DePIN's new star in the field! GRASS coin rises by more than $1, but unlocking mechanism may trigger a big dump?

The DePIN project Grass, known for its innovative and user-friendly interactive mechanism, has recently issued the governance token $GRASS, which has been well-received by Web3 users. Previously, Grass sparked controversy due to the opaque token distribution and witch determination mechanism; after the token officially launched, users still seemed dissatisfied.

What's the problem with $GRASS?

Before the deadline, the trading price of $GRASS was about $1. According to CoinMarketCap data, the fully diluted market cap (FDV) of $GRASS is $1 billion, which is roughly equivalent to the circulating market cap of the leading player in the field, Arweave ($AR). The difference is that Arweave Token has approached 100% unlocking, whereas the circulating supply of $GRASS is 244 million, accounting for only 24.4% of the aggregate supply of 1 billion. This will inevitably lead to continued selling pressure in the future until all tokens are unlocked by 2029.

Image source: CoinMarketCap Grass ($GRASS) Token information

Foreign media outlet BeInCrypto even pointed out that the actual circulating supply of $GRASS may be lower than the stated 24.4%: "$GRASS's circulating supply is not 25%, but 5-6%. This is because only 50% of the tokens unlocked for the airdrop have been claimed, so the actual circulating supply should be less than what we see."

Source: Grass official document $GRASS will be fully unlocked after more than 60 months of TGE.

Is FDV too high, causing the coin price to rise?

New emerging blockchain projects in the past two years often have concerns about scarce Circulating Supply but high FDV, similar to Grass. Token information website Tokenomist warns that such projects may trigger more serious selling pressure in a bearish market, thereby increasing the dilution risk of Token value.

In May this year, Pyth network ($PYTH), which had an unlocking volume exceeding 180% of the current circulating supply (an astonishing figure), is the best example; before and after unlocking, the price of $PYTH dropped from the all-time high (ATH) of $1.16 to a maximum decline of over 80% to $0.2199, causing significant losses to some investors.

Image source: TradingView massive amount of Token unlock tragedy

Projects with unequal FDV and circulating supply

Token information platform Tokenomist has compiled a list of blockchain projects with high FDV and low circulation, including Jupiter (13.5%), Ethena (12%), Jito (12.4%), Ether Fi (16.6%), Io.net (12%), Starknet (16%), Pixel (15.4%), Xai (21%), and Aethir (9.66%), which Arthur Hayes previously heavily invested in. Retail investors are urged to do their own research (DYOR) before investing in such emerging projects, as DYOR should always be the top priority.

Image source: X/@Tokenomist_ai Tokenomist's high FDV Token list

Disclaimer: The market is risky, and investment should be cautious. This article does not constitute investment advice. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their specific situation. Responsibility is self-assumed when investing based on this.