‘A slow rug pull’: Traders reject play-to-earn crypto shilled by Ice Cube
A Solana-powered crypto token shilled by rapper Ice Cube has sunk like a rock — more than 80% in one month — as investors realized its tokenomics skew heavily in the play-to-earn project’s favor.
Play-to-earn (P2E) gaming startup SolChicks, which claims to be working with the South Korean dev studio behind popular games Maple Story and PUBG, issued its native token CHICKS last December with an initial dex offering (IDO).
Back then, SolChicks opened trade at around $0.25. Today, it trades under $0.05, meaning anyone who bought $1,000 worth of CHICKS five weeks ago now holds just $200.
The SolChicks team says it’s developing a game which rewards players with animal character NFTs. It has a demo complete with an arcade and casino, pushed via hype-ridden press releases pasted across crypto media late last year.
Live gaming channels like HisAndHerLive featured the SolChicks demo in their videos.
Token-powered P2E games exploded in popularity along with NFTs throughout the pandemic, led by Vietnam-based Axie Infinity.
A Bloomberg report last August titled This Video Game Is Turning the Pandemic Jobless Into Crypto Traders detailed how the game’s devs had enabled players across South-East Asia to out-earn their salaries.
But micro-cap cryptocurrencies like CHICKS are well-known for their susceptibility to pump and dumps. What apparently encouraged mass investor exodus is the project’s preposterously centralized supply.
Turns out, the SolChicks team released barely more than 2% of its total supply in its IDO. The project no doubt plans to release and liquidate the other 98% over time to fund its development.
Rather than being slowly dumped on by an opportunistic crypto startup over the next decade, CHICKS investors simply jumped ship.
Why ‘fully diluted value’ matters
Calculating the fully diluted value (FDV) of an asset is simple: multiply total supply by current price.
If all tokens are fully issued, a cryptocurrency’s market cap will equal its fully diluted value (its circulating supply will match its total).
But if there’s future token issuances like inflation, rewards, or incentives, a token’s FDV will exceed its current market cap (you can figure out “market cap” by multiplying circulating supply by current price).
- For example, there are 18.9 million Bitcoin in circulation.
- Bitcoin’s circulating supply is expected to grow 11% to 21 million by the year 2140.
- Therefore, Bitcoin’s fully diluted value is 11% higher than its market cap.
CHICKS’ total supply is 10 billion and tokens are worth $0.05 each. So, the token’s FDV is $500 million.
On the other hand, its circulating supply is 237.6 million tokens, and CHICKS’ market value is really a measly $12 million.
This means CHICKS’ fully diluted value is more than 4,000% higher than its market cap. Yikes.
Speculators traded CHICKS tokens on little-used shitcoin casinos crypto exchanges Raydium, Gate.io, and MEXC.
To encourage holders (there are around 36,000) to stop dumping, SolChicks opened staking last week. It promised 150% Annual Percentage Rate (denominated in CHICKS) on tokens locked for at least 60 days.
CHICKS’ price is down nearly 20% since then.
SolChicks employed bots, bought fake endorsements
Investor enthusiasm was also likely waned by evidence that surfaced last month indicating SolChicks had artificially inflated its Twitter followers and Discord channel members with bots and phoney accounts.
Twitter sleuths also allege that SolChicks ran a fake marketing campaign on Reddit and plastered its website and other promo materials with fraudulent claims and bogus backers.
In fact, the Ice Cube “collaboration” SolChicks bragged about was a non-starter, as shown by a trove of internal documents leaked in December by what the startup labeled a “disgruntled former employee.”
Among other shameless behavior, The Solchick Papers revealed the company’s marketing team simply rented Cube on Cameo. Cube directly addresses SolChicks’s chief exec “William Wu” in the video.
SolChicks’ apparently dodgy business practices, combined with its monstrous treasury of tokens waiting to be dumped, has some accusing the project of pulling a slow rug pull.
Read more: [BitClout’s creator didn’t raise $200M for a ‘new’ blockchain — it’s the same old shit]
“Slow” rug pulls differ from regular exit scams usually perpetrated by crypto exchanges or DeFi protocols. Those are sudden, with whole platforms often disappearing overnight.
Instead, these schemes involve crypto projects intentionally inflating hype, underdelivering on promises, and then gradually offloading tokens in small amounts over time so as not to crash the market entirely.
Play-to-earn these unrelated promos
At the moment, SolChicks seems more concerned with flogging its NFTs. The startup previously claimed its first collection was the “hottest on Solanart,” a NFT marketplace for Solana tokens.
Only 289 addresses contain a SolChicks NFT at press time.
Another blog post promised SolChicks collectibles on Binance earlier this week, however a search of the crypto exchange’s NFT marketplace shows no relevant results.
Indeed, the project’s Twitter account is already running promotions totally unrelated to its game — a K-Pop NFT project called SeoulStars.
SolChicks’ social media team has also abandoned posting game progress updates of late.
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