The real problems token launches are meant to solve

Token Generation Events are more than hype, they’re strategic levers that transform theoretical tokens into functional, capitalized, and trusted components of a web3 project.

A token generation event is often framed as a visibility or a liquidity milestone. In reality, TGEs solve structural problems that most web3 projects cannot address through private fundraising or product development alone. Formula’s research into token launches from 2024 to 2025 shows that outcomes depend less on brand or capital than on how teams understand the role of the token.

This gap between intention and execution is something Formula encounters in practice. According to Jenny Ryan, marketing lead at Formula, demand for launch visibility often comes before strategic clarity.

“One of the most common requests we receive is to run PR and marketing campaigns around a TGE, but many projects struggle to define what success actually means in numbers,” she said. “Without clear goals, even a well-funded launch can turn into nothing more than a listing event.”

Beyond hype, a token launch is designed to solve four core problems: capital formation, activation of utility, signaling project maturity, and risk control through transparency.

Converting interest into usable capital

Capital formation is the most visible function of a TGE, but also the most misunderstood. Frequently, projects raise funding before launch through seed or private rounds. The TGE then fulfills token delivery, converting allocations into liquid assets.

Alternatively, capital is raised at the TGE through public sales or launchpads. These launches reveal whether interest extends beyond private investors.

Once live, TGEs activate treasury mechanics that are impossible before a token exists. Revenue from fees, bonding mechanisms, or protocol-owned liquidity can circulate back into development.

A notable example from 2025 is Pump.fun. When the PUMP token launched, it raised $600M within 12 minutes. Beyond scale, the launch demonstrated how a TGE can convert attention and usage into capital.

Turning a token into a functional part of the product

A second problem TGEs solve is utility activation. Before launch, a token exists only in theory. After a TGE, it begins to perform real functions within the ecosystem.

Utility may include access to products, fee discounts, collateralization, staking, rewards, or governance rights. Without these functions, a token launch is just a listing event.

This distinction is especially important for stablecoins. As Reeve Collin noted when discussing STBL, utility determines long-term relevance.

“In today’s market, a stablecoin without real utility or built-in distribution won’t gain traction. The incumbents are too large and entrenched. New stablecoins either need a clear ecosystem to serve or a materially different design. Utility is what turns a stablecoin from a tradable instrument into real monetary infrastructure.”

Formula’s research shows projects with clearly defined post-launch utility keep user interest and participation longer than projects driven only by hype.

Proving the project is real, live, and competitive

Beyond capital and utility, a TGE acts as a public signal that a project is operational. Until a token is live, external parties struggle to assess real market positioning.

Hyperliquid illustrates this effect. After two years of self-funded development, the launch of the HYPE token brought the project into wider awareness. Instead of creating the product, the token made it visible and comparable.

This signaling effect also matters for partnerships. Omar Rahim, commenting on the upcoming Arena Two TGE, described this event as a catalyst for broader engagement.

“The token launch is a moment where the market can finally interact with what you’ve built,” Rahim said. “It helps attract partners and community members who want to participate in something that is clearly live and operational.”

Reducing uncertainty around ownership and risk

The final problem a TGE addresses is risk control. Token launches introduce transparency around ownership, distribution, and concentration. Once a token is live, everyone sees who holds it, how supply is allocated, and how decentralization evolves.

This visibility plays a critical role in trust formation. Market participants can assess risk based on real data.

Vitalik Buterin emphasized this principle repeatedly when discussing blockchain systems, particularly in the context of L2 networks. While his comments often focus on specific technical designs, the broader message applies across web3:

A well-structured TGE makes these dynamics explicit. Vesting schedules, unlock rules, and allocation frameworks become part of the public record, helping reduce uncertainty and align expectations.

When a TGE becomes a strategic lever

Formula’s research makes one conclusion clear. A TGE is not a shortcut to success, but a strategic mechanism that addresses challenges as projects move from private development to public participation.