Bootstrapping a Full-Stack Exchange, Rethinking Fundraising

By Griša Černe. Cross-posted to Paragraph.

We’re excited to announce that we’re participating in Flying Tulip’s $200 million seed round. Flying Tulip is a new initiative from Andre Cronje and his team. It’s an ambitious attempt to build, from the ground up, a full-stack exchange spanning spot, perps, and options trading to lending and structured yield. While the scope is broad, in this post, we’ll focus on the fundraising model, where Flying Tulip is breaking new ground.

Motivations & Opportunity

Going head-to-head with DeFi’s giants is a daunting task. They are better capitalised, with strong recurring revenues and large teams that operate at a different capacity than lean startups. They enjoy entrenched network effects, deep integrations, and loyal user bases. And there’s also a “political” angle: influence over standards and partnerships often matters as much as product quality.

So even if a small startup delivers genuine innovation, bringing it to market successfully is a different battle altogether. The challenge is not just technical; it’s also financial and social. Flying Tulip approaches this challenge by rethinking the way capital formation works in crypto. Instead of relying on mercenary liquidity or token mechanics that fizzle after the initial raise, it tries to build a fundraising model that sustains operations long enough for a product suite to stand on its own.

The Limits of Token-Based Fundraising

So far, crypto tokens have been most successful as a form of crowdfunding: sell tokens, raise capital, bootstrap the project. But once that initial phase is over, many tokens fade into irrelevance, drifting toward zero as teams struggle to create sustained demand.

Token-based utility remains an active area of experimentation, but in many cases, tokens have primarily served as a fundraising mechanism, a role that often makes the most sense during the bootstrapping phase, before a project evolves into a self-sustaining company.

Flying Tulip embraces this reality and tries to build a model around it.

The Fundraising Model

The core idea is simple: raise a large reserve of capital through a token sale, place that capital into low-risk DeFi strategies, and use the resulting yield to fund operations until the product suite generates its own revenues.

Investors receive Flying Tulip (FT) tokens backed by a perpetual put option. As long as they hold the tokens, they can always return them for their original investment. The put never expires. Rationally, investors would only exercise the put if the token trades below their buy price, at which point their tokens are burned.

In practice, investors are paying the opportunity cost of ~4% yield they could earn themselves by deploying directly into DeFi. What they gain in return is exposure to FT’s upside, backed by a structure that minimises downside.

Flying Tulip is targeting a $1B raise. There’s no lockup, and 100% of the supply goes to investors at launch. With a ~4% yield on the treasury, that’s about $40M annually to fund operations and bootstrap the product suite until fee revenues take over.

Buyback and Burn at the Heart of the Model

The revenue generated from the treasury yield will be split between operating expenses and buybacks of FT tokens. Over time, fees from the main product suite will add another stream of buyback demand.

Importantly, if investors sell their FT tokens on the secondary market, their put option is invalidated. Their original capital then moves to the foundation, where it can be used to buy back and burn tokens. This means that selling doesn’t just remove an investor’s protection, it actively strengthens the token’s deflationary mechanics.

Together, these dynamics make FT a deflationary asset from day one, with multiple reinforcing sources of demand and supply reduction.

Economic Implications

Since the entire FT supply is in investor hands at launch, the early market dynamics are likely to be volatile. A limited float combined with persistent buyback initiatives sets the stage for strong reflexivity.

Unlike traditional raises, where supply is divided between team and investors, Flying Tulip starts with 100% investor allocation. Over time, supply gradually shifts toward the foundation and eventually toward burn. In theory, the token could eventually serve out its purpose and disappear altogether.

Our Thesis

Flying Tulip is not a risk-free bet; it’s an original one. The success of the model depends on the team’s ability to manage the treasury effectively, sustain yields, and deliver a competitive product suite. The cost comes in the form of capital inefficiency: investors forgo the yield they could earn directly, which is only justified if the project succeeds.

For this fundraising primitive to succeed, below ingredients matter the most:

• The ability to raise large amounts of capital, usually anchored by a key person or team with the reputation, influence, and trust to attract it.
• A sufficiently established product suite that actually warrants the scale of bootstrapping.

Flying Tulip, in our view, has a rare combination of these two factors.

Andre is one of crypto’s sharpest builders, influential but also controversial. His track record of introducing original primitives speaks for itself, and Flying Tulip fits that mold: an unconventional mechanism that rethinks token fundraising from the ground up, while launching a product suite aimed squarely at the incumbents.

We’re backing the Flying Tulip team because it represents a real attempt to rethink token-based capital formation, a mechanism at the heart of the crypto movement. If it works, it could accelerate the bootstrapping of ambitious projects and make the ecosystem more competitive, ultimately benefiting end users.

It’s an experiment, full of open questions. But it’s precisely these kinds of experiments that move crypto forward.

For more information, please visit: https://flyingtulip.com/

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