Every Web3 project eventually faces a design problem rather than a marketing one:
how should its token enter circulation?

A token launch establishes the first real market conditions for a network. It determines:

• Early ownership
• How liquidity forms
• How price discovery unfolds
• Which incentives participants respond to

These early conditions continue to shape governance dynamics, community behavior, and capital allocation long after the launch itself.

Early in the industry, launches were treated primarily as fundraising events. Over time, they have come to be understood as mechanisms for shaping markets.
That distinction matters.

Classic Launch Models

Initial Coin Offering (ICO)

ICOs were the earliest widely adopted token launch mechanism. Projects sold tokens directly to participants, usually before a product existed and before any secondary market was available.

At the time, the model was a natural starting point. Teams needed capital, smart contracts enabled global distribution, and there were few established patterns for structuring token economies. The emphasis was on access and reach, not on controlling downstream market behavior.

A frequently cited example is Ethereum, which raised funds in 2014 through an ICO to finance protocol development. The long gap between the sale and meaningful network usage unintentionally aligned incentives: early participants had no immediate liquidity, and value depended on sustained execution.

As ICOs became more common, several limitations became clear:

• Tokens were often sold without anything on-chain tying the sale to future delivery
• Funds were typically unlocked immediately
• Participants relied almost entirely on off-chain promises

Once tokens were distributed, few mechanisms tied capital raised to progress delivered.

ICOs demonstrated that permissionless fundraising worked. They also showed that markets struggle when distribution is disconnected from accountability.

Initial Exchange Offering (IEO)

IEOs emerged as an attempt to restore confidence after repeated ICO failures.

Centralized exchanges hosted token sales using standardized infrastructure, user verification, and reputational screening. Participants trusted exchanges to filter out the most problematic projects, while teams benefited from built-in distribution and faster access to liquidity.

Platforms such as Binance Launchpad popularized the model, enabling projects like BitTorrent to reach large audiences quickly.

The shift introduced clear trade-offs:

• Control over allocation and timing moved off-chain
• Selection criteria were rarely transparent
• Economic outcomes depended more on platform policy than protocol design

IEOs improved reliability and reduced outright fraud, but replaced on-chain guarantees with institutional trust. For many teams and participants, that trade-off was acceptable at the time.

Initial DEX Offering (IDO)

IDOs marked a return to on-chain distribution, using decentralized exchanges to launch tokens directly into liquid markets.

Tokens entered circulation at the same time liquidity pools were created, allowing prices to form immediately through supply and demand. Access was open by default, and no centralized party controlled participation.

Projects such as SushiSwap demonstrated that tokens could be distributed without intermediaries, relying entirely on decentralized infrastructure.

In practice, new issues emerged:

• Launch periods dominated by automated trading strategies
• Thin early liquidity amplifying volatility
• Extreme price movements during initial trading windows

While execution was transparent, outcomes were not always balanced.

IDOs clarified an important point: decentralization removes gatekeepers, but it does not automatically produce fair or stable markets.

Evolving Launch Mechanisms

As teams gained experience, launch design began to focus less on broad access and more on how early markets behave. New mechanisms emerged to address recurring issues seen in earlier launches:

• automated trading dominating early distribution
• unstable price discovery
• ownership concentrating too quickly

These models aim to shape early market conditions more deliberately.

Liquidity Bootstrapping Pools (LBPs)

Liquidity Bootstrapping Pools adjust automated market maker parameters over time, often starting with a high implied valuation that gradually changes according to a predefined schedule.

Rather than rewarding the fastest participants, LBPs allow demand to set price across a longer window. Participants enter when they believe valuation reflects fundamentals, not simply because they arrived first.

Projects such as UMA used LBPs to limit early speculation and distribute tokens more evenly during launch.

The approach introduces complexity, both in configuration and in user understanding. When designed carefully, LBPs trade speed for steadier distribution and more informative price discovery.

Fair Launches

Fair launches remove preferential access entirely.
No private rounds. No discounted allocations. No early unlocks.

The most cited example remains Bitcoin, where coins entered circulation through mining with no pre-allocation. In DeFi, Yearn Finance followed a similar approach, launching without reserved tokens for founders or investors.

The structure simplifies incentives. Teams and participants face the same market conditions, and commitment is demonstrated through exposure rather than promises.

Fair launches reduce flexibility and early capital certainty. Execution after launch carries more weight, and markets tend to reflect that quickly.

Bonding Curve Launches

Bonding curves embed pricing directly into token issuance logic. As demand increases, prices adjust automatically according to predefined functions.

Early protocols such as Bancor used bonding curves to provide continuous liquidity without relying on external market makers. More recent applications like friend.tech applied similar mechanics to dynamically price access based on demand.

Bonding curves remove the idea of a single launch moment. Distribution happens continuously, and supply expands as demand materializes. Outcomes depend heavily on parameter design, making careful modeling essential.

Choosing The Right Launch Model

Token launches have evolved from simple sales into tools for shaping early market structure.

Early models prioritized speed and access. Capital formation was the primary goal, and market behavior was largely left to chance. As the ecosystem matured, teams began to recognize that how tokens enter circulation has lasting effects on ownership distribution, liquidity depth, governance participation, and price stability.

Each launch model reflects a different set of trade-offs:

• Speed versus stability, in how quickly markets clear
• Access versus control, in who participates and under what conditions
• Simplicity versus precision, in how much structure is imposed on early trading

No approach is universally correct. The right choice depends on a project’s maturity, regulatory exposure, and tolerance for early volatility. Infrastructure projects, consumer applications, and financial protocols often face very different constraints at launch.

What has changed most is how markets evaluate these decisions. Participants increasingly look beyond announcements and narratives. Instead, they examine how supply enters circulation, how liquidity behaves under stress, and what is enforced by design rather than promised.

In Web3, early market structure tends to compound over time. Ownership patterns, liquidity placement, and pricing dynamics set at launch often persist well beyond the initial distribution. Launch design is where those foundations are laid.