Star Xu, the founder of the major crypto exchange OKX, raises alarms about the frequent sell-offs of newly listed altcoins.
Specifically, he points to the drastic decline of the Aevo token, which fell from a high of nearly $4 in March 2024 to a current value of $0.434. This represents a dramatic 90% drop in value in just five months.
Aevo Announces Buyback to Create Long-Term Value For Token Holders
Xu’s criticism extends beyond market fluctuations to address crypto exchanges’ ethical responsibilities.
In an X (Twitter) post, Xu questioned the motives behind crypto exchanges listing new tokens. He argued that these actions often lead to rapid sell-offs, primarily benefiting initial holders and disadvantaging the broader user base.
“Since there is no supervision on listing and reducing holdings for the time being, how can we protect this market? This is something that the entire industry should reflect on,” Star Xu said.
Read more: 12 Best Altcoin Exchanges for Crypto Trading in August 2024
Echoing Xu’s concerns, prominent crypto investor RamenPanda noted a shift in how project developers approach token sales. In earlier times, founders invested deeply in their own cryptocurrencies. However, today’s developers frequently use tokens merely as tools to raise and cash out USD.
“Tokens themselves have become an intermediate tool for cashing out US dollars. These project developers don’t even believe in Bitcoin, let alone their own tokens,” RamenPanda criticized altcoin developers.
Moreover, in response to these issues, the Aevo team has implemented a token buyback strategy to stabilize its price. In July, they purchased 1 million AEVO at an average price of $0.446.
“We will commit to buybacks of at least 1 million AEVO every month from July to December. With the supply of AEVO almost fully vested and the start of buybacks, we believe this is a good starting point to create long-term value for AEVO token holders,” the team announced.
Nevertheless, Aevo is not the only token facing these challenges. Recent data from the Dune dashboard, VC Printer, indicates that several altcoins are under similar pressures. For instance, venture capitalists (VCs) holding Ethena (ENA) are sitting on an unrealized profit of 73X, posing a significant risk of market impact if these profits are realized.
Additionally, token-unlocking events contribute to market pressures. Wormhole’s upcoming release of 600 million W tokens, constituting 33% of its circulating supply, is expected to introduce a substantial selling force into the market.
Read more: How To Fund Innovation: A Guide to Web3 Grants
Similarly, last week AltLayer unlocked over $100 million worth of ALT tokens. These tokens make up around 42% of its supply. If the stakeholders sell their tokens in the open market, it could ignite pressure, impacting price.
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