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Original title: Flying Tulip: Bootstrapping a Full-Stack Exchange, Rethinking Fundraising Original author: Lemniscap Original compilation: Ismay, BlockBeats   Editor's note: Flying Tulip's $1 billion fundraising target may seem daunting at first glance, and it may even raise concerns about "sky-high financing and project cash-out". However, according to Lao Bai (@Wuhuoqiu), its unique mechanism design is precisely to circumvent the pitfalls of traditional token financing. This huge amount of money is not directly at the disposal of the team, but serves as a project treasury, generating stable operating funds by investing in low-risk U.S. Treasuries and on-chain yield protocols such as Ethena. For investors, their principal is protected by a "perpetual put option". This means that any time an investor believes that the project has poor prospects, or if the token price falls below the issue price, they can choose to redeem their investment at the original price without any loss of principal. Investors only pay the time and opportunity cost of funds. If everyone chooses to redeem, the team will take nothing. More importantly, whenever an investor redeems it, its corresponding token will be permanently burned. This puts $FT tokens on a deflationary trajectory from their inception, with their total supply decreasing with redemption behavior. It is understood that the project is regarded as the "culmination" of past projects (such as YFI, KP3R, Solidly) by its founder and legendary builder in the DeFi field, Andre Cronje. It integrates core functions such as spot, lending, perpetual contracts, options, on-chain insurance, and more, aiming to propel capital efficiency to new heights through synergies between modules. Therefore, Flying Tulip is not only a bold technical endeavor, but also a social experiment in the dynamic game between tokenomics, investor confidence, and project value. It remains to be seen how the return of DeFi king Andre Cronje will perform. The following is the full text: We are proud to announce that we have participated in Flying Tulip's $200 million seed round of financing. Flying Tulip is a new initiative launched by Andre Cronje and his team. This is an ambitious attempt to build a full-stack trading platform from scratch, covering spot, perpetual contracts, options trading, as well as lending and structured yield products. Despite its extensive reach, in this article, we will focus on its fundraising model – a realm where Flying Tulip pioneers innovation. Motivation and opportunity Competing head-to-head with the giants in the DeFi space is a daunting task. These giants are more capitalized, have strong recurring revenues, large teams, and their operational capabilities are not comparable to those of lean start-up teams. They enjoy deep-rooted network effects, deep ecological integration, and a loyal user base. There is also a "political" factor: influence on industry standards and partnerships is often no less important than product quality. So even if a small startup brings real innovation, bringing its success to market is a completely different battle. The challenge is not only in technology, but also in the financial and social level. Flying Tulip addresses this challenge by reshaping how capital is formed in the crypto space. It does not rely on "mercenary liquidity" or token mechanisms that fail to follow after initial financing, but tries to build a fundraising model that can sustain project operations for a long time until its product suite can be self-hematopoietic. Limitations of token fundraising So far, crypto tokens have had the greatest success as a form of crowdfunding: selling tokens, raising capital, launching projects. But once the initial phase is over, many tokens gradually become irrelevant, and their value tends to zero as teams struggle to create sustained demand. Token-based utility is still an active area of experimentation, but in many cases, tokens primarily act as a fundraising mechanism. This role is often most rewarding at the start stage of the project, after which the project evolves into a self-sustaining company. Flying Tulip accepted this reality and tried to build a new model around it. Flying Tulip's fundraising model The core idea is simple: raise a large amount of reserve funds through token sales, put those funds into low-risk DeFi strategies, and use the generated yield to fund project operations until the product suite can generate revenue on its own. Investors receive FT tokens backed by a perpetual put option. As long as they hold the tokens, investors can return them at any time and get their original investment back. This put option never fails. Rationally, investors will only exercise the option if the token price falls below their bid price, at which point the token in their hand will be burned. In reality, investors pay the opportunity cost of about 4% yield – this is the potential gain they might get from investing directly in DeFi themselves. In exchange for FT's upside potential, this structure minimizes downside risk. Flying Tulip aims to raise $1 billion. There is no lock-up period for the token, and 100% of the supply goes to investors when it goes live. With a yield of about 4% on treasury assets, it can generate approximately $40 million annually to support project operations and product suite launches until fee revenue can be taken over. The revenue generated from the treasury proceeds will be divided between operating expenses and FT token buybacks. Over time, the fees incurred by the main product suite will provide a new source of buyback demand. Importantly, if an investor sells FT tokens on the secondary market, their put option will lapse. The capital they initially invested will be transferred to the foundation for buybacks and token burning. This means that selling not only loses the protection of investors, but also actively strengthens the token's deflationary mechanism. Taken together, these dynamics make FT a deflationary asset from day one, with multiple sources of mutual reinforcement in demand and supply cuts. With the entire supply of FT in the hands of investors at the beginning of the launch, the early market dynamics could be very volatile. Limited circulation combined with ongoing buyback programs create conditions for strong "reflexivity." Unlike traditional fundraising, where teams and investors split the supply, Flying Tulip starts with a 100% investor distribution. Over time, the supply gradually shifts to the Foundation and is eventually destroyed. In theory, the token could eventually fulfill its mission and disappear entirely. Our investment logic Flying Tulip is not a risk-free investment, but it is in a league of its own. The success of this model depends on the team's ability to effectively manage the treasury, maintain revenue, and deliver a competitive suite of products. The cost is the loss of capital efficiency: investors give up gains that could have been obtained directly, and this abandonment is only worth it if the project is successful. For this fundraising "primitive" to be successful, the following factors are crucial: Being able to raise a lot of money, usually with a key person or team as the backbone, needs to have enough reputation, influence, and trust to attract capital. A suite of products that are mature enough to really deserve such a large-scale launch program. In our opinion, the Flying Tulip is a rare example of both. Andre is one of the top builders in the crypto world, influential but also controversial. His track record of launching original "primitives" is evident to all, and Flying Tulip fits this model: it uses an unconventional mechanism that fundamentally rethinks the token fundraising model, while launching a suite of products that also point directly to the existing giants in the market. We support the Flying Tulip team because it represents a true rethinking of token capital formation patterns, and this mechanism is at the heart of the crypto movement. If successful, it will potentially accelerate the launch process of ambitious projects and make the entire ecosystem more competitive, ultimately benefiting end users. This is an experiment full of unknowns. But it is these kinds of experiments that drive the crypto world forward.