Crossing endless X-rays and VC approval. In-depth research from Simplicity Group shows that the token debut is more about cold, tough fundamentals than hype and marketing.
The company analyzed more than 50,000 data points related to 40 encryption token releases to conclude:
Participation is not everything
A popular concept in the crypto community is that activity on social media has increased, which translates into successful token releases. But the simple group found no statistical relationship between social media participation, especially in responses, posts and likes on x (Formerly Twitter) and the price performance of the tokens within one week after issuance.
In fact, the study shows a negative correlation between interaction and one-month and one-month returns after launch – indicating that the more replies the project, reposting and likes, its worst price. “This is statistically trivial correlation, not demanding, but be aware of it,” the report said.
However, there are more engagement projects before the token generation activity (TGE)As its own dataset, there may be a stronger month performance due to a broader awareness base.
Initial Market Value Reality Check
This study analyzes the correlation between initial market value (IMC) and initial recirculation supply (called initial floating point) Price performance for a week and a month after TGE.
It found a strong negative correlation between the token’s IMC and its price performance. “For every 2.7 times increase in IMC, the 1-week return fell by about 1.37%, while the 1-month return fell by 1.56%.
The report further states that lower IMCs are usually converted into price pumps in the first week, with strength lasting at least one month.
Meanwhile, the report shows that initial circular supply is not related to forecasting price performance for the week, suggesting that the total value of the initial floating point is more important than the percentage of supply that was not locked at the time of publication.
Trading volume
The report collected TGE’s volumes a week and a month after release and analyzed the correlation with price performance.
Initially, the two seem to be irrelevant, but Spearman’s hierarchical correlation suggests that the price drops in tokens tend to be much worse.
“From a simpler point of view, tokens with higher volume retention tend to (even if the relationship between the values is not linear) despite the lack of linear linkage of performance to volume.”
Quantity retention is the number of quantities that continue in one month after TGE.
Big money cannot guarantee success
Finally, the report reviews the general belief that well-funded projects supported by large VCS are destined to be successful. However, the report notes, “ Raising more money does not mean you will have a better token because statistically the added benefits of more cash outweigh the expenses.”
The study found that there was little statistically significant relationship between the funds raised by the project and the price performance of the tokens.
Key Points
Quantitative analysis by Simplicity Group shows that product-driven content and real user engagement far outweigh the general marketing efforts that drive sustainable token success.
The study sees Bubblemaps and Kaito as projects that organically generate content related to their core product functions, showing continuous engagement and positive performance.
In contrast, those who rely on heavy memes, promotions and universal actions have dropped drastically immediately after TGE, resulting in weaker prices. The report also highlights the need to be consistent and authentic tone throughout all communications and aligned with the overall brand goals, use cases and target audience of the project.
Finally, it emphasizes the key role of transparency and reliable technological updates in building credibility.
Disclaimer: Part of this article was generated with the assistance of AI tools and reviewed by our editorial team to ensure accuracy and compliance with our standards. For more information, see Coindesk’s complete AI policy.
