Token generation events (TGEs) in 2025 have seen a dramatic failure rate, with approximately 85% of projects trading below their launch valuation. This trend, highlighted by 21Shares researcher Darius Moukhtarzade at the Ethereum Community Conference (EthCC), underscores a systemic crisis in token distribution models. Moukhtarzade pointed to a widening "sentiment-fundamentals gap" as the core issue.
On one hand, industry fundamentals appear strong, with a growing global user base, improving regulatory clarity, rising institutional participation, and scalable infrastructure. On the other hand, market sentiment is deeply negative, marked by extreme fear, repeated TGE failures, and capital dilution from an explosion in new token supply.
Moukhtarzade identified several critical execution mistakes. A primary flaw is the prevalent model of launching with a high fully diluted valuation (FDV) and a low initial circulating supply—often below 20%. This creates artificial scarcity that inflates prices initially but distorts price discovery. When large, concentrated token unlocks occur for early investors, airdrop recipients, and liquidity providers, it triggers a "race to the exit," leading to sharp price declines that harm retail investors.
Other missteps include founder overconfidence leading to launches in weak market conditions, and launching tokens too early, before achieving product-market fit or sustainable revenue, making the token a substitute for real traction.
In response, Moukhtarzade has proposed a new framework for 2026, calling for the death of the old "token playbook." The new model focuses on aligning incentives so that users earn more by holding tokens rather than selling quickly. It emphasizes tying token value to real fundamentals like protocol revenue, distributing that value directly to holders (e.g., through revenue share), and treating holding as active participation in the protocol's growth, where longer holding leads to greater rewards.
