Only 1 in 10 Weak Token Launches Recovered in 2025, Arrakis Finds
Early sell pressure—not market timing—proved decisive for the fate of new crypto tokens throughout the year, according to a comprehensive study by Arrakis Finance.
Overview
A new 80‑page investigation from the DeFi infrastructure firm Arrakis Finance, based on more than 120 token generation events (TGEs) in 2025, indicates that the overwhelming majority of freshly‑minted tokens failed to regain their launch price. The analysis, which surveyed 125 TGEs and consulted over 25 founding teams, shows that roughly 85 % of the tokens ended the year trading below the price at which they were first offered. Even more striking, only about 9.4 % of the tokens that slipped in the first week ever managed to climb back to their initial level.
What the Data Shows
| Metric | Result |
|---|---|
| Total TGEs examined | 125 |
| Tokens below launch price at year‑end | ~85 % |
| Tokens already down within 7 days of TGE | ~66 % |
| Week‑1 losers that later recovered to launch price | 9.4 % (≈1 in 10) |
| Average median annualised return (bull‑ vs bear‑market launches, Dragonfly Capital) | +1.3 % vs –1.3 % |
Early Week‑One Performance Predicts Year‑End Outcome
Arrakis plotted week‑one price movements against December‑31 values and found a strong correlation: projects that suffered an early sell‑off rarely reversed the trajectory. In most cases the initial drawdown deepened as the year progressed, suggesting that confidence loss in the first days is difficult to repair.
Airdrops as a Primary Source of Immediate Selling
Across several launches, the firm observed that up to 80 % of recipients of airdropped tokens sold their holdings on the very first day of trading. The report describes this phenomenon as “a baseline assumption” for launch planners: when a participant receives a token with zero cost basis, the rational expectation is a quick liquidation, especially in a market where price decline is anticipated.
Liquidity Mispricing Amplifies Pressure
Besides the airdrop effect, the study flags liquidity‑provision structures as another factor that can exacerbate price drops. In many cases, market‑making depth was insufficient to absorb the sudden supply shock, leading to rapid price impacts. Arrakis notes that appropriately sized and priced liquidity pools are essential to resist the dual pressure from airdrops, exchange allocations, and short‑term market‑maker loans.
How This Fits With Other Research
The Arrakis findings echo a recent report from Dragonfly Capital, which examined token performance across market cycles. Dragonfly’s managing partner Haseeb Qureshi explained that the timing of a launch—whether during a bull or bear market—has little bearing on long‑term results. Tokens released in a bullish environment posted a median annualised return of just 1.3 %, while those launched in a downturn averaged –1.3 %. Both studies point to launch mechanics, rather than macro‑economic conditions, as the primary driver of token success or failure.
Implications for Projects and Investors
- Launch Design Matters More Than Market Cycle – Projects must anticipate the sell pressure that accompanies an airdrop or large initial allocation and build safeguards into the tokenomics.
- Liquidity Planning Is Critical – Adequate depth and correctly priced liquidity pools can dampen price shocks, giving the market time to find an equilibrium.
- Early Price Signals Are Hard to Reverse – Investors should treat a sharp decline in the first week as a red flag; historical data suggests a low probability of recovery.
- Airdrop Strategies Need Rethinking – Rather than a blanket distribution, staggered or vesting‑based airdrops could mitigate the immediate sell‑off.
- Due Diligence Should Focus on Mechanics – When evaluating a new token, analysts should scrutinize the allocation schedule, market‑making contracts, and any built‑in anti‑dump mechanisms.
Key Takeaways
- Only 1 in 10 tokens that fell in the first week of 2025 ever reclaimed their launch price.
- Early sell‑pressure, especially from airdrop recipients, is the dominant factor behind post‑launch price erosion.
- Liquidity mispricing compounds the problem, creating outsized price impacts when large holders exit.
- Macro‑level market timing appears secondary; launch mechanics dictate outcomes.
- Both Arrakis and Dragonfly research suggest that most new tokens underperform, regardless of the broader market environment.
Looking Ahead
The data underscores a growing consensus in the DeFi community: successful token launches will increasingly hinge on sophisticated economic design rather than reliance on favorable market sentiment. Projects that invest in staggered distribution models, robust liquidity provisioning, and transparent communication with early participants are more likely to survive the volatile post‑launch period.
For investors, the message is clear—focus on the structural details of a token’s launch rather than the prevailing market narrative. As 2025 draws to a close, the lessons from the year’s 125 TGEs will likely shape token‑omics best practices for the next wave of blockchain ventures.
Source: https://thedefiant.io/news/research-and-opinion/only-1-in-10-weak-token-launches-recovered-in-2025-arrakis
