There’s a science to issuing a token.
At least that’s according to Shane Molidor, the founder of Forgd, a platform that specializes in advising crypto projects on how to launch their own native tokens.
“It’s easier now to launch a token than ever, especially with pump.fun,” Molidor told CoinDesk in an interview, referring to the Solana-based launch platform favored by memecoin creators. “But it’s harder now than ever to launch a utility token that actually ends up performing well, because there’s a finite amount of attention among retail and institutional investors.”
“At the end of the day, everyone seeks a positive return on investment, but if there’s a finite pool of capital, you’ve got a lot of churn,” Molidor added.
Forgd provides free-to-use software for blockchain projects to design tokenomics, engage market makers, navigate exchange listings, and underwrite their own valuation at launch.
Once they officially launch their token, these projects can keep using Forgd as a data analytics platform to track their market makers, monitor unlocks, and optimize token demand drivers.
The company also has an internal advisory practice to help guide large projects to fruition. More recently, Forgd has built out a portal where other token advisory firms can manage their portfolio; additionally, market makers are able to access transparent deal flow, as well as track uptime obligations.
The software has been used by more than 1,500 projects, according to Molidor, about half of which have been research-oriented, meaning users played around with the tools to understand how it all works.
Most of the time, the more serious projects (which Molidor called “blue chips”) end up using the software while still working with an advisory firm — which could be Forgd itself, or one of its competitors.
In Molidor’s book, to qualify as a “blue chip project” means raising significant funding from venture capitalists and offering their token at about $100 million notional or above on major centralized exchanges. Multiple tokens now in the Top 100 in terms of market capitalization have been launched through Forgd, Molidor stated, though he declined to provide any names.
“The goal is to provide transparency and standardize this process of go-to-market,” Molidor said. “It’s always struck me as odd that… protocol innovators are expected to become subject matter experts in all things market microstructure.”
“A lot of the intricacies of this go-to-market process are very much a black box to all but insiders. I used to be one of those insiders, so I know how to navigate the process,” he added.
Unsustainable launch process
Forgd’s recommendations are completely>
In Molinor’s saying, the current process for launching tokens — with assets trading at multi-billion dollar fully diluted valuations shortly after launch, and with hyperinflationary token emissions over a period of three or four years — is completely unsustainable and needs to change. With such projects, demand is usually limited to the opening days or weeks; afterwards, the investing public’s attention moves on to other projects.
“The reality is that, behind the scenes, on big time launches, the opening price and the magnitude of the… pop are hyper manufactured, either by the exchange or market makers, so the project might have very minimal influence as to how high they’re trading in the first one minute. Predatory or self-interested actors might influence that,” Molinor said.
“What I think is actually more common is that the project doesn’t know how to structure a balanced relationship with strategic partners like market makers, and they unknowingly put themselves in a position where the market maker is incentivized to let the price rip,” he added.
The problem could be fixed if mechanisms were put in place to ensure sustained demand in the secondary market, Molinor said. In traditional markets, when a company goes public, it has certain assurances in the book building process from the underwriter that there will be institutional demand, he claimed. Tokens, however, usually can only count on retail speculative demand once they go to market.
To remedy that, deal structures could be conducted in such a way that, if an institution wants to invest in the primary market, they are only allowed to invest a small portion of the capital they want to allocate — with the rest earmarked for the secondary market.
“Just as DeFi summer revolutionized the way that we think about liquidity provision, I wouldn’t be surprised if we see on-chain mechanisms that incentivize buy-side demand being injected on-chain after a token is launched, that could be with basically yield that’s generated in tokens, or maybe stablecoins that effectively lower the cost basis of institutions,” Molinor said.
