DeFi

Why promising airdrops of billions run out of steam as hype gives way to ‘short-term scalpers’ – DL News

Published

9 months ago

1 May, 2024

CoinFlix Staff

Why promising airdrops of billions run out of steam as hype gives way to 'short-term scalpers' – DL News

More and more DeFi users who receive token airdrops are choosing to sell.
Some blame the unsustainable valuations of many newly launched tokens.
But the high valuations could be intentional.

April was a big month for crypto airdrops.

Ethena, Wormhole, ParcelTensor, Omni Network, and several other projects combined have distributed billions of tokens to eligible users.

And with many more DeFi protocols set to launch tokens over the coming weeks, next month could be even bigger.

But there is a problem.

New token launches, which traders previously flocked to in droves, no longer attract the same attention as before.

As airdrop recipients look to cash out and no new buyers step in, prices of newly launched tokens are plummeting.

“Only short-term scalpers who see low circulating supply as an opportunity for quick gains are buying them,” said Marc Weinstein, partner at crypto investment firm Mechanism Capital. DL News.

The lack of interest is obvious. Kamino, a lending marketplace on Solana, launched its KMNO governance token on April 30. Less than an hour after its launch, KNMO fell more than 63% as those who received tokens in an airdrop rushed to cash out.

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And it’s not alone. Recovery protocol At Renzo’s Governance token REZ, launched around the same time as KMNO, fell 28%.

The worry now is that future airdrops, which many DeFi users are betting big on, will follow a similar trend, disappointing those hoping for substantial gains.

Unsustainable valuations

The reason many newly launched tokens fall is because their valuations are too high when they launch, Weinstein said.

“Investors don’t believe there is upside potential if a project launches with an 11-figure valuation,” he said.

The high valuations are partly due to the hype surrounding newly launched projects. But there are other reasons.

“Manipulative market maker deals and low initial floats” also contribute to unrealistic launch valuations, according to a source who works at a crypto investment firm and spoke with DL News under condition of anonymity.

Some market makers have already been accused of pump the value of the tokens they were recruited to provide liquidity for.

The initial float refers to the amount of the total supply of a token that is put into circulation upon its launch.

Newer tokens were launched with low initial floats. For example, Wormhole, launched with 18% of its W token supply in circulation, and Etthena’s ENA token only 9.5%.

By releasing only a small portion of a token’s supply, it can more easily maintain a high valuation in the short term. But when a project later puts more tokens into circulation, the price often drops as selling pressure increases.

For example, a launch at $10 billion plus a so-called fully diluted valuation “is not sustainable unless interest from retail investors trading these tokens increases significantly,” said Regan Bozman, co-founder from cryptocurrency venture capital firm Lattice Fund. DL News.

Fully diluted valuation – or FVD – is the value of the total supply of a token, including those locked or yet to be distributed, not just those in circulation.

Bozman said projects should distribute a larger amount of tokens upon launch and allow their communities to purchase tokens directly from them in order to launch a more sustainable FDV.

Is this all intentional?

But for some projects, launching at a high FDV is probably intentional, specifies the same anonymous source.

“The most optimistic hypothesis is that they want to use their token as currency and that a high FDV leads to a larger US dollar runway,” they responded when asked why projects like to launch tokens at high FDVs.

But for some projects, there are also more malicious reasons.

“Teams and investors are getting rid of [over the counter] before acquiring and investors make money on unrealized gains via management fees,” the source said.

Weinstein also speculated on another reason why projects might want to launch at a high FDV: “If you start at $20 billion and drop 95% on a downside, you’re still a $2 billion project “, did he declare.

As new tokens continue to crash at launch, projects will need to find new ways to attract buyers. The bottom line is that despite the problems a crypto project may claim to solve, investors only care about one thing above all: whether they can make money.

Tim Craig is DL News’ DeFi correspondent based in Edinburgh. Contact us with advice at tim@dlnews.com.

Fuente

DeFi

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Published

6 months ago

29 July, 2024

CoinFlix Staff

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Bonk and Pepe appear set to net new investors 10x to 100x returns over the next 12 months. However, cryptocurrencies in the DeFi play-to-earn gaming sector could offer even greater returns. As August approaches, Rollblock is emerging as a standout DeFi play-to-earn gem with the potential to 100x-1000x gains in the fourth quarter and beyond.

