Interpretation of Monad's 18-page sales document: How does a 0.16% market-making chip support a 2.5 billion FDV?

Original Author: KarenZ, Foresight News

As the Monad (MON) token countdown to public sale on Coinbase begins, its 18-page disclosure document has become the focus of the market.

This document, provided by Monad Foundation's subsidiary MF Services (BVI), Ltd., comprehensively reveals the full picture of Monad, from project architecture to financing status, from token distribution to sales rules, as well as transparent market maker information and security risk warnings, providing investors with the key information necessary to make informed decisions and reflecting the project's commitment to transparent operations.

In addition to key data widely cited by the media, such as "2.5 billion USD FDV," "price per token 0.025 USD," and "7.5% public sale ratio," this document also systematically discloses a wealth of details that cannot be overlooked, including legal pricing, token release rhythm, market-making arrangements, and risk warnings.

Notably, the document devotes considerable space to systematically listing multidimensional risks associated with token sales, the Monad Foundation, MON tokens, the Monad project, and its underlying technology. For users interested in investing in MONAD tokens, it is recommended to study this document in depth to make rational investment choices.

Legal Structure

The Monad Foundation is publicly selling through its subsidiary MF Services (BVI) Ltd. on Coinbase.
MF Services (BVI) Ltd. is a wholly-owned subsidiary of the Monad Foundation registered in the British Virgin Islands and is the seller in this token sale.
The Monad Foundation is the sole director of MF Services (BVI).

Core Development Entity and $262 Million Financing Details

The core contributors to Monad are the Monad Foundation and Category Labs, Inc. (formerly Monad Labs, Inc.).
The Monad Foundation is a foundation company in the Cayman Islands dedicated to supporting the development, decentralization, security, and promotion of the Monad network through a range of services including community engagement, business development, developer and user education, and marketing services. Category Labs is headquartered in New York and provides core development services for the Monad client.
The three co-founders of Monad are James Hunsaker (CEO of Category Labs), Keone Hon, and Eunice Giarta. The latter two are co-GMs of the Monad Foundation.
The Monad Foundation is overseen by a board of directors, consisting of: Petrus Basson, Keone Hon, and Marc Piano.
Financing Timeline:

Pre-Seed: Raised $19.6 million from June to December 2022;
Seed Round: Raised $22.6 million from January to March 2024;
Series A: Raised $220.5 million from March to August 2024;

In 2024, the Monad Foundation received a $90 million donation from Category Labs to cover operational expenses from 2024 to 2026. This donation is part of the $262 million raised in various rounds of financing by Monad Labs.

Key Information on Sales Terms

Token sale time: November 17, 2025, 22:00 to November 23, 10:00.
Token sale ratio: Up to 7.5 billion MON (7.5% of initial total supply).
Sale price: $0.025 per MON. If fully sold, it will raise $187.5 million.
Minimum subscription of $100, maximum of $100,000 (Coinbase One members may enjoy higher limits according to platform terms).
FDV: $2.5 billion
Adopting a "bottom-up" oversubscription allocation: To ensure broad distribution and prevent large holders from monopolizing, the document discloses a mechanism called "bottom-up filling." If oversubscribed, a bottom-up allocation mechanism will be used to achieve as broad a distribution as possible among sale participants while limiting the concentration of assets among large purchasers.
Example: In a sale of 1,000 tokens: three users (small / medium / large) apply for 100/500/1,000 tokens respectively. In the first round of allocation, each receives 100 tokens (700 remaining, fully satisfying low-amount users). In the second round, the remaining 700 tokens are evenly distributed among medium and large users, each receiving 350 tokens. Final allocation: small allocation 100 tokens, medium allocation 450 tokens, large allocation 450 tokens.

Token Distribution and Release Situation

The MON token economic model is shown in the diagram below:

The following diagram shows the expected token release situation:

Overall, on the first day of the public launch of the Monad mainnet, approximately 49.4 billion MON tokens (49.4%) will be in an unlocked state. Among them, it is expected that about 10.8 billion MON tokens (10.8% of the initial total supply) will enter public circulation through public sales and airdrops, while about 38.5 billion MON tokens (38.5%) will be allocated for ecosystem development. These tokens, although in an unlocked state, will be managed by the Monad Foundation and will provide grants or incentives strategically over the coming years, and will be delegated according to the foundation's validator delegation plan.

