DeFi
Crypto Trader Accuses Worldcoin of Predatory Tokenomics
Crypto trader DeFiSquared has shared a comprehensive analysis of the Worldcoin project and its native token, WLD. Their analysis delves deeper into concerns about the project co-founded by OpenAI’s Sam Altman, focusing on tokenomics design.
DeFiSquared explained that Worldcoin could “realistically” be the largest wealth transfer of this cycle. Yet this might not constitute a universal basic income as the project’s mission suggests.
DeFiSquared accused Worldcoin (WLD) of having “predatory tokenomics”
DeFiSquared shared some calculations regarding the hyperinflation of the WLD token. Currently, with a fully diluted valuation (FDV) of $60 billion, the token is devalued by 0.6% per day due to emissions from subsidies and operator claims, most of which are sold immediately.
DeFiSquared believes that many investors should be aware of the expected aggressive selling of WLD. THE The Worldcoin Foundation announced that it would sell $200 million more WLD tokens to trading companies. This transaction will add 18% of the entire circulating supply sold at a discount to counterparties.
“These $200 million in tokens come from the deceptively named “community” allocation of the WLD token supply, yet are sold to opposing parties for the benefit of the foundation,” DeFiSquared note.
Learn more: How to Buy Worldcoin (WLD) and Everything You Need to Know
Worldcoin issuance rate. Source: X/DeFiSquare
The most important thing, according to DeFiSquared, is that in just 70 days, when token allocation to venture capital (VC) and teams begins to open up, the supply of WLD will increase by 4% per day. That’s nearly $50 million per day of “continuous selling pressure” on WLD tokens that insiders hope to cash in for a $60 billion FDV.
DeFiSquared also claimed that crypto tokens like Worldcoin were designed to have “predatory tokenomics” from the start. DeFiSquared highlighted an event in December 2023 as the best example of Worldcoin’s predatory tokenomics. At that time, they said the Worldcoin Foundation intentionally terminated the market maker contract that prevented WLD prices from rising higher during low float.
They noticed that the low float, high FDV design is a similar tactic used by Sam Bankman-Fried, co-founder and former CEO of crypto exchange FTX. This design also directly enriches insiders as they hedge their locked allocations at high valuations before unlocking via perpetual or over-the-counter (OTC) placement.
“Yet retail unfortunately continues to think it is beating the system by trying to drive up prices,” they suggested.
DeFiSquared also reminds investors to watch out for some strategically timed announcements between now and the token unlock period for WLD Insiders in July. They see that the unlocking will most likely happen create profitable exit liquidity for WLD insiders.
Exit liquidity is a common tactic in the crypto industry. Insiders use hype and announcements to increase the price of certain crypto assets. After seeing the price rise, they will sell their holdings, leaving retail investors facing potential losses.
Despite public speculation, DeFiSquared believes the project has no real connection to the popular artificial intelligence (AI) project: OpenAI. This is why they called it a “misleading project”.
They also pointed out that most retail buyers probably understand that Sam Altman has no active involvement in Worldcoin. DeFiSquared emphasized that the project is a completely separate entity from OpenAI.
Historically, the development of OpenAI has often influenced the price performance of WLD. BeInCrypto reported last week that WLD jumped 30% amid rumors of a new OpenAI search engine product. Furthermore, when OpenAI announces the departure of Sam Altman as CEO of the company, WLD fell more than 13%.
Learn more: Worldcoin (WLD) Price Prediction 2024/2025/2030
However, OpenAI’s introduction of GPT-4o on Monday did not drive up the price of WLD. At the time of writing, WLD is trading at $5.22. This figure marks a drop of 11.66% over the last 24 hours.
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