Token Issuance in the Berachain Ecosystem: Opportunities and Challenges

Recently, several projects in the Berachain ecosystem have launched or plan to issue tokens, which has sparked widespread discussion in the industry. Although this phenomenon reflects the vitality of the ecosystem to some extent, it also brings a series of questions worth pondering.

Token issuance can undoubtedly spur economic activity, spark market speculation, and even drive protocol growth. However, we need to carefully consider the true value of the token issuance. Once a project issues a token, its public perception will inevitably be pegged to the token price. In the current market environment, it is difficult for most emerging tokens to escape the influence of the overall market trend, and the downturn in token prices may directly affect the adoption rate of the product.

Ideally, the token should be launched when the product demonstrates a clear market fit and is in a phase of rapid growth. It should be a reward for early adopters and a tool to drive asymmetric growth, rather than a burden to hinder product adoption.

However, the reality is often more complex. Even with loyal community support, a consistently declining price curve can still affect product adoption. In the current market environment, even the tokens of mainstream public chains are struggling to find buys, and as an emerging ecosystem token of “niche within a niche”, it is necessary to carefully consider the timing of issuance.

The project team needs to seriously consider: who is the marginal buyer of the Token? If there is no clear and differentiated answer, it is advisable to reassess the issuance decision. Community support is indeed important, but its funding is ultimately limited and cannot sustain the Token price in the long term. The project should focus on long-term viability rather than short-term market opportunities.

The token issuance amplifies everything about the project’s performance. When prices rise, the project may be overly sought after; When prices fall, they can face harsh criticism. Therefore, tokens should not be issued blindly unless they are critical to the operation of the product (such as certain DeFi projects).

If it is certain that you want to issue tokens, it is recommended to follow the following principles:

1. Coordinate with other projects within the ecosystem to avoid overly concentrated issuance dates.
2. Give the market enough time and space for capital flow and rotation.
3. Reasonable valuation, especially in the current market environment, consider going flat or slightly lower than the financing valuation.

For projects that are already profitable, it is recommended to prioritize increasing investment, increasing revenue, and optimizing distribution, rather than rushing to issue coins. Ensure that the product will survive for the long term, preferably to be truly profitable, leaving room for possible buybacks in the future.

It is important to note that the existence of tokens may affect product adoption. Some users may participate in tokenless projects in anticipation of future airdrops, but may abandon them directly when they see the price of tokens dropping. In the current market environment, mid-cap tokens often find themselves in a price discovery “no man’s land,” where investors either choose stablecoin mining or gamble on very low market cap tokens.

The right motivation for issuing a coin should be based on the fact that the product has proven market fit and has a clear roadmap that shows how the token can contribute to growth. It should not be due to investor pressure, community expectations, or team cash-out considerations.

For the Berachain ecosystem, the current wave of token issuance could lead to two extreme outcomes: either forming a highly loyal but relatively closed community, or causing future teams to hesitate to issue tokens in the ecosystem. Optimistically, these early attempts could lead to unexpected surprises, drive product growth, or at least provide valuable learning experiences for founders within the ecosystem.

Overall, the crypto industry is a marathon, not a sprint. The project team needs to be patient, formulate a long-term strategy, and carefully consider the timing and method of token issuance on the basis of ensuring product value and user growth.