Worldcoin, the dystopian iris-scanning sci-fi project that promises to be decentralised at a future date fell 64% amidst widespread criticism from non-VC segments of the crypto community over its black on white Orwellian features.
The project, which does away with privacy features by default, boasts an appalling VC-backed tokenomics structure that was picked up by the Information Commissioner’s Office (ICO), the UK data regulator, which is looking to conduct an investigation into the project, wholesale.
Worldcoin, the token created out of thin air and backed by empty promises, skyrocketed on Monday following its global launch, only to witness its gains erased amidst broader industry criticism which pointed out a series of glaring red flags. Notably, Eth co-founder Vitalik Buterin both criticised and gave credit to the project founders, saying that “they have committed to decentralise over time”.
Worldcoin (WLD) soared to as high as $5.2 after Binance, OKX and other exchanges made the token available for trading on their platforms, but immediately nosedived to $1.8 hours later, registering a 64% decline. The coin exchanges hands at $2.38 at the time of writing, per TradingView data.
The drop is certainly an underwhelming statement when considering the overwhelmingly heavy criticism voiced by Bitcoiners and various elements of the crypto community. Worldcoin’s premise seemingly comes straight out of the dystopian sci-fi film Minority Report; as if the founders watched the movie and thought ‘what a great idea’.
It uses a piece of hardware called ‘Orb’ to scan the irises of individuals as ‘proof of personhood’, which is then made part of the new identity in a supposed digital economy where vapourware WLD tokens can be claimed and traded with other vapourware tokens. Worldcoin’s tokenomics model involves the release of a majority of its 10 billion WLD tokens in the next 15 years.
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.
for that reason alone, I’m strongly opposed https://t.co/o0CiZhNPSg
— ethacct.eth (@ethacct) July 25, 2023
BlockTower Capital founder Ari Paul was also critical of the project, noting that Worldcoin’s model is standard industry practice for 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 (market makers) a multiple of that and incentivize them to set a price floor w/ options. 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.”
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, https://t.co/NeKAjrBESU
— Ari Paul ⛓️ (@AriDavidPaul) July 24, 2023
Another Twitter user by the name of @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 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. pic.twitter.com/GYpcw4Wx9w— OXY (@oxydotsol) July 24, 2023
“Worldcoin is another VC-backed project with predatory tokenomics. $WLD already has an insane fully diluted valuation: $27bn But less than 1.5% of the total supply is currently in circulation. The project might have potential. But I strongly advise staying away from its token,” DeFi analyst TheDeFinvestor warned.
Worldcoin is another VC-backed project with predatory tokenomics.$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. pic.twitter.com/xpvlvzFOid
— The DeFi Investor 🔎 (@TheDeFinvestor) July 24, 2023
Prominent crypto sleuth ZachXBT also detailed several criticisms about Worldcoin, noting that insider allocations had increased from 20% to 25% as reported by Coindesk. One early video even claimed that “WLD is better than BTC”, when the project isn’t even decentralised.
More alarmingly, the Worldcoin team has boasted a growing user-base, when in reality it has done so by exploiting people in developing countries, as covered in an extensive MIT Tech report.
Our investigation revealed wide gaps between Worldcoin’s public messaging, which focused on protecting privacy, and what users experienced. We found that the company’s representatives used deceptive marketing practices, collected more personal data than it acknowledged, and failed to obtain meaningful informed consent.
Aside from the lengthy, yet inexhaustive list of red flags, the UK’s ICO said it is currently investigating the project and its founders.
“We note the launch of WorldCoin in the UK and will be making further enquiries,” the data regulator said. A spokesperson for Worldcoin said that it adheres “to the strictest privacy guidelines and requirements in the markets where Worldcoin is available.”
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