The subsequent insights represent the viewpoint of Corey Billington, Co-Founder and CEO of Blubird.
The majority of token launches unfold predictably. Founders dedicate countless hours to spreadsheets, lawyers draft lengthy disclaimers, and online influencers begin to stir excitement with vague mentions of an impending “TGE.” However, behind the curtain, private investors are primarily anticipating the expiration of lock-up periods to sell their holdings. This action leads to a surge in circulating supply, a corresponding decrease in token value, and an influx of social media discussions regarding potential “unlock risks.”
Amidst all this activity, a fundamental truth is often overlooked: tokens are infrastructural elements, not simply tools for short-term capital acquisition.
My experience spans collaborations with over 80 teams, and a recurring theme emerges. Entrepreneurs are quick to create tokens, intending to raise funds without relinquishing equity. They subsequently endeavor to integrate utility into the product – a strategy that rarely proves successful. This flawed methodology leads to typical problems: excessive insider allocations, illogical unlock schedules, and “use cases” that are unappealing to users.
At this point, every token purchase effectively assists someone else in converting their holdings to cash.
Why Prioritizing Fundraising Before Utility Sabotages Everything
When your token’s primary purpose is to secure funding, you’re heading toward two critical challenges: legal vulnerabilities and potential harm to the market.
From a legal standpoint, if your token lacks intrinsic utility from the outset, it may be classified as a security – and the SEC is not known for leniency on such matters. Despite marketing it as a utility token, the Howey Test remains indifferent to your presentation materials. Paired with a swift distribution plan and subsequent drop in value, disgruntled investors might file complaints.
The strategic consequences are even more significant. Projects that regard tokens as a fundraising shortcut seldom devise plans for post-launch activity. Their efforts are instead directed towards navigating unlock schedules, vesting agreements, and investor demands, rather than enhancing product usage or user adoption.
Consequently, tokens are released into a market that is unable to absorb them. Token unlock events are likely to drive down prices, even with a mere 5% total supply release. Over the coming months, impending unlocks will total roughly $9 billion.
Prioritize a Business Plan, Not Tokenomics, Until the End
The most effective token models originate from the core business. A comprehensive plan is essential – one that you could confidently present to Series A investors, detailing the company’s operations, growth strategy, revenue generation, and the advantages it provides.
This clarity will provide you with answers. Is a token truly necessary? Where does the token seamlessly integrate into the product? What roles do users, validators, contributors, or liquidity providers play in fueling demand?
Once these considerations are addressed, you can start outlining the flow: who earns, spends, and stakes, and when. Then, you should stress-test the model: ‘What will happen during a market downturn? What if usage experiences explosive growth? How will fees, incentives, and distribution adapt?’
Tools such as Machinations can be beneficial in this process; consulting with someone who has examined numerous models can also provide valuable insights. However, if the fundamental structure is flawed, no amount of software or expert guidance can rectify it.
If the Token is Not Essential, Delay Its Launch
This is the advice I give to every team: if your product can function without a token, launching without one is generally the best course of action. Utilize equity, milestone-based SAFEs, or revenue-sharing agreements to finance initial development. You can deploy the token once the product gains traction and the token clearly benefits the process.
Launching too prematurely invites speculation, causing you to devote the next few years defending a price chart instead of cultivating your user base.
Conversely, when tokens are indispensable—for instance, facilitating blockchain transaction fees, enabling access to data feeds through staking, or distributing ecosystem rewards—their utility becomes the cornerstone. Demand increases alongside usage, and the token is earned, spent, and recirculated within the product. Emissions, in this scenario, do not diminish value, due to the actual activity that supports them.
Consider Solana: Daily releases of approximately $14 million worth of tokens have had a negative effect on its valuation. Strong network demand has consistently revived the project, however. Sui presents a further instance: Following a January 1 unlock that distributed 64.19 million tokens (valued at around $300 million), the token jumped almost 28%, hitting a new high of $5.1.
Entrepreneurs Should Prioritize Longevity, Not Launch Day
Founders are partial to vesting periods and scheduled unlocks—because they’re straightforward, easy to model, and satisfy the need for “long-term incentives.” Time is an inadequate indicator on its own. Connecting unlocks to concrete milestones is substantially more effective: the number of active validators, the modules shipped, or the usage goals achieved. This way, the token supply is linked to network growth.
Avoid creating models in isolation. Include variables such as slippage, market downturns, and project delays. Your model is not launch-ready if it can’t withstand these shocks.
Have someone critically analyze the model once it appears secure. Seasoned developers will detect flaws in the incentive structure and edge cases that the development team has overlooked.
Tokens Shape the Entire Market – Design Responsibly
This primarily comes down to perspective. More effective releases and stronger networks would be observed if more founders approached token design as genuine infrastructure—not a branding element or fundraising gimmick.
Venture investors are already moving in this direction: the best are focused on demand loops, not hype. Exchanges now lean towards transparency and sustainability, instead of obscure unlocks and temporary marketing. Also, regulators are more likely to approve a commodity-style utility token when it is essential to operations, not a bolted on afterthought.
In summary: do not launch if removing your token does not disrupt the loop. Build the loop first, then the token.