Fabric is well positioned to support on Token design. This guide outlines some do’s and don’ts. If you want to learn more, you can book a 1:1 with Julien.

Content Tables

Basic questions to ask when thinking of launching a token

• Do I need a token? Maybe not early on, but it would probably be a mistake to overlook the benefit of a token. A token can accelerate growth, a token allows your community to speculate on your future growth, giving you more means to actually make it happen. Unless you are absolutely set on never introducing a token, it’s probably better to have a token earlier than later (or at least to keep the door open on a token being likely/possible!).
• How to think about incentives? Tokens can indeed be a great bootstrapping tool, some kind of “free marketing” tool which you only really pay later if the project is successful. It is still therefore important to think about the kind of behaviour one wants to incentivise that will give the best bang for the buck. For example: early usage with an airdrop? Continued usage with incentives? More incentives on supply side, or demand side - depending on what’s harder to bootstrap for the project. What are the metrics that you are going to be judged on? TVL, usage, etc?
• What areas must you not over-look when launching a Token? Token launch are actually very important: the market sentiment can have a huge influence on how the industry/market perceives the token. It’s not controllable, but clearly bull markets are much better to launch a token. The early price action also has an important impact in people’s mind, if the price goes down only, people move on, crypto has a short attention span, so it’s wise to think about this carefully, i.e.: token listing, making sure the token is listed on the right venues and with the right market making partners, marketing, making sure the project has a good branding, etc... This exercise never ends and must be started before the token launch, obviously.

Governance & voting rights

Governance properties have recently become a staple in token designs, and they are useful in that they allow tokens to be future-proof: via governance, the token design can evolve, which is helpful and especially as the token ownership is gradually more decentralised. It is likely that a protocol or a marketplace will need to incentivise different behaviour in the early life vs late life, or perhaps a protocol may want to introduce a fee once it is properly established and completely stop any incentives … governance gives that needed flexibility.

Distribution

Getting it listed on exchanges is not simple and is best done in partnership with Market Makers that work with these exchanges. Fabric Ventures can help introduce you to a large number of market makers that can help on this, including Flowdesk, Galaxy Digital, G20, GSR, Wintermute, etc…

Flowdesk is quite unique in their approach to market making, as unlike others, they offer Market Making as a Service, where the client (you) get to keep any profit from the Market Making, meaning they have no incentive to trade against your interest, which isn’t necessarily a guarantee with all market makers in the industry.

Do’s and don’ts

DO:

• Think about community distribution: it’s a subtle art, but generally it’s best to lean on the side of generosity than greed. Ultimately a project’s reputation isn’t and cannot just be built on giving people free money, but it can have a massive impact nevertheless.
• Consider carefully what you need to incentivise to help your protocol grow on the metrics that matter, whether that’s user count, TVL, etc. This can be a virtuous circle where the metrics justify a token price appreciation, giving you more ammunition, allowing you to incentivise more and grow faster, etc...

DON’T:

• Over-complicate the design early on, keep it simple and make sure it can be evolved with governance