Source: Fair3

In the world of the cryptocurrency industry, scams are not new. However, in the past two years, the speed of "rug pulls," the cleverness of their methods, and the number of victims have refreshed the public's understanding of the term "Rug Pull." From the VC-backed project Movement, to the meme coin $YZY supported by celebrity Kanye West, and to the recently silent disappearance of the Solana project AQUA, investors' funds have flowed away like an open faucet, leaving behind a mess and a sense of helplessness.

According to RootData, since 2024, there have been over 260 Rug events in the Web3 market, involving amounts exceeding $500 million. More critically, most victims have no form of rights protection mechanism. The blockchain emphasizes "code is law," but once it involves scenarios where project parties abandon their responsibilities, social media accounts are canceled, or smart contracts are not open-sourced, ordinary users have almost no way to hold anyone accountable.

In traditional financial markets, risk hedging mechanisms are layered with defenses, while Web3, despite boasting "decentralized autonomy," often lacks systematic responses when real risks arise. The responses after project collapses are usually just short-term community appeasement and compensation, rather than replicable and institutionalized solutions.

Against this backdrop, a new attempt is gaining community attention: the Fair3 Fairness Foundation. This is an on-chain insurance system that does not rely on project parties or exchanges, but is entirely established by the community. It is attempting to answer a long-ignored question: "What can we actually do when risks truly arrive?"

This mechanism is not just a "decentralized insurance," but may also become a new driving force for buying pressure, changing the operational logic of cryptocurrency token economics.

Decentralized Insurance Practice After the AQUA Incident

In September 2025, a piece of news quickly spread in the Solana Chinese community: the AQUA project had gone missing. The project was once hailed as a "representative of the potential environmental track on Solana," but just three weeks after being listed on exchanges, the team collectively disappeared, the community disbanded, and the Token plummeted to zero overnight.

Unexpectedly, in the absence of any compensation actions from the project party, the Fair3 Foundation became the first third party to stand up and provide insurance for community users.

According to the official announcement, Fair3 launched an insurance plan totaling 100,000 FAIR3 tokens. This insurance plan not only requires users to provide on-chain holding screenshots but also introduces a "main compensation pool + public pool" dual-track structure, providing different compensation amounts based on whether users hold and stake FAIR3. All processes are conducted transparently on-chain, and the insurance funds come from the foundation's previously fixed quarterly reserves.

The actual operation of this mechanism has become a rare "non-project party-led" compensation case in the crypto world. It not only brought about a short-term reversal of public sentiment but also sparked new thoughts in the industry about whether "public protection mechanisms can be on-chain."

The Core Logic of the Foundation: Insurance, but Decentralized

The core design of the foundation is to compensate users who have suffered injustice. It requires victims to hold both Fair3 and the tokens of the affected project at the time of the incident, and they must stake Fair3 to qualify for compensation. The compensation amount is determined by the user's staking ratio, with a maximum of 10% of the compensation pool. Additionally, staking more Fair3 not only means a higher coverage amount but also grants governance rights: holding over 5,000 tokens allows voting, and holding over 100,000 tokens even allows proposing compensation requests. In other words, the process of staking Fair3 essentially equates to purchasing an insurance policy, and this policy also empowers users to influence the compensation outcomes.

Traditionally, insurance is provided by centralized companies, where users pay premiums, and the company compensates when incidents occur. The Fair3 Foundation essentially moves this model on-chain and makes three key modifications:

On-chain Transparency: Compensation eligibility is verified through snapshots, avoiding post-event compensation fraud.

Holding Linkage: Compensation amounts and voting rights are directly tied to the amount of staked $FAIR3.

Community Governance: Whether to recognize a certain event as a "compensation case" is decided by voting among token holders.

The result is that buying and staking $FAIR3 is not just about acquiring tokens; it feels more like purchasing an "on-chain insurance policy."

Why It Is More Than Just Insurance?

If it were just insurance, the Fair3 Foundation would at most be considered a "stop-loss tool" for users. The true uniqueness lies in the fact that this mechanism is inherently linked to buying pressure logic.

Holding Equals Protection: Users must stake $FAIR3 to enjoy compensation eligibility.

