Massive Funding + Disruptive Design: How is Flying Tulip Redefining Tokenomics with "Perpetual Put Options"?

We are excited to announce our participation in the $200 million seed round financing of Flying Tulip. Flying Tulip is a new project created by AC and his team, aiming to build a full-stack exchange covering spot, perpetual contracts, options trading, lending, and structured yield—a grand vision starting from scratch. Although the project covers a wide range of areas, this article will focus on its innovative financing model.

Why was Flying Tulip created?

Directly competing with DeFi giants is extremely challenging. They are better funded, have strong recurring revenues, and possess well-established team structures. Their scale of operations is far beyond what a lean, small startup can match. These giants enjoy extremely deep network effects, highly integrated ecosystems, and loyal user bases. There is also a "political" dimension: influence over industry standards and partnerships is often as important as product quality itself.

Therefore, even startups with truly innovative technology face entirely different challenges when bringing products to market. This is not just a technical test, but also a challenge involving capital and social factors. Flying Tulip addresses this by reconstructing the capital formation model in the crypto space. It abandons reliance on short-term profit-seeking liquidity and token mechanisms, and is committed to establishing a financing model that can sustainably support business development, giving the product matrix enough time and space to grow independently and mature.

Limitations of the Current Token Financing Model

To date, the most successful application model in cryptocurrency has been crowdfunding: raising funds through token issuance to support project launches. However, after the initial phase, many tokens gradually fade away, as project teams struggle to maintain sustained demand, and their value approaches zero.

The use of tokens is still an active area of experimentation, but in many cases, tokens mainly serve as financing tools, a role that is most meaningful during the project’s launch phase—before it develops into a self-sustaining company.

Flying Tulip acknowledges this reality and attempts to build a corresponding model based on it.

Flying Tulip's Original Financing Model

The core idea is simple: raise a large amount of funds through token sales, invest the funds in low-risk DeFi strategies, and use the generated yield to sustain operations until the product line achieves self-sustaining profitability.

Investors receive Flying Tulip (FT) tokens backed by perpetual put options. As long as they hold the token, investors can redeem it at the original investment value at any time, and this put option never expires. Rationally, investors will only exercise the option when the token price falls below the purchase price, at which point their tokens will be burned.

In practice, investors bear an opportunity cost: if they had invested these funds directly in certain DeFi strategies, they could have earned about a 4% yield. What they gain instead is the upside potential of the FT token, while the structured design minimizes downside risk.

"Flying Tulip" ultimately plans to raise $1 billion. The token has no lock-up period, and all tokens will be distributed to investors at issuance. Based on an estimated treasury yield of about 4%, the project can generate approximately $40 million in annual revenue, which will be used for operating expenses and to guide the development of the product portfolio until fee income becomes the main revenue source.

Buyback and Burn: The Core of the Model

DeFi treasury yields will be used to cover operating costs and buy back FT tokens. In the future, fees generated by the core product portfolio will become another source of buyback demand.

It is important to note that if investors sell their FT tokens on the secondary market, their put options will immediately become invalid. This portion of the original capital will be transferred to the foundation and used to buy back and burn tokens. This means that selling not only causes investors to lose protection, but also directly strengthens the token’s deflationary mechanism.

In summary, these designs ensure that there is continuous new buying demand for FT tokens, while the supply side keeps decreasing. This positive deflationary cycle will continue to reinforce itself.

Impact on Tokenomics

Since the entire FT supply is held by investors at launch, early market prices may experience significant volatility. Limited circulation combined with ongoing buybacks lays the foundation for strong reflexivity.

Unlike traditional token issuances where supply is allocated between teams and investors, the "Flying Tulip" project initially allocates 100% of tokens to investors. Subsequently, the supply will gradually shift toward the foundation and ultimately move toward deflationary burning. In theory, after fulfilling its historical mission, this token could completely exit the circulation field.

Our Thoughts

"Flying Tulip" is not a guaranteed win, but it is a uniquely ingenious experiment. The success of this model depends on whether the team can effectively manage funds, maintain stable yields, and build a competitive product system. The cost is reflected in low capital efficiency—investors forgo yields they could have earned through direct investment, and only project success can compensate for this opportunity cost.

For such large-scale fundraising to succeed, the following factors are crucial:

• The ability to raise a large amount of capital, usually relying on a key individual or team whose reputation, influence, and trustworthiness attract capital.
• A sufficiently mature product suite that truly warrants large-scale fundraising and expansion.

In our view, Flying Tulip uniquely combines both of these factors.

AC is one of the most astute builders in the crypto space, with both influence and controversy. His repeated achievements in pioneering crypto primitives are well recognized, and the "Flying Tulip" project is a continuation of this tradition: completely reconstructing the token financing model with unprecedented mechanisms, while launching a product matrix aimed directly at industry giants.

We support the Flying Tulip team because it represents a rethinking of the token financing model, which is the core mechanism of the crypto movement. If it proves viable, it could accelerate the launch phase of ambitious projects, enhance ecosystem competitiveness, and ultimately benefit end users.

Although this is an experiment full of unresolved questions, it is precisely such explorations that drive the crypto industry forward.