DeFi is undoubtedly one of the most important inventions that mankind has given birth to — a precious aspect of modern-day finance that indiscriminately puts copious amounts of freedom in the hands of the average person over their assets. It is trustless thanks to smart contracts, transparent due to open-ledger systems, and most importantly decentralized on account of various consensus mechanisms and of course, the blockchain.
It shouldn’t come to anyone’s surprise therefore that DeFi has proven to be a fertile ground for countless projects to materialize, grow and evolve. Individuals and institutions alike can invest in ideas they believe in, and can directly contribute to and even partake in their development.
However, for every project that has taken off thanks to this very system, there are many others that have been hindered, frozen and even failed due to a critical flaw that is becoming ever more common, relevant, and worrying — post-launch crashes.
The Bane of Projects
The lack of a safe route for major token holders to take without causing a crash in a token’s pricing is at the very least detrimental to projects not big enough to endure such impacts; and at most, the unfortunate consequence of a system that is regarded as still in its infancy despite the billions injected in its hundreds of protocols.
Post-launch crashes happen when major token-holders such as whales, VCs, and financial institutions sell most or all of their tokens upon launch, which is when a token’s price usually pumps. Sell pressures of such magnitudes cause the token’s price to crash due to the relatively small liquidity pools present, which may also in turn cause panicking investors to sell, further worsening the situation.
As such, projects can lose support rather quickly; and with their major investors out of the picture, may have no one to turn to for future funding. The alternative is vesting schedules and unlock periods, but even such well-thought-out systems can present their own problems. For one, it could discourage certain investors from putting their money in, and other investors would sometimes demand higher allocations of the total supply — effectively giving them more influence over the price and governance of the project.
A Matter of Paths
VCs tend to be demonized for such behavior, but the reality is it’s not necessarily an act of greed or ill will that causes such selloffs, rather, it’s the lack of an effective alternative. Investors of such levels often care about making a decent amount of profit on their investment, but when their only option is to dump it in a DEX, their actions can cause unintended but rather devastating consequences.
This is one of several problems that Accessifi is aiming to solve with its protocol; by essentially connecting VCs and DeFi enthusiasts and using trustless smart contracts and SAFT NFTs, Accessifi is able to navigate around these problems by creating a bridge between those that want to get out early, and those that want to get in.
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Find more of Accessifi below:
Website: https://accessifi.io/
Twitter: https://twitter.com/Accessifi
Telegram: https://t.me/Accessifi
Email: team@accessifi.io
The content above is neither a recommendation for investment and trading strategies nor does it constitute an offer, solicitation, or recommendation of any product or service. The content is for informational sharing purposes only. Anyone who makes or changes the investment decision based on the content shall undertake the result or loss by himself/herself.
