Despite the professed egalitarianism of cryptocurrency, new token distributions can skew in favor of private investors, the founders of the token or those who have been tipped off about a new crypto investment before launch.

Check token distributions of popular coins and you may be shocked to learn that huge swathes of so-called decentralized networks are reserved for early investors or founders, leaving the general public as second-class investors.

See Also: What Is Tokenomics and Why Is It Important?

The promise of a “fair launch” remedies these inequalities. The concept refers to projects that provide everyone with an equal chance of acquiring tokens, no matter their status, meaning that no party is privileged to an investment above any other.

Fair launches gained popularity among those who think the market is rigged against them, jaded by whitelists, venture capital allocations and pre-mines that skew favor to the few in the know over the general population.

Crypto intelligence platform Messari lists the most popular fair launch tokens, which include bitcoin (BTC), monero (XMR) and sushi (SUSHI).

A fair launch takes place in a decentralized crypto network where tokens are earned, owned and governed by the community from the outset. It should make sure anyone is able to participate. A fair launch ensures there is no early access, pre-mine or allocation of tokens.

Still, what constitutes “fair”? A useful framework proposed by crypto researcher Hasu and Paradigm investment partner Arjun Balaji in 2019 described fairness as something that offers equal opportunity to acquire coins over a long period of time. They contended that a launch is fairer “the more potential buyers are aware that a project exists.” If the entire supply is sold within a month, they ask, “did the market really have a chance for proper price discovery?”

Hasu and Balaji also champion relative price equality – that “no group or person that can acquire the token at a sizable discount to the market price.” Interestingly, they don’t disavow early token access entirely, claiming that certain discounts are justified if funds are locked up under certain conditions such as a long lockup time, the rationale being that early investors should be rewarded for accepting risk.

Like with most things in crypto, it’s not always helpful to assess a launch in terms of a binary “fair/unfair.” Some launches are more fair than others; given the myriad token distribution mechanisms that projects can choose from, fairness can be difficult to judge without the benefit of hindsight.

Fair launches allow everyone to get in on the ground level. They solve the problems that have led to unfair launches that occur when founders give in to pressure to get investors on board by promising them cheaper tokens, earlier than anyone else.

Crypto projects are often pressured into following what is a default method of conventional tech funding, where an early stage project shops around for venture capitalists or angel investors who can access and get equity in a private company years before it goes public.

The drawback for crypto is that when these VCs can cash out of a crypto project they may do so quickly and in a way that benefits only these early investors who bought in cheaply. When the VCs dump their tokens, public investors may find prices plummet as massive quantities hit the market at once, leaving later-stage investors with tokens that have lost most of their value.

These days, decentralized finance (DeFi) projects generally make people work for their tokens. This happens in two main ways:

The first is to retrospectively reward people for being early users of a protocol through an airdrop. This is what OpenDAO did in late 2021. The project wanted to become a kind of decentralized insurance fund for non-fungible token (NFT) marketplace OpenSea. Anyone could mint its token, SOS, based on their prior engagement with the NFT marketplace.

The launch could be considered fair as nobody (save for the creators of the protocol) could game this engagement before the minting went live. However, fair launches do not necessarily translate into successful projects. OpenDAO, while it had a fair launch, did not set out clear goals and a long-term road map, and security risks were also flagged with the project. Shortly after launch, the SOS token plummeted in price and has since flatlined.

The second is to reward users for continued contributions to projects. This is what projects like Yearn.Finance (YFI) did. Yearn’s creator, Andre Cronje, reserved no YFI tokens for himself, instead letting those that provided liquidity to the platform earn tokens.

Read More: What Is Yearn? A Guide to the Gateway of Decentralized Finance

Bitcoin is a similar example of a fair launch. Bitcoin miners earn new bitcoin for contributing their computational power to the network. Its creator, Satoshi Nakamoto, didn’t reserve coins before launch. (However, the number of participants was small, and Nakamoto mined coins after the Bitcoin blockchain went live.)