Is the narrative of Worldcoin enough to support its market value, which is equal to the valuation of OpenAI?

Does Worldcoin's narrative support its market value, equal to OpenAI's valuation?

Great ideals, grand narratives, massive supply and circulation.

Original author: Loopy Lu

Yesterday, Worldcoin teased the upcoming “big event”. And just one day later, this highly anticipated project finally announced its token launch.

When multiple CEX platforms opened for trading, the WLD token briefly traded at around $1, followed by a short, rapid surge. According to Bitget market data, WLD reached a short-term high of $4.7, with a growth rate exceeding 1000%. Coingecko data shows that the current price of WLD is fluctuating around $2.8.

The initial circulation is 143 million, with a total supply of 10 billion. Calculated by market capitalization, the market value of WLD has reached $400 million, and based on the fully diluted valuation (FDV) calculation, this project is valued at approximately $28 billion. In May this year, after completing a new round of financing, OpenAI was valued between $27 billion and $29 billion. The market value of Worldcoin is now comparable to the super-star project OpenAI, also founded by Sam Altman.

Under the hype, Worldcoin’s NFTs also experienced significant price increases. According to OpenSea data, in the past week, the floor price of the Worldcoin commemorative NFT “Introducing World App” rose from 0.0067 ETH to a peak of 0.0265 ETH, with a maximum increase of 295%. The current floor price is temporarily reported as 0.017 ETH. In the past week, the NFT sales volume reached 1,097, with a transaction volume of 18.64 ETH, and a total trading volume of 268 ETH.

In the past few weeks, the crypto market has not experienced any major breakthroughs or standout hotspots. Only a few MEME tokens have gained popularity. In this situation, Worldcoin’s team, investor background, and grand narrative have made it a short-term focus in the market. Exchanges are competing to list it, and investors are eager to participate. However, there have always been controversies surrounding it, and doubts about the token’s model raise concerns about the sustainability of its price.

Scarce airdrops, concentrated holdings, is it a windfall or a trap?

At noon today, before the official announcement of the token launch, OKX announced that it had started accepting WLD token deposits, confirming the market’s expectation of Worldcoin’s token release.

Subsequently, several exchanges, including Binance, followed suit and joined this hot project. The scene of multiple exchanges competing for WLD tokens has not been seen in the crypto market for a long time. Can the high market expectations for this project ignite trading enthusiasm? With the support of high hype, which direction will the price of WLD token go?

The initial airdrop rules announced by the official team stated that approximately 2 million early users who registered Worldcoin during the testing phase (i.e., those who entered iris data and generated World IDs) would receive an airdrop of 25 WLD tokens. Worldcoin promises to accelerate the registration process by deploying The Orb in more than 35 cities across 20 countries worldwide, and users will continue to receive regular rewards in the future.

This airdrop rule has also caused dissatisfaction in the community. Due to the requirement of offline iris scanning for World ID, the majority of investors are restricted and unable to participate in the verification. Therefore, the commemorative NFTs issued by Worldcoin twice were also considered by the community as alternative options for “early participation”.

Dune data shows that the number of holders of the first commemorative NFT exceeded 58,000 addresses. The number of holders of the commemorative NFT issued on the Optimistic network is even higher, exceeding 1.6 million. However, Worldcoin did not airdrop to NFT holders. These holders expressed their anger and dissatisfaction with Worldcoin’s airdrop rules.

However, a few hours later, the official immediately launched the Genesis Grant airdrop. In this round of application, addresses that have not been registered with iris scanning can also receive airdrop rewards.

The Genesis Grant round is open from July 24th to July 31st. Unverified iris users can pre-claim 25 WLD tokens, which will be locked for 365 days. Pre-claimed users can withdraw WLD after completing iris verification. It is currently unclear how many accounts meet the requirements for this round of airdrops.

On-chain data shows that WLD on the Optimistic chain is currently being distributed. As of the time of this article’s publication, there are already 98,000 holding addresses.

However, the distribution of holdings is highly centralized. WLD is deployed on both the Ethereum mainnet and the Optimistic chain. Taking Optimistic as an example, holding more than 100 tokens allows an address to enter the top 30 holding addresses on the OP chain.

The on-chain detectives have also provided more accurate data. Monitoring by 0x Scope Protocol found that the top 9 addresses holding WLD tokens account for 99.135% of the total, and it is speculated that they may be controlled by the project team. In addition, some tokens have been transferred to Binance, OKX, and Bybit.

How much WLD is actually in circulation?

In stark contrast to the airdrop of only 25 tokens, WLD has a huge supply and circulation.

Previously, Worldcoin had never publicly disclosed the token economics of WLD, even until the issuance of the token. Only in official documents did it briefly mention that the total supply is 10 billion tokens, of which “less than 20% of the total token supply will be used to support Orb production and protocol development, and 3% will be used for ongoing ecosystem development and maintenance.”

At approximately 3 PM today, the official finally released the detailed token allocation plan. However, this detailed allocation plan is slightly different from the previous disclosure.

The token economics show that the total supply limit of WLD is 10 billion tokens, of which 75% is allocated to the Worldcoin community, 9.8% is allocated to the initial development team, 13.5% is allocated to Tools for Humanity investors, and the remaining 1.7% is reserved for Tools for Humanity.

