When we launched Denarii Labs this year, we had a simple goal: to create a best-in-class tokenomics accelerator to help five great startups ideate and launch a full-fledged token project. Each company (see previous post about the selected companies for cohort 1) receives a $100k investment out of the Red Beard Ventures Fund I, a hands-on advisory and token design consulting from Horizen Labs Ventures, and will attend a greater Red Beard Ventures ecosystem day to demonstrate their new token. After 170+ applicants and months of searching, we put together an amazing cohort and an extremely valuable curriculum to help them succeed.
The first three weeks of our accelerator program has been an exciting time, educating the cohort on the finer points of tokenomics design and brainstorming on what a token could do for their startup. Let us dive in and see what the cohort has been working on up to this point with our experts and mentors.
First, we would like to thank our sponsors on this great endeavor, without whom this program would not be the success it has been.
- Fenwick & West LLP — a premier law firm for tech and life sciences companies
- Kairon Labs — Crypto market makers and liquidity providers
- Hedgey — Token infrastructure for onchain teams
- FLOW Ecosystem — A blockchain designed to be the foundation of Web3 and the open metaverse
What is usually a very intuitive answer in Web2, for many Web3 projects the answer to “who are your stakeholders” is a much more complex one. It’s an important question to ask, because a token project will rely on the proper incentives for much of the key features to work. Our team helped the cohort identify the less-obvious stakeholders, such as liquidity pool members, validators, and governance participants.
A token project working with decentralized ownership must consider community participation and business development more importantly than a Web2 counterpart would. Furthermore, whereas a company will not have to worry about their equity being subject to market forces until an IPO in the traditional world, the Web3 startup has to seriously consider listings, education, and market makers at the very beginning.
User Action Space
Where we can define these external stakeholders in a token project, our cohort is further considering HOW they provide value to the network, and what incentives they will respond to most effectively. Example: for systems where an ecosystem has a ‘cold start problem’ and needs value to operate, users will help with this provided that there is some incentive or subsidy to their interaction.
Our cohort companies worked with us to figure out who in their network will supply value, who will consume it, and how to incentivize both to work together via the token economy.
Mentor talk: Thirdweb with Head of Ecosystem Jason Hitchcock
Thirdweb is an all-in-one hub for developing a Web3 project, bringing together a large suite of tools to build, manage, and analyze web3 apps. All of their tooling is open-source, decentralized, and permissionless, saving founders and developers many headaches by putting them all under one banner, simplified to shorten the learning curve.
Jason Hitchcock, as Head of Ecosystem, knows that the decision of what toolkit a developer uses is key, but can often be made in haste or error; a choice for X task may not work well with Y coding language, for example. Thirdweb is providing a huge host of tools to our developers at the most best time to make these decisions: right at the beginning. That way, every new task that requires a specialized tool doesn’t have to be a workflow-breaking emergency.
Mentor talk: Kevin Leuthardt, LL.M.
Our cohort had the privledge of a talk from Kevin Leuthardt, founding partner of Threek, a boutique and owner-operated advisory firm for Web3 projects and investors. Kevin has a terrific history of working with projects as a sort of ‘sparring partner’ helping them figure out strategy for token design, financial management, and liquidity considerations. In addition, Kevin has experience advising post-launch considerations like governance, risk management, transferability, and more.
Kevin educated our cohort on some of the most pressing questions they have yet to answer in their journey; what should the founder allocation look like? What are the legal considerations to selling a token to US, EU, or other investors? When and where should liquidity be deployed? What is the value-add for having a Swiss/European tax entity?
These first few weeks of Denarii have been illuminating and exciting ones. Our cohort is finding that there are many not-so-obvious factors to consider when launching a token, and the value of having this terrific education and the mentorship of our experts is truly priceless.