Original Article Title: Your token sucks (and everybody cares)
Original Article Author: @CaesarJulius0, Co-Founder of StableJack xyz
Original Article Translation: zhouzhou, BlockBeats

Editor's Note: This article analyzes the main issues with current token design, including liquidity mining, no-barrier airdrops, high FDV low circulation, and a lack of revenue sharing or value accrual mechanisms. Excessive incentives and unreasonable token releases have led to market dilution and price declines, lacking long-term value creation. To address these issues, a demand-based unlocking plan is proposed, emphasizing that tokens should be sold at a discounted price to truly committed users and ensuring the token's long-term value and market demand through revenue sharing and value accrual.

The following is the original content (slightly reorganized for readability):

This cycle is frustrating, and the old tricks no longer work. Your favorite coin no longer does a 10x in a month, or even keeps lagging every day (ETH, you know).

If you're a project team, it's even more painful. You've poured your heart into building a product, received excellent feedback from the testnet users, and after the TGE... no one cares anymore. Why? Because the token didn't pump.

Macro-economics and marketing are indeed important, but we must face reality: does your token really have a reason to rise? Is your tokenomics sound, or are you repeating those proven invalid patterns? When everyone would rather hold meme coins than touch your meme coin, should we rethink token design?

This article will dissect the main issues in current token design and propose a new approach.

Inherent Problems in Token Design

· Token Inflation – Liquidity Mining

· Continuous Selling Pressure – No-barrier Airdrops

· High FDV Low Circulation

· No Revenue Distribution or Value Reinvestment Mechanism

Simply put, most investors care about token price, not technology. They invest in the project team, hoping these tech geeks will realize the vision. In the end, both sides should win – investors should at least get a reasonable return, and the project team can focus on development.

Next, we will break down these issues one by one:

Liquidity Mining

Any legitimate project should not aimlessly distribute tokens without a plan. You wouldn't see Tesla giving away stocks to people buying cars, so why do some DeFi protocols treat tokens as freebies?

Tokens should have value, but many teams have been guilty of excessive "incentive" issuance, leading to a market oversaturation. If the project team doesn't value the token themselves, how can investors be expected to? This creates a vicious cycle: token recipients only sell instead of holding long-term.

Liquidity mining is one of the main causes of meme coin crashes. When designed improperly, it triggers a "race to the bottom": new users come in to mine, earn rewards, sell off, then move on to the next project, leaving behind only the losing old users. Without a mechanism to ensure long-term value creation, this situation will not change.

No-Threshold Airdrops

Airdrops themselves are not the issue, but most airdrops fail to bring in long-term users. The problem is not just that recipients sell off, but that many airdrop models only reward short-term "task-based" behavior rather than genuine user engagement.

The typical process looks like this:

· Participants (usually bounty hunters) complete some basic tasks to qualify for the airdrop.

· The protocol distributes tokens at TGE.

· Many recipients immediately cash out.

· The token crashes, making it difficult for the protocol to retain users.

Sound familiar? The real issue lies in misaligned incentives—airdrop recipients have no reason to stay, not because the product lacks value, but because the airdrop itself does not consider long-term engagement.

Not all projects should do airdrops, and for those that should, airdrops should reward genuinely active users, not just one-time task completers.

Hyperliquid and Kaito are great examples. Their airdrops do not incentivize manipulation but rather align with users' existing behavior—Hyperliquid rewards active traders, Kaito rewards authors contributing quality content consistently. This not only promotes genuine participation but also increases long-term holding rates, redirecting funds away from short-term arbitrageurs.

High FDV, Low Circulation

Many projects raised a huge amount of early-stage funding for development, and early investors want to recoup their investment quickly. This results in a high FDV (fully diluted valuation) but a low circulating supply, causing the token price to be severely inflated at listing.

