How we’ve moved from public upside to private capture and Grove’s path forward: float first, hype second, where value is earned in the public arena.
Mark Phillips
CoFounder, Product and Strategy
From the “Everyman IPO/ICO” era to Private Market Capture
For most of the 20th century the public markets were the venue where the bulk of equity value creation occurred. Amazon listed in 1997 at a US $438 million market capitalization; today it is worth roughly US $2.5 trillion, a 5,600x increase that was available to anyone with a brokerage account. NVIDIA’s 1999 IPO told the same story: an opening valuation near $625 million, now above $4.2 trillion, about 6,700x upside captured by the public markets.
Back then, the majority of the upside was harvested in full view, inside the common garden of public markets. Today, that garden feels like a museum. Companies like Airbnb, Snowflake, and Arm debuted at mid 11-figure valuations (at $47 billion, $70 billion, and $54 billion respectively). If you arrived with a brokerage account on day one, you were not “early”; you were exit liquidity for half a decade of private rounds.
Companies now routinely stay private until multi‑billion dollar valuations, selling late stage equity only to institutions. The pattern has carried across to crypto assets: instead of “retail first” token generation events (TGEs) at modest valuations, many of today’s tokens debut only after raising several private rounds and at multi-billion dollar fully diluted valuations.
When Tokens Still Offered Economic Opportunity
Crypto’s first big launches created the similar levels of economic opportunity that were possible in equity markets in the 90s. Ethereum sold 60 million ETH for about $18 million in BTC, at $0.31 per ETH and then drifted under a $100 million fully diluted valuation for more than a year. Chainlink’s public buyers paid $0.11 per token for roughly a third of the supply. Solana had a market capitalization of less than $100 million for most of 2020 after their TGE.
The early access and value that was created from the development of these protocols and products has created some of the strongest communities in the cryptocurrency industry. During this era, value, if it appeared, accrued to the same community that provided the initial working capital and the early feedback.
Though some ICOs investors saw wild success - BNB for instance ICO’d at $0.15 and now trades at ~$891, a return that rivals the returns from Amazon and NVIDIA IPO participants; they also opened the door to a rush of half‑baked launches, outright scams, and get rich quick schemes. Teams put up slick websites, paid for celebrity endorsements, and ran aggressive social media campaigns, only to disappear with investor funds once the crowds piled in. Some of the biggest failures, like the Pincoin and iFan schemes, walked away with hundreds of millions of dollars, leaving retail buyers holding worthless tokens. Others, like BitConnect, were outright ponzi schemes that defrauded investors out of billions of dollars.
The rush to market also exposed serious transparency gaps. Many token sales came with whitepapers that billed grand partnerships or enterprise rollouts but provided no real roadmap or team information. There were no onchain lockups or clear vesting schedules, so founders and early backers could sell their entire allocation the moment tokens started trading. That led to brutal price crashes within hours of launch, wiping out casual participants who believed they were joining a fair distribution.
Regulators finally stepped in with firepower. The U.S. Securities and Exchange Commission, armed with an ancient set of rules, heavy-handedly ruled that many ICO tokens were actually unregistered securities and issued cease‑and‑desist orders and hefty fines. Founders behind Centra and Paragon faced criminal charges, and countless projects saw their reputations and viability ruined. That era taught cryptocurrency industry participants a hard lesson: without clear audits, transparent tokenomics, and a respect for legal frameworks, even the most ambitious vision can collapse under its own hype.
Private Capture, Phantom Pricing
Today, cryptocurrency TGEs primarily only occur after multiple venture rounds, with Hyperliquid being the notable exception. Such events occur with “low float, high FDV,” with multi-billion valuations that are completely untethered to reality.
Highly anticipated projects like Aptos TGE’d at a very low float and high FDV and looking at the below chart that seems to have worked out pretty well right?
The circulating market capitalization increased from roughly $1bn in 2022 to $3bn today, so investors must be pretty happy, as the project is clearly doing well.
Well, you would be happy if you invested in the private rounds. Switching to the price per Aptos token tells a different story.
This is the price action of what many, present company included, would consider to be a well run project with an excellent team and strong fundamentals. Side note, one of our favorite ways to measure the progress of blockchains is their stablecoin TVL (Aptos’ is up around 6.3x year over year to a little less than $1.2 billion).
Now, let’s turn to what happens when a project is considered to have underperformed expectations. The Starknet token ($STRK) is down 93% since TGE. Scroll ($SCR), is down 72%. Both tokens launched with >$1 billion fully diluted valuations.
This post-TGE underperformance is far and away the rule rather than the exception, which underscores a critical lesson for any token launch. When tokenomics are engineered more for initial splash than lasting engagement, the inevitable gap between promise and delivery becomes a vacuum that sucks value out of the project. Plunging token prices erode trust, discourage new users, and leave founders scrambling to reboot their narrative. We’ve seen this playbook too many times. In each case the public was allowed through the door only after insiders had marked the menu.
Attempts at Re‑Opening the Door
Platforms such as Echo and Legion promise to fold smaller checks into the sort of seed rounds once reserved for venture funds. Echo lets accredited users syndicate onchain SPVs, pitching itself as an antidote to concentrated VC ownership. Legion is building a platform that connects value-add network participants with the most promising crypto projects. Progress, yes, but the average deal still clears at a valuation that would have looked like a Series C in 2017.
Though these platforms are certainly an improvement, they are still often gate-kept by connections to the founding team, investors, communities (e.g., Echo), or perceived value add (e.g., Legion).
