Worldcoin, the newly launched ID and crypto project, dumped 40% of its value as it faces heavy criticism from the crypto community over its Orwellian features, privacy concerns, and tokenomics in addition to a report that the Information Commissioner’s Office (ICO), the U.K. data regulator, is looking into the initiative and is planning to conduct an investigation.
The crypto asset linked to the identity-verification project Worldcoin skyrocketed Monday following its global launch, only to witness its gains immediately erased as crypto genius and Ethereum co-founder Vitalik Buterin and the broader cryptocurrency industry raised their eyebrows and waved red flags at the initiative and some of its features.
Worldcoin (WLD) soared to as high as $3.58 after Binance and several major cryptocurrency exchanges listed the token on their platforms, but it immediately nosedived to $1.92, showing a 46.5% loss. Later, it slowly climbed back to $2.43, based on the data from CoinMarketCap.
The dip is an understatement of the heavy criticism voiced by the crypto community about the project, which utilizes hardware called Orb to scan the irises of individuals to prove they are human, which, when proven, would make them a part of a new digital economy and will allow them to claim WLD tokens on the initiative’s app.
Several members of the crypto community have expressed concern about Worldcoin’s tokenomics model. This model involves the release of the majority of its 10 billion WLD tokens within the next 15 years.
Tokenomics is a portmanteau of token and economics and refers to the monetary policies of each token or coin.
“Privacy questions aside, the tokenomics of Worldcoin are absolutely designed to fleece retail by creating an insane valuation early on with a limited trading supply, which VCs can then dump on retail next year when their coins unlock,” a Twitter user who uses the handle @ethacct said, before adding, “For that reason alone, I’m strongly opposed.”
“Here’s the basic crypto market manipulation model that produces the $10b+ valuations for start-ups: grant founders and investors the cap table, locked. Airdrop a tiny % of float to retail. Then give mm’ers (market makers) a multiple of that and incentivize them to set a price floor w/ options,” BlockTower Capital founder Ari Paul said, noting that “the result is that retail traders see a price and liquidity on exchange, but that price reflects <5%, often <1% of the tokens! Media breathlessly reports the ‘success,’ VCs mark their books up and get to raise new funds on the basis of the fake marks.”
The executive added, “Then 3-18 months later the tokens unlock and the project’s price and liquidity have been accepted as ‘real’ by retail and ‘insider’ tokens get dumped on retail. The legality of this gets subtle and varies by region. The ethics of it are pretty simple imo.”
Twitter user @oxydotsol said, “Worldcoin tokenomics (not good); 10 billion coins total, but only 43 million at launch going into circulation to users, another 100 million will be loaned out to market makers, 25% of the tokens go to insiders, Insiders can start dumping after the first year.”
“Worldcoin is another VC-backed project with predatory tokenomics. $WLD already has an insane fully diluted valuation: $27B! But less than 1.5% of the total supply is currently in circulation. The project might have potential. But I strongly advise staying away from its token,” DeFi analyst TheDeFinvestor warned.
Twitter user @Daniel89679730 wrote, “Are you really buying $WLD? I would advise against it! #WorldCoin has one of the worst #Tokenomics available on the market. This coin is only pumped up by the big investors. There are some other projects that have a much better concept and are worth investing in.”
Aside from this, Britain’s ICO said it is currently looking into the project, suggesting that the manner of data collection employed by the project is questionable. “We note the launch of WorldCoin in the UK and will be making further enquiries,” a spokesperson for the data regulator said.
But a spokesperson for Worldcoin said that it adheres “to the strictest privacy guidelines and requirements in the markets where Worldcoin is available.”
WLD was trading at $2.3505, with a 24-hour trading volume of $388,912,011 as of 5:10 a.m. ET on Wednesday. This represented a 16.36% increase in the last 24 hours and an 11.9% decrease over the past seven days.
Based on the latest data from CoinMarketCap, WLD’s total circulating supply stood at 109,247,999 WLD coins, and its value increased by 18.58%, with a market cap of $257,349,695.