In addition, the maximum circulation supply of WLD at the time of launch is 143 million. Among them, 43 million WLD will be distributed to users who have been verified through Orb during the pre-launch stage of the project, and 100 million WLD will be loaned to market makers outside the United States. The distribution of 43 million tokens in different regions is as follows: Asia 32.1%, Africa 31.6%, Latin America 18.8%, Europe 17.1%, and the remaining regions 0.1%.

The pre-launch stage is from May 2021 to July 2023. During this period, more than 2 million people from over 30 different countries have verified their World ID on Orb.

It is worth noting that the allocation plan does not differentiate between regular users and operators. We cannot determine whether operators are “whales” and we are not clear about the proportion of tokens obtained by users in these two roles.

According to the earliest introduction document, the official stated that “most tokens will be allocated to users and operators. To incentivize user adoption, operators will receive token rewards for each registered user, and the rewards will decrease over time.”

How does Worldcoin realize Sam’s utopian ideal?

Worldcoin was initiated by Sam Altman, the founder of OpenAI and former president of Y Combinator. Due to the popularity of OpenAI, its unique iris recognition mechanism, and distinctive physical devices, this project has gained a lot of attention this year.

Worldcoin’s research has found that there are still 4.4 billion people worldwide who lack a legal identity and cannot be verified digitally, making it difficult for them to access financial services. Therefore, Worldcoin hopes to provide a more accessible digital identity for people worldwide. In terms of product implementation, Worldcoin has three main products.

World ID: A digital identity that allows users to prove themselves as unique individuals in an anonymous manner. This product uses zero-knowledge proofs (ZKP) to protect user privacy.

Worldcoin Token: Tokens distributed for free to humans worldwide, which can be used for future governance.

World App: A self-hosted wallet that allows users to make payments, purchases, and transfers using Worldcoin tokens, digital assets, stablecoins, and traditional currencies globally.

The most idealistic aspect of Worldcoin lies in its token distribution method. Worldcoin aims to distribute cryptocurrency for free to every real human being worldwide. Anyone can create an account by identifying their iris information and receive token rewards for free after creating the account.

What’s more interesting is that Sam is committed to realizing his grand UBI vision through this project. UBI policy aims to provide a certain amount of money to every person on an ongoing basis. The “basic income” should cover a person’s basic needs, including food, housing, and healthcare. And this income should be unconditional, fixed monthly, and not subject to specific restrictions or requirements.

Specifically, Sam is trying to empower everyone with financial tools through Worldcoin, provide cheap energy to society through two fusion development companies, improve social productivity with AI and robots, and ultimately achieve human liberation – distribute UBI income to all humans through Worldcoin, allowing those who have their basic survival needs met to engage in more valuable and creative careers.

For more detailed design of Worldcoin and Sam’s grand vision, please refer to the article “Interpreting Worldcoin’s Utopian Vision: Airdropping Billions of People is Just the Beginning” written by Odaily Star Daily. This article will not be repeated here.

However, there have also been many controversies beyond the grand story. Previously, several people exposed on social media that contractors collected iris data from local villagers in Southeast Asia and sold personal encrypted users for $30 or less outside the market, helping to complete app registration, targeting the large-scale token airdrop behind it.

In addition, Worldcoin also faces contradictions in regulatory intervention and data processing. Worldcoin operates a subsidiary in Germany, and according to the principles of the GDPR regulations, any data that operates within the EU or involves EU residents is subject to EU regulation. However, there is an actual conflict between Worldcoin’s global operations and EU regulations. For example, it claims that 1% of the population in Portugal has become its users, but how to handle global data has not been fully clarified. According to the GDPR regulations, “failure to adequately protect data may result in fines of up to 4% of global revenue or €20 million”.

In terms of privacy and data management, Worldcoin’s mechanism design is obviously not perfect.

With a high valuation, how much room for imagination is left?

In October 2021, Worldcoin completed a $25 million Series A financing led by a16z, with a valuation of $1 billion, including participation from DCG, Coinbase Ventures, Multicoin, and other star capitals.

In 2022, Worldcoin received investments from institutions such as Andreessen Horowitz (a16z), with a valuation as high as $3 billion.

In May of this year, Worldcoin announced the completion of a $115 million Series C financing, led by Blockchain Capital.

For an unreleased project, a valuation of $3 billion is undoubtedly a behemoth. However, for secondary market investors, this may not necessarily be a good thing.

For a mega project with a valuation of up to $3 billion, how much growth space is left? We are unable to make accurate predictions about Worldcoin’s growth potential, but it is clear that, based on current market prices, a valuation of $3 billion would rank it among the top 30 cryptocurrencies by market capitalization, surpassing Monero and belonging to the market capitalization range of $3 billion to $5 billion along with BCH, AVAX, SHIB, UNI, and LINK.

Currently, Worldcoin’s airdropped tokens have not been fully released, and market liquidity is still lacking. Is Wordcoin a concept-driven speculative target or a successful project that can be developed in the long term towards its vision? Odaily Star Daily will continue to pay attention to Worldcoin and please stay tuned for follow-up reports.