The issue is that a high FDV limits the upside for early retail holders, as most tokens are locked up in the hands of institutional investors whose cost basis is far below the market price. Once the unlocking begins, these early investors often cash out under market demand pressure, causing a continuous downward price pressure. Eventually, the token price drops, and everyone starts to worry.

This is not a perfect solution, but for projects with high FDV, there must be strong fundamentals and real market demand; otherwise, they will merely become a "buy the dip" fund for early investors.

No Revenue Sharing or Value Accrual

Now, let's talk about the most critical issue: Why should your token exist?

If it has no revenue sharing, no value accrual, and no practical utility, then why would anyone hold it long term? If your token is merely a speculative alternative, it will inevitably trend towards zero; it's just a matter of time.

Many founders avoid revenue sharing to maintain full control over profits, which is understandable. However, if there is not a compelling reason for users to hold it, the market will price the token accordingly. Ultimately, value accrual is not optional. Whether through revenue sharing, real earnings, or meaningful in-protocol utility, the token must provide a valid reason for its existence.

Relying solely on "governance" is not a solution. Most governance tokens have no real power, and even if investors do decide on a particular pattern, it almost always relates to toggling a fee switch—a notion still tied to revenue sharing.

The MetaDEX model has done reasonably well by providing revenue sharing to token stakers (such as Aerodrome, Pharaoh, and Shadow Exchange). This enables them to create demand for the token and increase the staking ratio.

So, what is the solution? My solution is simple: a demand-driven unlock schedule.

Tokens should not be released on a fixed schedule but should only enter circulation when there is actual demand from active protocol users. Additionally, tokens should not be freely distributed through liquidity mining rewards but should be available for purchase at a discounted price, ensuring that only users truly invested in the protocol can become holders. Here are three industry leaders who have proposed similar solutions:

Luigi DeMeo also holds a similar view, emphasizing that most token models face runaway inflation issues, weakening value accrual. He notes that liquidity mining often attracts short-term participants who immediately sell tokens, depleting protocol resources, and cannot ensure long-term engagement. Without market-driven demand and revenue sharing, token holders can hardly see real value.

Vitalik Buterin tweeted that protocols should consider discounted sales instead of free token giveaways, which also supports the main point of this article.

Andre Cronje directly raised this issue. He believes that liquidity mining attracts temporary participants who mine for rewards and then exit once the incentive is gone, creating sustained selling pressure. As a solution, he proposed the "optionality reward" — whereby liquidity providers can purchase tokens at a discounted price after a set period, rather than receiving tokens for free. This mechanism aligns their incentives with the project's long-term success, as their reward only appreciates when the protocol thrives.

At Stable Jack, we are implementing a solution called Discount Tickets — a system designed to make token distribution sustainable, demand-driven, and resistant to rent-seeking capital.

How it works:

Only active users can acquire Discount Tickets, granting them the right to buy $JACK at a discounted price relative to the market.

The protocol does not give away tokens for free — they are sold at a discounted price, ensuring committed users can accumulate a meaningful holding.

No new tokens will enter circulation unless there is genuine demand for $JACK — this is demand-driven unlocking.

There is no undue supply pressure — loyal users will not be dumped on by short-term participants.

What is the result? Believers, not mercenaries, become holders. There is no runaway inflation. No free giveaways. Just a model that prioritizes user alignment and protocol longevity. Additionally, the protocol can build up its own liquidity, alleviate selling pressure, and continue product development.

Conclusion

For years, altcoins have struggled under imperfect token models — unsustainable liquidity mining, structurally flawed airdrops, and runaway inflation have eroded value without creating value. The solution is not to remove incentives but to align incentives with long-term participation and actual value accrual.

We need to shift from time-based unlocking to demand-based unlocking, ensuring tokens only enter circulation when there is genuine market demand. Projects should not give away tokens for free but should sell them at a discounted price to committed users, while also incorporating a revenue-sharing mechanism that gives holders a meaningful stake in the protocol's success.

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