Treeverse’s $END Token Launch: A Mixed Reception
The long-anticipated $END token from Treeverse officially became available for claiming on July 4, and trading commenced just a day later. Supported by Endless Clouds and notable community figure Loopify, the token had generated significant excitement among enthusiasts of the forthcoming anime-inspired MMORPG. With a circulating supply of 31.1% at its debut and a strong sense of community support from NFT holders and early investors, expectations were particularly high. However, these hopes quickly diminished.
Initial Hype Gives Way to Disappointment
Upon its launch, the token presented a fully diluted valuation (FDV) of approximately $30 million. Yet, just two hours into trading, $END saw a dramatic drop, crashing below a $10 million FDV. The overwhelming sell-off from airdrop participants flooded the market, leading to widespread disappointment and echoing a recurring theme: Web3 gaming tokens frequently experience significant declines shortly after their launch. This raises an essential question: Why does this pattern continue to occur, and should we reconsider our approach to token launches?
The Issue Extends Beyond Treeverse
It’s important to note that Treeverse did not make any significant errors in its approach. On the contrary, Loopify and the team at Endless Clouds displayed commendable transparency throughout the process. However, this situation isn’t unique to Treeverse. In an analysis released in early 2024 by Wolves DAO, the team outlined a prevalent strategy for gaming token launches, which often involves NFT-gated rewards, play-to-airdrop initiatives, early presales, and public listings. The key takeaway from their findings is that most token launches tend to follow a predictable trajectory: initial excitement, a significant spike at the Token Generation Event (TGE), followed by a substantial drop of 60–90% as participants rush to cash out. The Wolves DAO team emphasized that if a token is distributed as a reward without genuine demand, it typically faces rapid devaluation. Additional features like staking or token-gated quests rarely mitigate this outcome, often appearing as superficial solutions rather than substantive changes.
Current Trends in the Gaming Token Market
Adding mechanisms such as vesting or staking does little to alter the trajectory of these token launches. In reality, these tactics often serve as temporary fixes for a fundamentally flawed system. Data from Decrypt corroborates this trend; as of early 2024, none of the six gaming tokens that were once ranked among the top 100 in crypto remain there today. The overall valuation of the sector has plummeted by 68% compared to the previous year, despite numerous new token launches. Additionally, Cointelegraph has shed light on how market makers can exacerbate these issues. Frequently, tokens are lent to market makers prior to launch to provide liquidity. However, this often results in early selling that contributes to an off-chain inventory that is later dumped after the TGE. With insufficient real demand to uphold prices, even solid projects can find themselves spiraling downwards.
Reevaluating the Need for TGEs
If the majority of token launches result in sharp declines, it might be time to reflect: Are TGEs necessary, or should we reconsider their implementation?
Expert Recommendations for Improvement
Fortunately, experts have begun to highlight these weaknesses while proposing potential solutions. Insights from Wolves DAO, Cointelegraph, Decrypt, and academic research are generating interest in several strategies. While these are not one-size-fits-all remedies, they advocate for a paradigm where tokens are earned, utilized, and held in esteem rather than simply farmed and subsequently sold off. Six notable suggestions have emerged:
- Anti-Dumping Clauses: Implement smart contract features that limit excessive token sales in the initial weeks, including transfer restrictions or penalties for early sell-offs.
- Engagement-Based Unlocks: Instead of distributing tokens for free, allow players to earn them by completing challenging tasks, winning competitions, or burning NFTs, thus ensuring that effort is required.
- Treasury-Controlled Liquidity: Rather than providing immediate liquidity on decentralized exchanges (DEX), allow the team or DAO to gradually introduce it based on actual user engagement.
- Burn-to-Upgrade Systems: Require players to burn tokens or items to create higher-tier gear or unlock new levels, thereby fostering long-term demand and reducing supply.
- Status Over Payouts: Design tokens to offer benefits beyond monetary rewards, such as cosmetic items, access to exclusive communities, or governance rights, which can encourage players to retain their tokens.
- Infrastructure Rewards (ServerFi): Shift the focus from rewarding players who merely grind for tokens to those who actively support the game’s infrastructure, such as hosting servers or moderating content.
Understanding ServerFi
In 2024, Yale researcher Pavun Shetty introduced the concept of "ServerFi" in a paper titled "ServerFi: A New Symbiotic Relationship Between Games and Players." The fundamental premise is that current web3 gaming reward systems are too transactional; players complete tasks, receive tokens, and leave without any long-term commitment. ServerFi aims to transform this dynamic by granting players a stake in the ecosystem.
Here’s how it functions:
- Earn Lottery Chances, Not Tokens: Players receive draw tickets for adding genuine value, whether through winning matches, operating servers, or supporting liquidity instead of direct token rewards.
- Win Fragments → Forge NFTs: Players who win a draw obtain random "fragments." Collecting all fragments allows them to create an NFT that represents their stake in the game’s ecosystem.
- Stake NFT for Revenue Share: By staking the NFT, players can earn passive income from various revenue streams, including marketplace transactions and battle passes.
- No TGE Required: As rewards are earned gradually, there’s no need for a massive launch event, eliminating the pattern of initial price surges followed by steep declines.
The simulation results for the ServerFi model indicate that it encourages more consistent user contributions compared to systems that reward high-retention players. This approach provides a pathway to ownership for all players, even those who participate casually.
The Significance of ServerFi
ServerFi fundamentally alters the traditional reward model by prioritizing long-term alignment over immediate gains. The design ensures a capped supply, as fragments are consumed during the synthesis process, which helps to regulate inflation and prevent excessive token emissions. Additionally, the framework promotes a tiered structure, allowing smaller stakeholders to earn ownership through consistent gameplay and contributions. Since rewards are linked to the game’s infrastructure rather than speculative trading, there is less urgency for players to sell off their holdings; instead, they are motivated to contribute to a sustainable ecosystem. This model fosters genuine co-ownership, encouraging stakeholders to remain engaged and committed to the game’s growth over time.
Rethinking the Future of TGEs
The potential shift to a ServerFi model raises the question of the necessity of TGEs. For many game developers, TGEs serve as crucial funding opportunities, helping to attract partners and gain visibility. However, the consistent post-launch crashes signal a need for reevaluation.
Rather than eliminating TGEs entirely, perhaps they should be postponed until after a game demonstrates its capacity to retain players. Alternatively, making TGEs invitation-only, based on player engagement or contributions, could be another approach. Another possibility is to restrict trading of the "token" until it represents something valuable enough to retain.
A Vision for a Healthier Model
Imagine a new web3 game implementing the following strategies:
- No public TGE until the core game achieves specific 30-day retention metrics.
- Tokens earned through player milestones rather than distributed freely.
- NFTs crafted from token fragments, with supply reductions during the synthesis process.
- Gradual liquidity introduction, managed by the treasury.
- Anti-dumping restrictions imposed on larger investors during initial launch windows.
- Token holders receiving cosmetic and governance benefits beyond mere payouts.
Would this model be effective? It could be a more realistic approach than relying on the hope that the next token launch will not experience a downturn, especially given the current trends.
Ultimately, Treeverse’s $END token experience serves as a reflection of the systemic challenges within the industry and underscores the urgent need for innovative thinking. Web3 gaming is still in its formative stages, but we now possess more valuable data, enhanced tools, and thoughtful frameworks than ever before. The path forward may be complex, but by prioritizing sustainable value over fleeting momentum, the web3 gaming landscape could undergo the transformation it desperately needs.