Echo’s new Sonar platform, a public token sale infrastructure, is in our view a meaningful improvement on the status quo and the first product that felt like the ICO days (the non-scammy parts of that era, at least).
Instead of relying on private fundraising run by select groups, Sonar lets projects host fully transparent public sales. Participants deposit stablecoins into a vault for a fixed period, and the size of their contribution plus how long they keep it locked up determines their share of the sale, rewarding ongoing commitment over insider access.
Its first launch was Plasma’s XPL token sale on May 27, 2025. Plasma offered 10% of its 1 billion‑token supply at $0.05/token, targeting a $50 million raise (implying a $500 million fully diluted valuation). The sale filled in minutes, prompting organizers to double the cap from $250 million to $500 million on the spot, underscoring the depth of sidelined capital awaiting high quality launches. The cap was once again raised the following week, to a final cap of $1 billion.
Public reception was broadly positive, with commentators praising Sonar for reviving “fair ICO” dynamics and democratizing early stage access. When it came time for investors to commit to purchase their Plasma $XPL tokens, the $50 million round was oversubscribed by over 7x, with over $373 million of capital commitments. While these tools broaden access, most deals still price at late stage valuations, leading to continued structural asymmetry.
Why Founders Play the Game Anyway
Founders often lean into high fully diluted valuations because they serve as an immediate signal of credibility. A headline grabbing FDV can make conversations with prospective hires, institutional partners, and top exchanges move from “maybe” to “let’s talk” almost overnight. In an environment where raising capital has become relatively easier but finding leadership talent remains a bottleneck, these paper valuations function as powerful recruiting tools, helping projects stand out in an increasingly crowded market.
Beyond hiring optics, a lofty FDV operates much like an asymmetrical option. When tokens remain locked for insiders, any uptick in market price translates into unrealized gains that grow exponentially, while downside risk is deferred until tokens unlock. This convex payoff structure aligns neatly with many founders’ incentives: they capture upside if the market rallies, and if it doesn’t, they simply push back vesting schedules or attribute soft performance to broader market conditions.
The social media ecosystem further amplifies this dynamic. Projects deploy “yap‑to‑earn” mechanics and enlist key opinion leaders to drive engagement farming. Comment sections on Twitter become echo chambers of low effort hype; retweets, generic endorsements, promised airdrops; fueling a feedback loop that inflates price discovery without necessarily reflecting traction or product market fit.
In the end, the combination of headline FDVs, scarcity driven option value, and algorithm friendly marketing creates an environment where founders can secure headline capital and reputational wins. Public buyers are often left to navigate the volatility and opaque unlock schedules, carrying much of the downside risk while insiders quietly await the moment when their locked‑up stakes become liquid.
Industrialized Dumping
Over the past several years, an entire subindustry of industrialized token farming has been created that seeks to fundamentally extract capital from the ecosystem in perpetuity, funding an ever grander marketing campaign for the token, while obfuscating project fundamentals.
In these projects, you’ll often see an aggressive loop of hype building followed almost immediately by behind the scenes token sales from foundation reserves. Protocol teams invest heavily in press tours, influencer partnerships, and “insider” AMAs to keep retail enthusiasm high.
As public attention spikes, large blocks of tokens; ostensibly earmarked for “community growth” or “long‑term development;” are quietly funneled into OTC desks or automated sell orders. The result is a self‑sustaining cycle: every new marketing blitz drives a price bump, and every bump underwrites the next round of promotion.
For anyone evaluating a “community first” launch, the key isn’t just onchain activity or social media mentions; it’s the alignment (or misalignment) between token release schedules and promotional pushes. If significant unlocks consistently track major PR milestones, it suggests the primary product is the hype and dump machine itself, not the underlying protocol. True sustainable growth comes from product market fit, clear commitments to long term value creation, transparent vesting logic, and a roadmap that advances independently of token unlocks.
Paradoxically, the very projects that lean hardest into flashy token launches and engineered price rallies often see their teams lauded by investors and listed on the biggest platforms, despite the fact that those same projects sustain their operations by timing foundation wallet sales to coincide with every marketing surge. This model rewards theatrical hype over genuine product traction, incentivizing teams to prioritize token dumps as a funding mechanism rather than building core utility.
A Different Path for Grove
At Grove Labs we see a different path: we believe token distribution should be designed around transparent vesting, community alignment, and adoption milestones. We believe sustainable growth comes not from pumping price peaks, but from earning organic network effects through product excellence and honest, transparent, long term stewardship of the protocol.
Grove’s unique genesis through the Sky Endgame puts it in a unique and advantageous position relative to similar projects in DeFi. Grove has no investors and the protocol is already generating revenue.
Token launches should celebrate public participation, not reward those behind closed doors. We strongly believe every project should publish every detail of the emission schedule in clear, everyday language, so that community members can see exactly when and how new tokens enter the market.
The Protocol economics should be displayed in a clear and easy to understand format, so token holders can evaluate the prospects of a protocol with clarity, leveraging something like Steakhouse Financial’s pioneering blockchain-based accounting and financial reporting work in the early days as contributors to MakerDAO.
Closing Thoughts
Capital formation in crypto is replaying the late stage private trend seen in equities, but faster and with fewer protections. Unless launch mechanics adapt, most of the economic value will keep accruing to insider rounds.
Grove Labs believes tokens should earn their valuations in the public arena. By flipping the script; float first, hype second, we hope to demonstrate a model where all participants, from individuals to global institutions, can enter early, learn together, and build enduring value.
If you share that vision, follow our progress @grovedotfinance on X, and join the Grove community.