All tokens held by investors, team members, and the treasury of Category Labs will be locked on the first day of the public launch of the Monad mainnet and will follow a clear unlocking and release schedule. These tokens will be locked for at least one year. All locked tokens in the initial token supply are expected to be fully unlocked before the fourth anniversary of the public launch of the Monad mainnet (Q4 2029). Locked tokens cannot be staked.

It is worth mentioning that the document indicates that in the future, after the network is launched, the Monad Foundation may continue to airdrop tokens to incentivize the exploration and use of applications and protocols within the Monad network and ecosystem.

Future Supply: 2% Inflation + Fee Deflation

Inflation: 25 MON will be newly generated per block as rewards for validators/stakers, with an annual inflation of about 200 million (2% of the initial total supply), aimed at incentivizing network participants and ensuring network security.
Deflation: All base transaction fees will be burned. This mechanism offsets some inflationary pressure by reducing circulating supply.

Monad Market Making and Liquidity Arrangements

To ensure good liquidity after the token listing and to achieve transparency, MF Services (BVI) Ltd. has detailed its market maker cooperation and liquidity support plan.

MF Services (BVI) Ltd. has signed loan agreements with five market makers: CyantArb, Auros, Galaxy, GSR, and Wintermute, totaling 160 million MON tokens borrowed. Among them, the loan term for CyantArb, Auros, Galaxy, and GSR is one month (renewable monthly); Wintermute's loan term is one year. Additionally, the project has introduced a third-party organization, Coinwatch, to monitor the use of borrowed tokens, ensuring that funds are used to enhance market liquidity rather than for illicit operations.

Furthermore, MF Services (BVI) may deploy up to 0.2% of the initial MON token supply as initial liquidity for DEX pools.

How to View Monad's Market Making Arrangements?

Public Transparency

In the Web3 space, the transparency and reasonableness of market-making arrangements have always been a core issue of market concern, as traditional projects often face investor trust crises due to the lack of disclosure of market maker information. The market-making details disclosed by Monad in the Coinbase ICO, centered on transparency, break industry norms.

In addition, monitoring by Coinwatch will ensure that the borrowed tokens are genuinely used for market making, indicating the project's emphasis on regulated operations.

Cautious Structural Design

The loans from the four market makers are for a one-month term, with monthly renewals, while only Wintermute provides a one-year commitment. This structure reflects Monad's cautious attitude:

Flexibility: Short-term contracts allow the project to flexibly adjust market-making arrangements based on market conditions; if a market maker performs poorly, the contract can be terminated at the end of the month.
Risk Hedging: Wintermute's one-year commitment provides a stable long-term foundation for market liquidity.

This combination shows that the project aims to ensure initial liquidity while avoiding excessive reliance on any single market maker or long-term commitments.

Restraint in Market Making Loan Scale

Relative to a total supply of 100 billion, the 160 million tokens borrowed for market making account for only 0.16%. This proportion is very small, possibly due to:

Avoiding excessive market intervention
Controlling token dilution
Market considerations: Relying on genuine trading demand rather than excessive market making to maintain price stability.

Additionally, the foundation may use up to 0.2% (200 million) for initial DEX liquidity, further confirming this prudence.

Potential Risk Points

However, from Monad's 18-page sales document, we can see that the project has taken a very conservative, even slightly cautious balance between "initial price discovery" and "long-term decentralization."

At the current pre-market price of $0.0517, these market-making borrowed funds are worth only $8.27 million. Compared to many projects that often have a "market-making quota" of 2-3%, this may not be sufficient to support liquidity in the face of significant selling pressure.

Moreover, the foundation may use up to 0.2% (200 million) for initial DEX liquidity, and it is stated as "may" rather than "must." This scale can only ensure that there won't be a sudden lack of volume at the opening but cannot support sustained depth. The official also warns of risks related to DEX and CEX liquidity, effectively providing a disclaimer in advance.

For investors, this means that if there is not enough natural trading depth and organic buying support after the MON token opens, the price may experience high volatility. Therefore, when participating in investments, in addition to focusing on the project's fundamentals and long-term vision, it will be wise to remain vigilant about the initial liquidity conditions and price discovery mechanisms in the market.

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