The More You Hold, the Higher the Protection: Large stakes not only increase compensation amounts but also grant proposal rights.

Governance Binding: 5,000 $FAIR3 tokens are required to vote, and over 100,000 tokens are needed to initiate proposals.

In other words, to be protected and to have a voice, one must buy and long-term stake $FAIR3.

How Do Insurance and Buying Pressure Form a Flywheel?

The true power of this mechanism lies in its natural construction of a "buying pressure flywheel":

Users buy and stake Fair3—obtaining insurance that ensures they won't lose everything due to rug events.

Users participate in governance—those holding more can decide which events enter the compensation list.

Users receive compensation—when encountering black swan events, compensation is distributed from the foundation's compensation pool according to staking ratios.

Users make additional purchases—if they want to increase compensation amounts or governance weight, they must stake more $FAIR3.

New users are attracted—seeing real compensation cases from the foundation makes them more willing to buy Fair3 to gain insurance eligibility.

Market value and capability resonate—Fair3's price increases, enhancing the foundation's compensation ability, further attracting more users.

This is a typical closed-loop flywheel:

Insurance brings buying pressure and staking → Buying pressure and staking bring market value → Market value brings stronger insurance capability → Stronger insurance capability brings more buying pressure.

The Difference Between Fair3 and Traditional Projects: True Anti-Cycle

The value support of most crypto projects lies in "narratives" or "application scenarios," facing selling pressure once the hype fades.

Fair3 differs in that it provides token holders with a realistic and long-term reason to hold:

Even without a price surge, staking Fair3 remains valuable because it serves as users' "market insurance policy";

The more chaotic the market, the higher the insurance value, which is contrary to the logic of most tokens shrinking in bear markets.

Thus, Fair3 resembles an "anti-cycle token."

Potential Impact: The Long-Term Holder Logic of Fair3

This means that Fair3 could shape a new holder structure:

Short-term speculators may exit, but those who remain will be users treating Fair3 as an insurance and governance tool.

Institutions and large holders may be more willing to allocate long-term, as they need a bottom-line mechanism during market fluctuations.

Retail investors will naturally form holdings due to the intuitive logic of "buying Fair3 = buying insurance."

When the motivation for buying tokens shifts from "speculating on price" to "hedging risks," its holder structure will become healthier and more long-term.

For Project Parties: The Introduction of a Fair Margin Mechanism

In addition to users, project parties are also included in the flywheel.

The foundation's "fair margin mechanism" allows projects to actively purchase and stake Fair3 as a commitment that they will not rug. If a project experiences a rug or a significant token drop in the future, this margin will be distributed to all users holding the corresponding tokens. Essentially, this allows the project itself to lay out an insurance pool to prove its confidence in the project, with the Fair3 Foundation's mechanism ensuring fairness and protection.

For projects, this serves as a public credit endorsement;

For users, projects that purchase fair margins are seen as more secure and trustworthy;

For Fair3, this means that in addition to user buying pressure and staking, project parties will also become a larger buying force, further accelerating the flywheel effect.

Conclusion: The Value Evolution from Insurance to Flywheel

What Fair3 represents is not just a "personal risk protection tool," but also a governance product that can be jointly referenced by platforms, exchanges, and project parties.

Fair3 CTO Wang Xin (former founder of Qvod) stated in an interview:

"Fair3 is not a project for short-term speculation; it aims to solve the long-standing lack of 'public product structure' in the crypto space, which requires time to build and real events to validate its value."

Similarly, Ann, the founder of Unicorn Verse and an investor in Fair3, pointed out:

"Currently, project parties and platforms are trying to bind users with incentives, but few are building a structural trust flywheel from the perspective of 'insurance mechanisms.' Fair3 shows us this possibility."

The Fair3 Foundation mechanism demonstrates a new possibility:

It transforms "fairness" from an idealistic slogan into a visible and tangible compensation guarantee for users;

It changes "buying tokens" from a speculative behavior into a long-term logic of purchasing insurance and participating in governance.

The greatest value of this mechanism is not only to provide compensation to victims but also to gradually accumulate a long-term holder community through the flywheel effect.

In an environment filled with uncertainty in the crypto space, this may be the most scarce "certainty."

This article is from a submission and does not represent the views of BlockBeats.

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