Worldcoin's heightened scrutiny over tokenomics, geofencing could drive WLD price lower

Sam Altman’s Worldcoin has taken the crypto community by storm after its launch on Monday.
Critics on Twitter suggest that WLD price could dive lower after taking a closer look at the project’s tokenomics and distribution to market makers.
After its launch, WLD price shot up 3,545% to set up an all-time high of $5.29 but currently trades at $2.05.

Worldcoin (WLD) has been the talk of the crypto town since it had a fiery start on Monday. With the launch of perpetual or futures trading on many popular crypto platforms, the WLD token has pulled back. Many critics took the conversation to Twitter to discuss the tokenomics and token distribution to market makers, suggesting that the altcoin is bound to slide lower.

Worldcoin faces intense public scrutiny

Sam Altman, the creator of the popular Artificial Intelligence bot ChatGPT, launched a new project called Worldcoin. Due to the listing of this token on many popular cryptocurrency exchanges, the altcoin has been the talk of the town.

As the initial hype fades, the crypto community is paying closer attention to the details of the project. While some indicate that the asset has potential, others suggest a dark underbelly to the way the tokens were split between retail investors and market makers. This article focuses on the latter aspect.

According to the Dune Analytics platform, market makers (MMs) controlled 95% of the float at launch. Matt Batsinelas of Glass Markets notes that the strike price of the WLD token was $2.8, which allows MMs to incentivize the launch with a Fully Diluted Value (FDV) above $28 billion. But, at launch, the price opened at $30 billion FDV, similar to the amount seen at the launch of other altcoins like Filecoin (FIL), Internet Computer Price (ICP) and Serum (SRM).

Batsinelas also notes the “weird” timing and decision to launch the token on Binance at 05:00 AM EST (09:00 AM GMT). While trying to quantify the “value of lending 95% of the circulating supply of to market makers,” Matt Batsinelas adds that the MMs “are not showing their full stack size yet.”

WLD market makers dump on retail?

Another Twitter user with a screen name MomoCrypto pointed out the market maker agreement and how it allows them to sell their “full stack above ~$2.80 since they can rebuy below that price in 3 months risk free.” MomoCrypto further adds that MMs are likely going to “sell anywhere above $2” and would be inclined to buy dips below $2.

$WLD market maker agreement. They have incentive to sell the it full stack above ~$2.80 since they can rebuy below that price in 3 months risk free. I expect them to sell anywhere above $2. Dips below could be worth buying. Initial supply 100m (MMs) + ~40m airdrop pic.twitter.com/BAiclVQJyy
— MomoCrypto (@MomoOnChain) July 24, 2023

Another Twitter user with the screen name Defisquared posted a screenshot of the Worldcoin order book on Binance, noting a 400,000 WLD sell order. Considering that the airdrops amount to nearly 2,250,000 WLD tokens, the sell order is a huge number. Hence, the common yet unverified consensus among Twitter users is that it was executed by market makers.

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? pic.twitter.com/YV2JdRHpr7
— DeFi^2 (@DefiSquared) July 24, 2023

Worldcoin price started trading at $2.65 on Binance after the launch of the futures trading contract on Monday. Since then, the WLD token has slipped nearly 25% and trades around the $2 psychological level at the time of writing.

WLD/USDT 15-minute chart

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