Liquidity Provisioning at Token Launch (TGE)

Optimal Float-to-FDV Ratios

There's no single "optimal" float-to-FDV ratio in crypto, as it depends on the project's goals and market dynamics. However, a low float (small percentage of tokens initially circulating) paired with a high FDV (fully diluted valuation) can strongly influence initial market perception and price dynamics.

Low Float, High FDV

• Pros: Can create a strong initial perception of value due to limited supply, potentially driving the token price higher.

• Cons: Risk of significant selling pressure as additional tokens unlock, potentially leading to price drops and volatility.

• Example: Tokens are typically considered low-float if their market cap-to-FDV ratio is below 0.5, indicating most of their supply is yet to be unlocked.

High Float, Low FDV

• Pros: Can help stabilize or lower token price due to excess supply availability, reducing volatility.

• Cons: Large immediate token supply may exert downward price pressure, making it difficult for price appreciation.

Factors to Consider

• Vesting Periods: Tokens locked up for extended periods can mitigate selling pressure.

• Demand: Strong market demand can mitigate downward price pressures from high initial floats.

• Tokenomics Design: Effective distribution and utility planning significantly influence long-term token sustainability.

Debates and Concerns

• Fair Token Distribution: Critics argue low-float, high-FDV models limit upside for public investors post-TGE, favoring private investors and VCs.

• Long-term Sustainability: Continuous token unlocks raise concerns regarding long-term market stability and price sustainability.