The core drawback of a hot start is the inability to determine organic demand. However, this issue is mitigated when establishing a category with strong product-market fit. In such cases, late entrants to the market can potentially compete with early market entrants by launching tokens early on. DeFi is the field where late entrants overcome the hot start problem the most, effectively utilizing tokens to incentivize user and liquidity adoption into new protocols. While BitMEX and Perpetual Protocol were the earliest to launch perpetual contracts in centralized and decentralized exchanges respectively, later entrants such as GMX and dYdX have utilized tokens to incentivize rapid liquidity adoption and become leaders in the perpetual contracts space. Compared to pioneers like Compound, newer DeFi lending protocols like Morpho and Spark have successfully guided billions of dollars in total value locked (TVL). Today, when new protocols have evident market demand, tokens (and tokens) are the default option for liquidity incentivization. For example, liquidity staking protocols actively leverage tokens and tokens to increase liquidity in competitive markets.
