Opinion: Web3 projects should not keep a "safety cushion" for themselves; maximizing team benefits won't lead to long-term success
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Opinion: Web3 projects should not keep a "safety cushion" for themselves; maximizing team benefits won't lead to long-term success
What does a project really need? Simple: a community bordering on cult-like devotion.
Navigating Web3 tides with focused insightsAuthor: 0xTodd
Renzo’s initial decision to allocate only a small percentage of $REZ to $ezETH holders was very likely a mistake (originally 5%, later increased to 7%).
To be clear, I’m not singling them out—http://Ether.fi gave Season 1 participants only 6%, which is also quite low.
For many re-re-staking projects, TVL essentially *is* everything. Remove TVL, and all the imagined components—AVS, Hub, strategizers, liquid restaking tokens, L2s, the entire restaking layer—cease to exist in any meaningful way. TVL is the true benefactor.
During the original DeFi Summer, $YFI distributed 100% of its tokens within one week. Yes, 100%.
TVL, liquidity mining, and governance each received one-third—simple, clear, and effective. The rest is history: in the following week, $YFI surged 1000x.
I don’t deny that re-re-staking has its innovations, but at its core it isn’t much different from Yearn. It doesn’t generate yield on its own—the real innovation and primary returns come from underlying protocols like Eigenlayer. Strip away the narrative layer, and they’re all just yield aggregators in disguise.
What does a project truly need? Simple: a near-cult-like community, not fickle, transient miners and airdrop hunters ready to exit at any moment.
But crucially, the identities of “devoted supporters” and “merciless dump-and-run miners” are interchangeable. The Schelling point for this transformation lies precisely in the proportion of tokens held by the community.
When you, as a project team, are surprised to find that you hold 95% (your so-called thick safety cushion), while the community holds only 5% (your so-called minimal sell pressure)…
—then don’t complain about why the community isn’t active or supportive.
Mining and trading are psychologically similar:
Every person who has actually traded crypto knows this feeling: once you buy into a token you believe in, your conviction grows immensely after a 2x gain.
Why do Bitcoin holders always seem the most faithful? Duh—they bought at $1,100 and held to $66,000. No FUD can shake them. The earlier you get in, the stronger the faith.
The psychology of mining is much the same:
- When people spend $100,000 to mine $10,000 worth of tokens with linear 50% unlocking, they’ll rush to dump immediately, locking in profits. This signals the project team’s “lack of confidence.” Plus, investors have “management bandwidth”—a tiny airdrop should be sold quickly; every extra minute is wasted attention.
- When people spend $10,000 to mine $10,000, they’ll proudly tweet about “missing out,” half-jokingly regretful, half-satisfied and subtly flexing, making readers envious and eager to join.
- When people spend $1,000 to mine $10,000, they’ll tirelessly talk about your project at every dinner, every gathering, every Twitter Space. For 1–5 years, they’ll evangelize it to everyone they know—even record it in their family genealogy: “In such-and-such year, our ancestor struck a legendary mine.” Friends and relatives will shed tears of envy, then board the FOMO train crying.
Believe me, this is a real story.
Did you notice? These three scenarios produce three types of people:
- Ruthless airdrop hunters;
- Enthusiastic core miners;
- Loyal seed users;
When you turn the sacred and critical act of “token distribution” into mere “early participant airdrops,” you’ve already lost at the starting line.
I don’t expect today’s re-re-staking projects to pursue a fair launch—few truly have the courage.
But I do know this: offering only 5% in tokens will never earn you a loyal cult-like community—only cold, calculating dump-and-run airdrop hunters.
Granted, raising it to 7% is better—but still no fundamental change.
A small reference: $UNI allocated 15% via airdrop and 2% via liquidity mining—17% total sent directly to the community at launch.
I’ve advised many projects, and founders often ask: how should we draw the token allocation pie chart?
There’s no single right answer—conservative, aggressive, or somewhere in between. Every aggressive approach is a “social experiment”; every conservative one is “better safe than sorry.”
Let me be blunt: a “better safe than sorry” mindset in tokenomics is pure laziness.
Such projects typically feature:
- Teams hoarding as many tokens as possible;
- Communities receiving minimal allocations (small base, harsh vesting);
- Reserved backdoors for treasury and core permissions;
Because this ensures maximum security for the team and founders—“I remain the ultimate controller of the game.”
Little do they realize, this steals security from the community.
Security cushions are conserved—they come in one piece. If you take it, the community has none.
Don’t bring Web2 mentalities into Crypto. Clinging tightly to equity maximizes founder self-interest—but it also ensures no one else will ever fight tooth and nail for your project, let alone form a loyal user base or devoted community. My partner once described a failed company: “It had only angry employees and angry users.”
We came to Crypto to change exactly that.
What is the spirit of Crypto we talk about every day?
It’s using the fairest possible distribution to unite everyone who can be united—harnessing that unprecedented unity to grow faster than any Web2 company, then defeat Web2.
If you’re still obsessed with maximizing team benefits and securing the founder’s peace of mind, perhaps you should return to Web2 entrepreneurship.
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@0x_Todd
