Worldcoin Botched Launch

Unibot Revenue Soar | Avalanche $50M Incentives

Marco Manoppo & Karon Pangestu
July 26, 2023

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Good Morning,

Happy hump day. It has been a pretty quiet week. Crypto markets are ranging with the degen bots garnering much of the attention. I’m gonna use this time to gamble on Rat Roulette (yes, that’s a real project).

In Today's Email:

What Matters: Worldcoin botched launch 🤦
Case Study: Vitalik on Worldcoin 🌎
Governance & Features: Avalanche $50M tokenization 🏦

Narratives: Telegram and Discord trading bots.

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WHAT MATTERS

Worldcoin Botched Launch

Worldcoin

State of play: Worldcoin, founded by Sam Altman, launched on Monday. WLD surged to $3.30 per token, then dropped to $1.91.

Observers allege that a botched token distribution plan involving market makers is playing a significant role in these price fluctuations.

WLD max supply is estimated to reach 10B tokens.
Worldcoin distributed 100M WLD tokens to market makers and 43M WLD tokens to retail users.

Additionally, Worldcoin provided the market makers with this loan structure:

“At the end of the 3 months, each entity must return its loan or may elect to purchase any amount of tokens up to the loan amount it has received. The price per WLD for this purchase will be set according to the following formula: 2.00 + (0.04 * X), with X being equal to (i) the amount of tokens being purchased, divided by (ii) one million.”

Simply put → the market makers are given an incredible deal — a call options structure that guaranteed (pretty much) profits.

Ari Paul, the founder of Blocktower, made allegations against WLD market makers, accusing them of engaging in "wash trading" and "paid market manipulation."

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 a multiple of that and incentivize them to set a price floor w/ options,
— Ari Paul ⛓️ (@AriDavidPaul)
11:58 PM • Jul 24, 2023

Worldcoin distributed ~25 WLD to 90K participants (2.25M WLD in total), but there was a 400K WLD selling block (20% of the total supply) which raised questions.

Matt Batsinelas argues that the market makers are not at fault as He contends that they merely accepted favorable deals offered by Worldcoin.

Worldcoin distributed ~25 WLD to 90,000 participants, totaling 2.25M to the global community. So who on earth is selling blocks of size 400,000 WLD, ie 20% of the entire global community's supply?
Anyone have more info on the token distribution today / where this supply is from?
— DeFi^2 (@DefiSquared)
11:13 AM • Jul 24, 2023

Why it matters: The way that Worldcoin launched WLD with extremely low initial supply float and ludicrous FDV is a playbook that has been criticized many times over.

For such a high profile project to repeat a common mistake, it’s embarrassing and will further tarnish crypto reputation amongst retail investors.

For builders: Don’t launch with low float and high FDV. It will only hurt you in the long run.

For investors: Help your founders think through about their token launches. Engaging market makers with lucrative deals is not always the best method.

We’ve seen multiple project do either a fair token lunch, or utilized AMMs to their advantage.

CASE STUDY

Vitalik on Worldcoin Risks

Vitalik

Credits to Vitalik for the original blog post.

State of play: Vitalik Buterin, co-founder of Ethereum, raised concerns about Worldcoin. Specifically, he identified concerns related to Worldcoin's Proof-of-Personhood (PoP).

PoP is a decentralized system that verifies a user's uniqueness without a central authority or disclosing personal information.
Worldcoin users use an app and the "Orb" device for iris scanning, which verifies their humanity and creates an iris hash for uniqueness.
Vitalik points out “security and privacy” concerns that there is an inherent risk of identity-related information being misused or leaked.
He also raised accessibility concerns as users are required to physically access a Worldcoin Orb, which limits the project's reach.
He added that the construction integrity of Worldcoin's Orb hardware devices cannot be verified, which raises the potential for the existence of backdoors.

Vitalik’s takeaway: Worldcoin has to combine social-graph-based, general-hardware biometric and specialized-hardware biometric techniques to be a more decentralized, scalable, and privacy-conscious system.

Our take: Worldcoin PoP idea is extremely valuable, especially in a world with expanding AI capabilities. However, the proper way to do so is extremely complex and will likely take multiple years before we have a good solution.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

INSIGHTS

Unibot's Revenue Soar

$unibot ($103mm mkt cap) has done more in revenue than $ldo ($1.7B mkt cap) the past 7 days. And more than notable protocols like $GMX, $Avax, $arb, $op, $sol, $gns etc. If you thought you were late, Unibot only has 4,100 token holders compared to 38k for ldo, 292k for GMX etc
— tree of dopamine (@infinitybanyan)
1:15 PM • Jul 25, 2023

@infinitybanyan pointed out that Unibot (~$130M market cap - $1.91M revenue) has more revenue than Lido ($1.7B market cap - $1.27M revenue) and other notable protocols in the past 7 days.

Here are the key data points of Unibot's revenue from @whale_hunter’s Dune dashboard:

Unibot's cumulative unique users have continued to grow since its launch in May and have reached 5,533 users as of July 25.
The annualized revenue for UNIBOT tokenholders is at 49.67%.
In total, Unibot has generated ~3,513 ETH of lifetime total fees.

FEATURES & GOVERNANCE UPDATE

Avalanche’s $50M Tokenization Incentives

Avalanche

The Avalanche Foundation will allocate $50M to purchase assets tokenized on the Avalanche blockchain.

Called "Avalanche Vista," the program will cover various assets including equity, credit, real estate, and commodities.
Ava Labs president, John Wu, stated that “Asset tokenization isn’t just the future of capital markets, it’s a critical driver of the present.”
The Avalanche Foundation also introduced IntainMARKETS, a marketplace for asset-backed securities.

Why it matters: The move shows Avalanche’s commitment to accelerate the growth of RWA tokenization, highlighting the benefits of blockchain for settlements, transparency, and liquidity.

This move might prompt other notable L1 networks to double down on the RWA tokenization effort.

Other notable feature updates:

Y2K launches the Gains Trader Vaults.
GND launches gETH.
Rysk launches ETH/USDC Dynamic Hedging Vault DHV.
Stakewise launches public testnet for V3.
Uniswap launches UniswapX.
Chainlink launches Cross-Chain Interoperability Protocol (CCIP).
Neon EVM launches mainnet on Solana.
GHO LP pools goes live.
Mantle Mainnet goes live.
PSY goes live on Arbitrum.

QUICK BITES

KuCoin cuts staff.
Binance to re-enter Japan in August.
Binance and CZ seek dismissal of CFTC lawsuit.
FedNow hints at payments wars to come.
Putin says ‘yes’ to Russia’s digital Ruble.
Japan's PM says Web3 can transform the internet.
Avalanche Foundation to invest $50M in tokenized assets.
American Bankers Association concern over stablecoin bill.
EBA Draft says EU stablecoin issuers with bank assets in reserve will get extra regulation.

MEME & NOTEWORTHY READS

Safary Club’s read on web3 growth industry landscape 2023.
Allen Farrington’s read on modeling Bitcoin values.
Liquity’s read on the stablecoin trilemma.

db out of pocket for this
— smac (@0xsmac)
7:39 PM • Jul 25, 2023

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