The project features an innovative revenue sharing model and exceptional accessibility, attracting players and investors. Additionally, Rollblock’s extensive game library of over 150 titles and enhanced sports betting are further driving excitement for the platform. Cryptocurrency analysts are expecting a sudden surge in demand. 800% a push for Rollblock from the beginning of September.

Bonk remains strong despite market fluctuations

While most well-known cryptocurrencies struggled throughout July, Bonk remained strong. As one of the highest-grossing meme cryptocurrencies of 2024, Bonk rose over 24% in July, while most cryptocurrencies experienced negative fluctuations.

Investors looking to add a relatively safe memecoin to their portfolio should consider Bonk. While Bonk is unlikely to generate explosive gains of 250x to 1,000x from here on out, Bonk could still theoretically provide returns in the 20x to 100x range.

Pepe should see a big rise in the next bull run

Alongside Bonk, Pepe has yet to go through a bull run. This means that there are still substantial gains to be made from Pepe over the next 12 months.

Pepe is down 4% in 30 days, but that shouldn’t worry Pepe investors in 2024. Experts believe Pepe’s best days are still ahead, with crypto analysts predicting a 10x to 50x surge in the next election cycle around November.

In the long term, Pepe could surpass the 100x mark for today’s investors. However, Pepe is a memecoin, and one should exercise caution when investing in purely speculative assets that have no utility.

Rollblock’s Unprecedented Hype Potential Could Push It Past 100x Valuation in Q4

Rollblock is a GambleFi Play-to-Earn token that integrates centralized and decentralized gambling on a single platform. By allowing players to earn rewards through active participation and gameplay, the platform creates a compelling incentive structure that appeals to both casual and competitive players.

With its cutting-edge blockchain technology, Rollblock offers top-notch security that keeps bets and transactions on the platform secure. The platform’s lack of KYC mandates appeals to both users who value anonymity and security.

Rollblock’s revenue sharing model, which allocates up to 30% of casino revenue to RBLK token holders, is a major draw for investors. The model involves burning half of the repurchased tokens and distributing the other half to stakers, increasing the token’s value and encouraging long-term investment.

The platform is also constantly evolving thanks to user feedback which has enabled updates such as the upcoming sports betting feature within the platform’s casino. This addition will complement Rollblock’s extensive game library of over 150 titles, ranging from traditional poker to innovative blockchain-based games.

RBLK is expected to emerge as one of the leading DeFi tokens in 2024. With a price of $0.0172 with impressive growth potential and over 140 million tokens sold recently, Rollblock is on track to enter the top 100 cryptocurrencies by Q4, making today a lucrative time to buy RBLK tokens.

Discover the exciting opportunities of the Rollblock (RBLK) presale today!

Website: https://presale.rollblock.io/

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DeFi

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Published

6 months ago

29 July, 2024

CoinFlix Staff

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Veteran cryptocurrency investor Arthur Cheong believes the digital asset sector offers long-term holders a golden opportunity.

Cheong, the founder of DeFiance Capital, tell His 171,700 followers on social media platform X indicate that he believes decentralized finance (DeFi) is hugely undervalued.

According to Cheong, DeFi projects are innovating at a rapid pace and leaving traditional financial (TradFi) companies in the dust.

“It’s been a long time since I’ve been this excited about the risk/reward and potential upside of DeFi. This is probably the most misjudged moment since the pre-DeFi summer of 2020, with extremely promising prospects.

I see opportunities not only in OG (original) DeFi, but also in some newer projects that are evolving rapidly and growing at a pace that fintech startups will do anything to match.

The veteran investor also believes that crypto is now here to stay following recent launch from the Ethereum spot market (ETH) exchange-traded funds (ETFs) last week.

“Overall, the floodgates are open and there is no turning back. TradFi asset managers will continue to launch new crypto products because, guess what: there is huge demand for them!”

I expect them to launch actively managed crypto ETFs [in the] coming years. ”

Earlier this month, Cheong laid that it might be a bad strategy for cryptocurrencies to seek mass adoption, believing that digital assets are designed to disrupt several key financial sectors.

“I think we should accept that cryptocurrencies may not be suited for mass adoption like Web2, but rather are optimized for some narrow but very high-impact use cases like stateless global money, cross-border payments, and decentralized finance.

Chasing mass adoption of normies may be chasing the wrong Grail from the start.

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