fundraised for his memecoin REAL using a sealed-bid launch. The mixed martial arts icon introduced the fundraising through a sealed-bid token auction to prevent bots and snipers from manipulating the sale. The project hoped to promote transparency and integrity in a space often plagued by front-running and rug pulls.
While the project didn’t disclose token lock-up details, the sealed-bid format and focus on long-term engagement suggest a strategic attempt to execute a transparent and more community-driven launch.
How do sealed-bid token launches work?
Sealed-bid token launches follow a structured process that minimizes the chances of manipulation and ensures transparency. Here is how the process usually unfolds:
- Step 1 (Project announcement): The crypto project typically announces the sealed-bid token sale through its official website, social media channels like X, or platforms like Binance Launchpad. It outlines details such as the number of tokens available, bidding timeline, minimum and maximum bid limits, and the process of token allocation.
- Step 2 (Private bid submission): Participants submit bids to an auctioneer on the platform by providing secret bids before a deadline. Each bid includes the desired token quantity and the offered price. Participants cannot view other bids, ensuring privacy and reducing strategic manipulation.
- Step 3 (Bid locking): Once submitted, all bids are locked. This prevents users from changing or withdrawing their bids, reinforcing transparency.
- Step 4 (Token allocation): Post deadline, the smart contract processes all bids. Tokens are…
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