PRESTO LABS INC

There's been some discourse about "fair launch tokens" and their use for funding long-term projects.

Here are my thoughts on the topic:

1. Comparing token launches as a fundraising mechanism to venture capital is missing the point. People who launch tokens often can't or don't want to raise venture capital, and thus the economics of the team vs. community allocation should be fundamentally different. You should give away *far* more of the fair launch token supply than you would give away equity for a venture-backed company. Different entities need different fundraising mechanisms.

2. One of the biggest reasons that community builders don't capture the value they create is because the incentives aren't aligned between themselves and the community. They give away all of their time in exchange for creating community value, but they don't capture it because there hasn't been a way to effectively align short-term cash flow needs with long-term upside. If you can give these community builders cash flow while also helping them retain ownership of a piece of the total network value, you can solve this problem.

4. Some people claim that fair launches only reward builders who already have capital to put in. This could not be farther from the truth. See my second point. We just need to solve the cash flow needs - and with that we solve the ability to fund future growth.

5. The legal requirements to do this right may be complicated, but if the creator is earning cash today, they should be able to fund the expenses to do things the right way. This has to be part of the thinking *before* deciding to launch tokens.

6. Traders don't know what goes into product building, but I would argue they shouldn't have to. Traders are an important part of any token ecosystem, just as the holders and contributors are. The traders create the ability for the creator to earn sustainable cash flow thru LP fees, whereas the holders create a dense foundation on which the community can build longer-term value. The contributors, of course, may be the most selfless group of them all because they are committing their time and energy to growing the total network value. But to disregard the importance of traders ignores the fact that they help creators keep the lights on.

3. Some people claim that low liquidity favors early traders but screws over everybody else. These people have never worked on long-term projects before. Low liquidity is a feature, not a bug. This is why VCs are locked up, and why founders describe VC-backed companies as 10-year journeys. By having low liquidity, you incentivize longer term thinking instead of early cash grabs.