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DeFi researcher @DefiSquared posted an analysis on social media, stating that there were previous reports that Worldcoin was updating its contract with market makers, and "the updated Worldcoin market maker contract is one of the most bullish things I've seen." The old contract allowed market makers to significantly suppress the price of Worldcoin without risk. A few days ago, market makers were still operating under the old contract, but as of today, it has officially ended. This means that the price of WLD may be able to rise for the first time without the suppression of market makers.
Here's a summary of why this is significant: Under the old protocol, market makers borrowed 75 million WLD and were guaranteed to purchase millions of tokens from the foundation at a price of around $2 per token when the contract ended. This meant that they could sell for free at prices above $2 over the past few months, leading to extreme price suppression. However, under the new contract, market makers no longer have a buyback option, meaning they no longer have the guarantee of selling for free until the end of the contract. Additionally, the loan size for market makers has been reduced to only 10 million WLD instead of 75 million, and the remaining WLD previously loaned but not purchased has been removed from circulation. Therefore, the new market value of Worldcoin may drop to only $190 million, an extremely low figure considering its relevance and current AI narrative.
Due to the token's extremely low circulation, the high FDV of WLD may not be significantly related to the price in the short term and could become the biggest painful trade for FDV shorts. Confirmation through the order book heatmap shows a significant decrease in liquidity for WLD today, as expected given the terms of the new market maker contract. |
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Post time 21-12-2023 07:12:31