# The Worldcoin Cash Grab Part 2: Price Control, Misdirection & Unexpected Victims

Source: https://x.com/DefiSquared/status/1813506473915466142
Kiwi News: https://news.kiwistand.com/stories/The-Worldcoin-Cash-Grab-Part-2-Price-Control-Misdirection-and-Unexpected-Victims?index=0x66981f44191cfc2f7dd7ed605b067f7a20ea691775cd0dd3707c7d9a07f26a5ba81ad931
Submitted by gokhan.eth on 2024-07-17 UTC, 6 upvotes, 0 comments

## Summary

The author's central claim is that Worldcoin's team controls WLD's price while publicly denying it, and that the token's roughly $30 billion fully diluted valuation depends on a very low circulating float heading into insider unlocks. The article says the float is about 2.7% of supply, with unlocks due in 7 days. It cites Worldcoin's December 16 decision not to renew a market maker contract and remove a call option, after which the price reportedly rose 100% within hours. It also says nearly 25% of circulating WLD is held on Bithumb, largely by Korean retail investors, and the author states an intention to short WLD after unlocks begin.

## Article

Worldcoin is projected to commence insider unlocks in 7 days at one of the lowest floats ever recorded in the industry, with just 2.7% of the supply circulating. With this in mind, it makes sense to take a deep dive to understand how the project reached this state. This research piece brings to light exactly how the team is controlling the price to still carry a $30 billion fully diluted valuation as insider unlocks begin, while falsely claiming to have no involvement. All content is up to date with the latest vesting schedule changes.

First, some background. When Worldcoin first launched, the foundation did so with a circulating supply of 1.4% or 140 million WLD. While there was concern about this float causing it to launch with an extremely high FDV, the team had allocated 100M of these tokens to market makers and gave them a call option allowing them to buy back a large number of tokens at the end of their contract at a bit over $2, with the intention of preventing the price from spiking too high. Allocating supply to market makers to create favorable price conditions is not uncommon in the industry.

As one might expect, WLD was unable to rise significantly above the call price during the length of this contract, as market makers would simply “dampen” the price. Worldcoin CEO Alex Blania discusses here how this contract was specifically needed in order to prevent the price from squeezing on their low float:

Note how he remarks that the intent is avoid the price “spiking to $10”, and goes on to say that a scenario like this would “be horrific”.

Despite this, on December 16th, with circulating float at just 1.2%, Worldcoin decided not to renew the existing market maker contract, removed the call option suppressing the price, and even went further by removing an additional 25 million WLD from circulation. Now at just $98M market cap with minimal market maker participation, the price unsurprisingly spiked by 100% in a matter of hours- the exact scenario Blania claimed they were trying to avoid. Within a month, Worldcoin had squeezed to nearly $12 at $120 billion FDV.

Evidently down the line the team realized that it's not wise for a US team to be openly describing how they control the price, so when prompted at Token2049 Dubai whether they watch the price, Worldcoin's CEO claims that they have no control over it, and that it’s simply driven by the market:

This is not true. The reality is that an 11 figure valuation is only possible due to the team's tokenomics design, and the token's daily price moves have been on many occasions influenced by the team as they actively make changes to emissions, market maker contracts, and well timed announcements before unlocks. It raises the question of why they would not want the public to believe this is the case.

So going back to the beginning here- we are scheduled to reach the beginning of insider unlocks at just 2.7% circulating supply, perhaps the lowest ratio ever seen by a major VC backed project at unlock time in crypto’s history. As a reminder, this is likely the only thing allowing WLD to persist at an eye watering $30 billion FDV that insiders will soon be able to sell at. But why is the float this low? Well according to Blania in 2023, they had to keep float low because in order to achieve universal basic income, “releasing 10% of the supply all at once would be completely unfair”:

But that is exactly what the team plans to do with unlocks, except to the pockets of insiders instead of UBI recipients. Even with the new unlock schedule, a bit over a year from now, nearly a billion tokens will have been emitted to the the team/VCs, while an extrapolation of the current rate of UBI grants projects only 600 million tokens to have been distributed to UBI recipients by this same time. This means that within a year, insider emitted WLD is expected to make up over 60% of the entire circulating supply of Worldcoin. 60% is a wild proportion- it basically means the majority of the ecosystem purely exists for VCs to dump. This seems to directly counter the justification that the float is being left low right now to benefit UBI recipients.

There are multiple other sources adding to circulating supply that are not directed to UBI recipients as well. My previous research piece discussed the large supply from the "community fund" being sold at discount to trading desks; additionally, it's worth taking a look at Orb Operators like this one (verified from the public orb operator emissions wallet), who at times is earning a baffling 20,000+ WLD a week for collecting biometric data of the underprivileged, and sending it straight to Binance:

But the question remains- even with the float so low, who are the unfortunate victims that are currently holding WLD at almost $30 billion FDV and keeping the valuation high into unlocks? As it turns out, a massive percent are actually Korean retail, many of whom potentially can’t even read English well enough to understand the situation. At the time of writing, nearly 25% of all circulating WLD is held on Bithumb, and despite the looming unlock emissions, still continuing to rise:

With this in mind, it's likely no coincidence that Worldcoin waited until 1 week before unlocks to release positive news. Despite being only a small change to unlock selling pressure, the news has proven incredibly effective so far in coercing retail to unwittingly provide higher prices and more liquidity for insiders to exit in a week's time. Worse still, it appears likely (but not proven) that someone from the team or VCs used insider information to frontrun buying the news before it was even publicly announced:

Unfortunately, even though project behavior like this is not new to crypto, a surprising number of market participants remain uninformed of the adversarial conditions of the investments they're making. This piece is intended to shed light on a project that appears to be intentionally propping up a token price that should be lower, and many of the reasons outlined are why I intend to be short WLD over the months following the start of unlocks.