Original title: Binance FairMode, a new token system, nurturing huge opportunities
Original author: Riyue Xiaochu (X: @riyuexiaochu)
Editors note:On December 19, Binance’s new currency mining Fair Mode launched NFPrompt (NFP).Fair Mode is a new token distribution model designed to protect the community and retail investors and maximize user interests. The initial circulation of tokens issued under this model will increase significantly. Additionally, it will permanently prevent part of the token allocation from entering circulation to further reduce inflationary pressures. Crypto KOL Riyue Xiaochu (X: @riyuexiaochu) published an article explaining the model innovation of Fair Mode and said that this is an interesting experiment in a new token economic system. Odaily organizes it as follows:
Many people may not have noticed that Fair Mode appears in Binance’s new launchpool.The focus is not on the project, but on the transformation of the token economic system.
As the leader in the industry, Binance has released an important signal with FairMode. Using its influence and new token system, Binance has put the project on the track of long-term healthy development.Some great companies may be born in the future, with opportunities a hundredfold or even ten thousandfold.
I have always believed that in addition to the innovation of decentralization and never tampering with blockchain, the innovation of the token economic system is the second artifact. There is a saying: How you divide the pie determines how big the pie can be. A good pie-sharing plan must stimulate the interests of all parties, unite everyone, and then move the project to the stars and the sea. Tokens have more advantages than traditional company equity, so several new token distribution plans in the blockchain haveFor example, IC0 in 2017, Defi mining in 20 years, and Mint in 23 years have brought about great changes in the industry and contain huge opportunities.
What is widely criticized in the market now is the institutional model. Due to the entry of a large number of institutional funds from the United States, the valuation of the project is very high, and then it is listed on the exchange. The growth space left for us in the secondary market is relatively small. What’s more terrible is that it is difficult for project parties to work well after they have a lot of money.
Binance Fair Mode is an innovative attempt at a new token economy. At first glance, it feels the same, with teams, investment institutions, development funds, airdrops, launchpools, etc.
This is indeed the case, but the difference in Fair Mode is the proportion of tokens.The token distribution ratio is very important, even crucial.For example, if you and two friends are working hard to start a business together. The performance is good after one year. If your shares only hold 5%, will you still have the motivation to work hard in the second year? But if you account for 30%, then you must be thinking about continuing your efforts next year and creating greater glories. So see, if the distribution ratio is different, your attitude is completely different.
So what’s different about Fari Mode? Let me interpret it.
1. Long-term development fund
This time, a long-term development fund appeared in Fair Mode’s NFPrompt, accounting for 27%. Interpreted as: assigned to"long term development fund"Tokens cannot be spent or sold, they do not enter circulation. After vesting, they can participate in the ecosystem through staking and other methods and share the rewards and benefits from the project, but they do not have any governance rights. The staking rewards it obtains can be used for the long-term operation and sustainable growth of the project.
This long-term development fund is a major innovation that has never been seen in other projects. Its characteristics are 1) it will not be circulated in the future, and 2) it can only be used to pledge dividends from participation in the system’s income for the long-term operation of the project. This means that 1) only 73% of the projects representatives are actually circulated, and 2) the project parties are encouraged to work hard to increase the projects income.
2. A large proportion of chips are distributed fairly, and the community’s voice is given greater weight.
Of the 25% of the initial circulation, 21% is distributed fairly to retail investors, including 11% from Binance’s launchpool and 10% from airdrops. In comparison, the initial circulation of most projects is around 15%, but the fair distribution is only within 5%. The other circulation is controlled by the team, such as marketing, liquidity chips, etc. In FairMode, the communitys chips are as high as 21%, while the teams chips are only 15%. Not only does the community have more say in future DAO voting. With more tokens in hand, the community has more motivation to build with the project side.
In addition, the token ratio of Binance launchpool has been greatly increased this time. In the past, hook and edu were around 5%, but this time it is as high as 11%. This not only increases the benefits Binance provides to users, but also increases the fair distribution of chips.
3. The increase in initial circulation means that FDV will increase and future unlocking will decrease.
Under the same circulation market value, an increase in initial circulation will represent a decrease in FDV, and future unlocking will also be greatly reduced. The initial circulation of NFPrompt is 25%. Excluding the long-term development funds that will never be circulated, 43% of the chips will be circulated in the future. In other words, less than twice as many chips will be in circulation in the next six years. In comparison, the initial circulation of most projects is around 10%, and 90% of the chips will remain in circulation in the future. That is to say, there will be 9 times more chips in circulation in the next 6 years (maybe 3 to 5 years).
We often encounter situations where a project has been a holder for one year and the market value remains unchanged, but the currency price has been cut in half. This is due to the doubling of circulation in one year. Under FairMode, this situation no longer occurs.
The routine of many projects now is to control most of the circulating chips in their own hands, so that they can set the opening price very high, and then slowly ship the goods, allowing retail investors in the secondary market to take over. Of FairModes 25% initial circulation, 4% is controlled by the project side, and 21% is distributed fairly. A large number of chips are circulating outside, and the project side cannot control the market to achieve a high price opening. The opening price will naturally be low, and then there will be a lot of room for growth in currency prices in the future.
4. The ratio of team + investors is greatly reduced, which means that future selling pressure will be reduced and long-term development can be taken advantage of.
This time Fair Mode’s project NFPrompt team + investor ratio is only 25%. For comparison, cyber 47.2%, arkham 40.5%, arb 44%, Op 44%. Therefore, compared to common projects, Fair Mode’s token ratio among the team + investor institutions is lower, and much lower.
Let me also explain here that the ratio of teams and institutions has been reduced, but the unlocking time has not been reduced, 1 year of locking + 5 years of unlocking cycle. Not shorter than other projects. The team cannot have too many chips. Otherwise, if the currency price finally rises, it will be sold, and no one will work hard.
Although many people recommend the inscription of 100% fair launch, I personally feel that it is suitable for a small number of projects.Most projects need to design a reasonable token distribution plan like FairMode to motivate people from all walks of life and lay a good foundation for future currency price growth.
1) The initial circulation increases and the FDV decreases, and the circulation will be greatly reduced in the next few years.
2) Greatly reduce the ratio of institutions and teams, and lock up positions for a long time. Motivate the team to work hard, instead of holding a lot of zero-cost tokens and cashing out as soon as you get one.
3) At the initial stage, a large amount of chips will be distributed fairly to the community and related personnel. On the one hand, it gives the community a stronger voice and encourages the community and project parties to build together. On the other hand, it prevents the project party from controlling the chips to open at a high price, leaving a lot of room for future secondary growth.
The first project FairMode is NFPrompt. Although it has mixed reviews in the market, it is worthy of attention as an interesting experiment in this new token economic system. More importantly, Binance, as the leader in the industry, has used FairMode to release an important signal. Using its influence, the new token system has allowed the project to enter a long-term track of healthy development, from which some great companies have been born.
