We as a team wanted to take some time to reflect on the launch. Transparency is a core value of ours, so we’d love to talk about what went wrong, went right, how we could have done better, and where we go from here.
We cannot wait for what’s coming.
What went wrong?
It’s important to be clear about a problem and identify the root cause. As we’ve thought about this as a team we’ve identified some core issues:
Quite simply, the price ran up way too fast when we launched. We tried to reduce volatility to protect investors by implementing a 7-day vesting period, and even made it so your tokens would stake while vesting. Unfortunately, in doing so, there wasn’t enough supply / sell pressure at the onset. The price should have never gone as high as it did (MAG hit $24 per token, or ~$194 million market cap at one point).
We started allowing minting too late. While the price ran up super fast (10x in a few minutes), our treasury didn’t keep up with it. With the listing on Trader Joe, there was an insane gas price spike on AVAX. Our transaction to start minting was delayed and people bought MAG instead of minting it. This led to a faster price run up and less liquidity than we intended — further increasing the price spike.
No vesting meant little sell pressure at the onset, and mints being delayed meant more buying pressure / less liquidity. The result was an enormous price spike that we wanted to avoid. Investors see that price is falling from this $24 level that it reached and they panic, when in reality, we never should have gotten to a $24 price to begin with. That’s simply too high of a market cap for a new project.
We’re just now getting back to a more sustainable market cap / treasury ratio. It was inevitable that price would correct. We are finally now reaching a ratio that makes sense again and expect to see more bonding / price support at these levels.
What went right?
All that said, we have some great highlights from the launch.
The demand we saw for MAG at the onset was pretty incredible. We fully jammed up the AVAX network and it was a frenzy to buy MAG. We obviously have an enormous interest in the project.
The protocol worked without issues, including everything we custom-built. The development team did an incredible job managing the listing process, adjusting mint discounts, increasing the APY, and other things behind the scenes.
At the time of writing our price is still above the public sale price of $2.50. Our backing per MAG is healthy and growing, along with the treasury and innovation fund.
Finally, after the launch, we’ve seen an outpouring of support from the core community, showing we’re still lined up on vision and our investment thesis.
How could we have done better?
There were a few things we could have done better:
We should not have had a vesting period, or we should have unlocked some % to start. This would have helped suppress price and we would have never reached $24 in the first place. Although it would have been heavily volatile on day 1, price would have quickly reached a fair level. Instead, now some investors are worried because of what “the chart” looks like.
The team could have added more liquidity. Based on our public sale allocations to the treasury, we had $2 million of liquidity set aside that we used during the launch. We felt that was a lot (significantly higher than what other protocols launch with) but for the market cap we were launching with, we probably should have added more.
We should have deployed mints before the listing or had them automated. In multiple rounds of testing, everything worked fine. We didn’t account for the enormous spike in gas and it took us too long (15 minutes) to get the transaction to go through.
Where do we go from here?
We’re excited about what is coming for the Magnet protocol and our DAO!
Nothing fundamentally has changed about our protocol or thesis. We have a $12 million treasury 1 day into launch, and over $1 million in the innovation fund ready to get deployed.
We will continue to execute and find ways to innovate. Immediate action items for our team are:
- Set up the DAO with Snapshot. We need a place for on-chain voting about the protocol.
- Focus on deploying the Innovation Fund (announcement on Wednesday regarding this).
- Build new features into the Magnet DAO protocol (likely zapping and adding a wrapped token).
- Start building new projects in-house: we have 3 projects in the pipeline that we are extremely excited about and have started to work on. These are in stealth mode for now — more details soon.
- Further build out and solidify the partnerships that we have been working on.
- Continue our marketing efforts — connecting with influencers, hosting and doing AMAs, and more.
- Our price ran up way too fast and the treasury wasn’t able to keep up, leading to an inevitable correction in our market cap to a level that is more sensible for our treasury and how young we are. We have no doubt at all that $24 per MAG is possible to sustain, it just happened way too quickly.
- We could have mitigated this price run up by eliminating vesting (or part of it), adding more liquidity, and deploying minting functionality faster
- Despite what we could have mitigated, it’s inevitable that price over-pumps for any project with decent hype and this type of price action has occurred in many other protocols that have gone on to be very successful
We have a ton of partnerships, events, and ideas in the pipeline. Ultimately, the success of this protocol will be determined by our ability to build and invest in exciting new projects: not how our first day of price action went.