Yesterday, social token platform Rally.io, which runs on its own Ethereum sidechain, announced it would suddenly cease operations. The decision leaves the funds of users and creators stuck on the chain, which “may simply become inoperable.”
According to its website (currently still online), Rally was designed as a digital fan club rather than an investment platform. Creators were able to launch coins “to tip and pay for services, merchandise, special content, or other benefits … and also as digital tokens to provide intrinsic value to holders by giving them exclusive engagement opportunities with their creators.”
An email to the platform’s creators announced the shutdown citing “macro headwinds” which are “too overwhelming to overcome.” As a result, tokens launched via Rally will essentially be lost, stranded on the abandoned chain. The email explains that “since NFTs on the Rally sidechain are not transferable to mainnet, these will not be accessible once the site shuts down.”
So much for permissionless, uncensorable, and immutable ownership
Possibly anticipating backlash to the news via social media, the project has already shut down its Twitter account. The abruptness of the announcement, combined with the lack of recourse for creators and token holders, has led many to label the actions as a “rugpull.”
The buzzword ‘social tokens’ was one of many that fueled the bubble of spring 2021, when Rally raised $57 million. The concept promised to use web3 to revolutionize monetization for content creators but depended on crypto adoption by a much wider audience, many of whom have been scared away during the past year’s bear market.
A testament to that FOMO can be seen in a list of Rally’s investors, which includes some of the biggest names in crypto VC. Balaji Srinivasan, Coinbase Ventures, and a16z are among those to have backed the platform.