Note: Andre Cronje, the so-called "Father of DeFi," announced his comeback to create a new product, Flying Tulip, and has completed $200 million in financing, with plans to continue raising up to $1 billion. What exactly is Flying Tulip? Lemniscap, an institution that participated in the seed round of investment, published a statement explaining their thesis for investing in Flying Tulip; compiled by Golden Finance 0xjs.
We are pleased to announce that we will participate in Flying Tulip's $200 million seed round of financing. Flying Tulip was built by Andre Cronje and his team. This is an ambitious attempt to build a full-stack exchange from scratch covering spot, perpetual contracts, options trading, lending, and structured returns. While the scope is broad, in this article, we will focus on Flying Tulip's financing model, which is where Flying Tulip breaks new ground.
Investment Motivations and Opportunities
With DeFi Going head-to-head with the giants is no easy task. They are well-capitalized, have strong recurring revenues and sizable teams, and their operational capabilities are very different from those of lean startups. They have entrenched network effects, deep integrations and loyal user bases. And then there’s the “political” factor: influence over standards and partnerships is often as important as product quality.
So even if a small startup achieves a true innovation, bringing it successfully to market is a completely different battle. The challenge is not only technical, but also financial and social. Flying Tulip It addresses this challenge by rethinking how capital is formed in the cryptocurrency space. Rather than relying on mercenary liquidity or token mechanisms that often fail after initial funding, it attempts to build a funding model that can sustain itself long enough for its product suite to operate independently.
The Limitations of Token-Based Fundraising
To date, crypto tokens have been most successful as a form of crowdfunding: sell tokens, raise funds, and launch a project. However, once the initial phase is over, many tokens become irrelevant, their value ultimately dwindling to zero as teams struggle to generate sustained demand.
Token-based utility remains an active area of experimentation, but in many cases, tokens are primarily used as fundraising mechanisms, a role that often makes the most sense during the bootstrapping phase (before a project develops into a self-sustaining company).
Flying Tulip has embraced this reality and attempted to build a model around it.
The Flying Tulip Fundraising Model
There is no lock-up period, and all issuance will be fully distributed to investors at launch. The treasury yields approximately 4%, meaning approximately $40 million per year will be available for operations and the launch of the product suite until fee revenue arrives.
Buybacks and Burns Are Core to the Model
The revenue generated by the treasury yield will be used for operating expenses and the buyback of FT tokens. Over time, fees generated by the main product suite will drive another wave of buyback demand.
Importantly, if investors sell their FT tokens on the secondary market, their put options will expire. Their original funds will then be transferred to the foundation to be used for token buybacks and burns. This means that selling not only removes investor protections but also actively reinforces the token's deflationary mechanism.
Taken together, these dynamics make FT a deflationary asset from day one, with multiple sources reinforcing demand and reducing supply.
Token Economic Impact
Due to FT's entire supply is held by investors at launch, leading to potentially volatile early market dynamics. This limited circulating supply, coupled with an ongoing buyback program, creates a foundation for strong reflexivity. Unlike traditional fundraising methods, Flying Tulip's token supply is allocated between the team and investors, with an initial allocation of 100%. Over time, the token supply gradually flows to the foundation and is eventually destroyed. Theoretically, the tokens could eventually reach their intended use and disappear completely. Our Investment Thesis Flying Tulip is not a risk-free investment, but rather a unique and innovative initiative. The success of this model hinges on the team's ability to effectively manage funds, maintain returns, and deliver a competitive product suite. This comes at the cost of capital inefficiency: investors forgo returns that could have been directly earned, which would only be justified if the project were successful. For this fundraising effort to be successful, the following factors are paramount: list-paddingleft-2">
The ability to raise significant capital, often through the efforts of a key figure or team with the reputation, influence, and trust to attract it.
A sufficiently mature product suite virtually guarantees bootstrapping to scale.
We believe Flying Tulip offers a rare combination of these two factors.
Andre is one of the most astute builders in the cryptocurrency space, both influential and controversial. His track record of introducing original primitives speaks for itself, and Flying Tulip is precisely that: an unconventional mechanism that rethinks token financing from the ground up, while simultaneously launching a product suite directly targeted at existing participants.
We support the Flying Tulip team because they represent a genuine attempt at token-based capital formation, a mechanism at the heart of the cryptocurrency movement. If successful, it will accelerate the launch of ambitious projects, enhance the competitiveness of the ecosystem, and ultimately benefit end users.
This is an experiment fraught with unanswered questions. But it is these kinds of experiments that drive the cryptocurrency landscape.
Catherine
Kikyo
Anais
Joy
Weatherly
Alex