Key Takeaways:
- Sam Altman’s Worldcoin launch went smoothly despite some concerns.
- However, liquidity remained a concern for the token.
NEW DELHI (CoinChapter.com) — Worldcoin, the crypto project from ChatGPT CEO Sam Altman that awards tokens to users for scanning their eyes, launched smoothly on July 24.
However, many controversies marred the token launch as several crypto users labeled the project a scam.
Several prominent netizens of crypto Twitter shared concerns about the project, including Ethereum founder Vitalik Buterin. The Ethereum chief released a blog post highlighting four major concerns regarding the project’s user authentication system.
However, the controversies did not stop the token from spiking over 87% within hours of launch to reach its all-time high of $3.31. In a deep dive, crypto analysis firm Kaiko noted that the Worldcoin team loaned nearly all of the token’s circulating supply to market makers.
Confusing Worldcoin Tokenomics
Worldcoin’s tokenomics remained elusive to most users, especially to US users. However, the project’s whitepaper reveals that out of the token’s total supply of 10 billion, the team assigned only 143 million WLD for its circulating supply.
Furthermore, the team loaned 100 million WLD tokens from its circulating supply to “market makers operating outside the US,” Kaiko noted. The Worldcoin team has allocated 75% of the total supply to the community, 13.5% to the investors, and 10% to the development team.
However, Kaiko highlighted Worldcoin’s tokenomics were “fairly confusing.”
[Worldcoin tokenomics has] distinctions between “circulating” and “unlocked” supply, various inflation and vesting rates, and unclear language.
Kaiko stated in its report.
Users receive 25 WLD tokens for scanning their irises using the ‘Orb.’
Initial adopters, who got their eyes scanned during Worldcoin’s pre-launch phase, account for 11 million WLD tokens. The unlocked supply would hit 50 billion WLD tokens by the end of 2025.
Artificial Trading Volumes And Liquidity Troubles
Kaiko noted that the token first launched on Huobi and Bybit, with UniSwap joining the fray next. WLD price on UniSwap ranged near $3.5, while the price was a dollar lower on centralized exchanges.
Moreover, the token’s Binance listing changed the token’s market dynamics, causing a spike in volatility. Interestingly, the hourly volume on Huobi remained surprisingly steady compared to other exchanges.
Kaiko investigated the suspicious volumes by taking random samples of trading volume over 15-minute periods of time on July 25. Huobi’s chart showed several horizontal clusters, which could suggest Time-Weighted Average Price (TWAP) trading on the exchange.
Users often use the strategy to minimize the impact of large orders on the market.
However, Kaiko’s analysis revealed that the horizontal clusters were not TWAP orders. Rather, the clusters represented perfectly balanced sell and buy orders. The crypto analyst noted that the occurrence was a “telltale sign of artificial volume.“
Moreover, Kaiko noted that liquidity for the token remained very low, with Bybit being surprisingly more liquid than Binance at the 1% level. Yet, liquidity for the WLD token remained relatively flat.
Taken together, the nature of the launch suggests that the team may have felt they needed to assign an appealing dollar value to their token. […] So far, this seems to be enticing people to sign up and scan.
Kaiko concluded
