July 02, 2024

How to Figure Out Whether a Crypto Token Is Worth Its Trading Price - Ep. 667

1 hour 27 minutes

The problem of low float, high fully diluted valuation (FDV) coins is one that is frequently discussed in crypto. But there’s another wrinkle: investors need to understand the unrealized gains of these coins to really understand the price.

In this episode, Jose Macedo of Delphi Digital and Ari Paul of Blocktower Capital explain the various metrics that reveal what a coin is really worth, why a wave of token unlocks that will be hitting the crypto markets in the next few years are not bullish, and whether there is a better way to design token unlocks for teams and insiders.

Plus, they cover whether venture capitalists are extractive to crypto, whether these games with circulating supply and FDV have caused investors to turn to memecoins, and why they believe the ICO era was better for retail investors.

Show highlights:

00:00 Intro

01:58 Why upcoming token unlocks are creating market jitters

10:22 How the ratio of unrealized gains to market cap influences token price movements

12:22 How some token projects manipulate their reported circulating supply

20:24 Whether and how everyday investors can uncover the truth about token projects

23:37 What secondary market trading says about the potential impact of upcoming token unlocks

34:50 Why Jose believes that the current token launch strategy, despite its flaws, is still favored by insiders and unlikely to change soon

41:02 Why some projects favor decisions that are more likely to result in short-term gains over long-term success

46:36 Why Jose believes that simple time-based token unlocks often work better than complex metrics, and how projects can balance funding with realistic success metrics

53:04 Why Ari believes the SEC's investigations into VCs for acting as securities dealers might be justified, and how these practices resemble pump-and-dump schemes

59:11 With numerous token unlocks looming, why the outlook is bearish for many projects, and what challenges they face in mitigating potential sell-offs

1:05:52 Why many crypto investors might end up holding the bag in the current cycle, despite plans to sell early and avoid losses

1:12:27 What the future role of VCs is in crypto, and how the influx of token unlocks and the rise of memecoins could shape the bull cycle

Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com

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Guests:

Jose Macedo, founder at Delphi Labs

Ari Paul, CIO of Blocktower Capital

Previous appearances on Unchained:

Ari Paul on Why Bitcoin Is a Good Value Buy

Ari Paul of BlockTower Capital on the Crypto Downturn and Why It Could Change Direction

Links

High FDV and unlocks:

Unchained:

How ‘Fully Diluted Valuation’ Can Be a Very Dangerous Metric for Crypto Markets to Rely On

Who’s to Blame for the Underperformance of Low Float, High FDV Tokens?

80% of Tokens on Binance Are Down Since Listing Date: SwissBorg Researcher

Cobie newsletter: New launches (part 1) - private capture, phantom pricing

Rocknblock: Token vesting explainer

CoinDesk: 'Liquid Vesting' Is Oxymoronic Blockchain Feature That Lets Early Investors Sell Without Waiting

Jose’s thread that inspired the episode

Ari’s post responding to Jose’s thread

Token.unlocks.app: Token vesting tracker

Solutions:

Hack VC: Potential Solutions to Crypto's Unlock Problem

Colony Lab: Early-Stage Program & Liquid Vesting

Imran Khan’s tweet on Blast https://x.com/lmrankhan/status/1806040646433522149

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By Laura Shin

4.6

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