A “low float” refers to when only a small percentage of a project’s total token supply is circulating and available for trading at TGE, with most tokens still locked or not yet released.





This article will bring light on the reality of low float models and why they offer only short-term happiness in exchange for long-term failure.

The Launchpad Trap

You’re about to launch your token. The market looks strong. Momentum’s building.

You approach a launchpad for the public sale (last step pre-TGE) only to be met with demands for:

• Low FDV

• Low initial market cap

• Low float

At first, this sounds like a winning strategy: artificial scarcity that pushes price higher with even modest demand.

But the truth is, this isn’t about your success. It’s about theirs.

Launchpads are usually the first to receive tokens, with high TGE unlocks and short vesting





and once the 2x, 5x, or even 10x multipliers are orchestrated. 





They’re first out the door. to cash in quickly, dumping their tokens as soon as prices spike, while your project is left to deal with the aftermath:

• Hyperinflation

• Plummeting token price

• Community fallout

• Structural fragility (due to extreme volatility after each unlock)

The Illusion of a Strong Launch

Yes, the charts look good at first. 2x, 5x, 10x returns. Flashy announcements. Momentum on Twitter.

But these are optics, not fundamentals.

And when the unlocks start flooding in, the price collapses just as fast as it climbed.

The Data Doesn’t Lie

Low float models bring short-term happiness in exchange for long-term failure.

An alarming 94% of projects that launch with a low float end up failing, with most trading below their launch price just a few months after listing. It underscores the risks of this short-term strategy.

The community, early adopters and retail investors, ends up paying the price. They invest at inflated valuations due to low float and high FDV scarcity manipulation, and as tokens unlock, they face dilution and watch their investments lose value while others have already cashed out.

The team, often lacking an economic background, is misled into believing the low float model will benefit them. Instead, they’re left managing a hyper-inflationary system after early investors and launchpads have exited, leaving the community and project exposed to constant sell pressure and collapsing price.

Our data analysis team conducted a study of over 500 crypto launches in 2024 to understand how the initial token float impacts price performance over time.

What did we find?

Low-float tokens initially surge in value due to scarcity, delivering strong returns in the first few months post-launch (as shown by the blue line in our chart). But those returns come with major volatility. A small circulating supply amplifies price swings, both up and down.

High-float tokens are more stable across the entire timeframe. They don’t spike as hard early on, but the larger initial supply acts as a shock absorber, reducing extreme fluctuations.

Specially early on at TGE, to have a control selling pressure.

Around day 120—the breaking point—low-float tokens begin to underperform. Dilution kicks in, unlocks accelerate, and the inflated valuation collapses. High-float tokens, by contrast, maintain better price performance over time.

Our analysis shows that high-float token models are crucial for projects focused on sustainable growth. While low-float launches generate quick exits for early insiders, they often result in long-term damage.

High-float strategies front-load a more realistic supply into the market, reduce future inflation, and create a healthier foundation for development.

For high-float models to work, the key is incentives. You need a system that drives usage, rewards holding or staking, and actually captures value at the protocol level—then feeds that value back to the token. If there’s no reason to hold, the float just leaks. If there is, you’ve got a real economy.

A token doesn’t just need a reason to exist. It needs a reason to be used. A reason to be held. And a system that rewards both. You can read more about this in our Tokenomics value flow (creation, capture and accrual) article.

Low Float Case Study: Defina Finance

Defina Finance is a textbook case of how low float and high FDV can wreck a project, fast.

The launch came in late 2021, right as the last bull market was losing steam. Only 2.71% of the token supply was circulating at TGE, while the FDV was already $200 million. That combo—tiny float and massive valuation—pushed the FDV over $1 billion within weeks.

Then came the unlocks.

Within two months, early seed and private investors started receiving their tokens. The first-year inflation rate hit 1,677%. There wasn’t enough demand to absorb the new supply, and the price collapsed, dropping 85% in under 30 days. It never recovered.

The core issue was a tiny float launched at the tail end of a market cycle. To keep the price stable one year after TGE, demand would have needed to grow 17 times. That didn’t happen, and it rarely does.

Defina shows what happens when you try to hold a billion-dollar valuation with no float, no backstop, and no sustainable structure. The mechanics didn’t break. They just weren’t designed for durability.

If You’re Still Doing Low Float… At Least Do This

If you’ve read everything above and still think a low float launch is the way to go, fine. But if you’re going to ignore the data, the market, and 500+ case studies, at least do the one thing that might save your token from imploding.

Use exponential vesting.

Let your circulating supply grow slowly and steadily. Don’t flood the market with unlock cliffs that torch your price overnight. Controlled emissions give your system a chance to absorb new supply and find real demand before the inflation hits.

It won’t fix the core problem, but it’ll slow down the damage.

Will it fix the underlying fragility of your model? No. But it may buy you enough time to build utility and generate organic demand before the sell pressure kicks in.

We broke this down in detail here: Token Vesting Schedules That Don’t Break Your Model 

If you ignore this, don’t pretend it was unpredictable when your chart looks like a rug. We’ve seen the pattern too many times to call it anything else.

Audited by tokenomics.com

With over 750 tokenomics models audited and a dataset of 2,500+ projects, we’ve developed the most structured and data-backed framework for tokenomics analysis in the industry.

Get Your Tokenomics Audited → If your model has blind spots, we’ll find them, and fix them.

You’ve only got one shot at your TGE. Most teams waste it. You don’t have to.