On August 1, Binance announced that Binance Launchpool will list CyberConnect's token CYBER on August 15. Since its launch, CYBER has become the focus of the market in a way that people had never imagined.
CYBER first hit a record high price of $36 on South Korea’s CEX, a 120% premium over other mainstream trading platforms. Then, the “wrong order” governance proposal was passed at lightning speed in 12 hours - unlocking tokens with a super-circulating number of shares. During this period, the figure of the leading market maker DWF even appeared. Odaily Planet Daily will take everyone to review this absurd drama that happened this weekend in the following article.
Premium up to 120%, low circulation leads to control controversy
The CYBER token economics released by Binance shows that the total amount of CYBER is 100 million, of which 9% is used for community rewards, 34% is used for ecological development, 25.12% is allocated to private investors, 15% is allocated to the team and consultants, and 10.88% is included in the community treasury. CoinList public sale and Binance Launchpool each allocate 3% of tokens.
Its initial circulation is extremely small compared to the total amount, only 11, 038, 000 CYBER, accounting for 11.04% of the total tokens.
At the beginning of Launchpool, the launch of this token did not attract much attention from the market. But about a week after the launch, Upbit launched CYBER, which instantly made the project "exciting".
On August 22, Upbit opened CYBER trading. Coingecko data shows that Upbit’s CYBER/BTC trading pair currently accounts for more than one-tenth of the CYBER market share, making it the second largest CYBER trading pair in terms of trading volume. Yesterday, this figure once exceeded 20%.
The price of CYBER has also been rising as Korean investors have become more enthusiastic about trading. At its peak, the price of CYBER was about four times what it is now.
However, this price only exists in the Korean market. Once again, the "Kimchi Premium" has brought some small Korean shock to the market.
On Upbit, CYBER once reached a high of about $36. On Binance, CYBER’s highest price was only $16.2. The Upbit premium rate is about 120%.
According to CyberConnect’s official explanation, major Korean trading platforms only support CYBER deposits and withdrawals on Ethereum. Due to the lack of CYBER liquidity on Ethereum, the price difference has occurred.
However, an interesting data is that at the time of the proposal, CYBER's circulating tokens included approximately 5.64 million CYBER-ETH, 2.4 million CYBER-OP, and 3 million CYBER-BSC.
Although the Ethereum network alone accounts for more than half of the circulation, this high premium still makes people puzzled. Is there no other reason why the CYBER premium is so strong?
Upbit’s high holdings may be a possible explanation. According to 0xScope’s monitoring, on-chain data shows that Upbit’s wallet address holds more than 3.6 million CYBER. This number accounts for 33% of the circulating supply.
Upbit, as the largest holder of CYBER tokens, also holds more than Binance.
On the one hand, this reflects the enthusiasm of Korean traders for CYBER. On the other hand, CYBER also has the potential risk of concentrated positions and high controllability.
Another obvious move further reinforced this concern. On August 31, the well-known crypto market maker DWF Labs deposited 40,000 CYBERs into another Korean market leader CEX Bithumb, which was equivalent to about $360,000 at the market price at the time. If calculated at the historical high of $36, the value exceeded $1.44 million.
Coincidentally, within 24 hours after DWF entered the market, CYBER experienced a rapid rise and reached its historical high within 48 hours.
Unlocked tokens exceeding 100% of circulation: It turned out to be a false signal
In the early hours of yesterday morning, a governance proposal from CyberConnect quickly put an end to the carnival that had just begun.
CyberConnect issued an emergency proposal "CP-1". CyberConnect believes that due to the lack of CYBER cross-chain bridges on multiple chains, CYBER lacks multi-chain liquidity between different chains, which in turn causes the high premium of CEX.
To solve this problem, liquidity will be balanced by unlocking tokens to solve the liquidity balance problem between CYBER, Ethereum, Optimism, and BNB Chain networks.
The specific implementation is divided into three steps:
Deploy CYBER-ETH, CYBER-BSC, CYBER-OP bridges powered by LayerZero’s ProxyOFT.
The Cyber DAO Treasury will unlock CYBER and use it to provide liquidity for such bridges. Unlocked CYBER in the Treasury is used to maintain liquidity for the bridge service. Providing bridge services will not affect the total supply of CYBER.
A total of 7,000,000 CYBER-BSC and 3, 888, 000 CYBER-ETH were unlocked.
The liquidity of each chain is balanced by burning and minting tokens. For example, when the CYBER-ETH in the treasury is exhausted, new CYBER-ETH will be minted and an equal amount of CYBER-BSC or CYBER-OP will be burned.
As soon as the proposal came out, CYBER plummeted.
Coingecko data shows that the total circulation of CYBER is only about 11 million. This unlocking will unlock 10.88 million coins at one time, which is approximately equal to the total circulation, which shocked CYBER investors.
After the proposal was released, CYBER fell 67% on Upbit and 26% on Binance within an hour.
After the plunge, a reversal occurred. The astronomical amount of tokens unlocked turned out to be just a mistake.
After Odaily Planet Daily verified with CyberConnect, the official said that the number of CYBER vault unlocked should be only 1.08 million, and the 10.88 million described in the Snapshot was a typo. Although the on-chain vote has passed, it will not be executed for the time being due to data errors.
Subsequently, CyberConnect issued a public statement stating that there was an error in the number of CYBER unlocks written in the proposal. The proposal has been declared invalid. At the same time, it was announced that a new proposal would be launched to solve the previously mentioned liquidity problem.
“Centralized” community voting farce
CYBER noted in the announcement that “despite the official quick repeal of the proposal, it did not stop rumors in the market, sparking panic, uncertainty and doubts about CYBER.”
At the same time, they also responded to the community’s most concerned issue: they “assure the community” that “the market manipulation of CYBER tokens is an unfounded rumor.”
However, this proposal has further aroused dissatisfaction in the community. Despite the promise that market manipulation is unfounded rumors, for crypto projects, this proposal undoubtedly further strengthens the impression of CYBER's "centralization".
For a crypto project, "decentralization" is the position of every project. However, on CyberConnect, we saw a ridiculous scene:
A user named "cybergov.eth" (cyber governance) initiated a vote that was valid for only 12 hours. A single user cast 87% of the votes.
The proposal was quickly passed with the support of an absolute majority of users, but was rejected by the authorities due to errors in the writing of the proposal.
Of course, such an absurd vote ultimately failed. If the governance proposal succeeds, wouldn’t it be a farce that was “written, directed, and performed by the party itself”?
In the current on-chain world, “centralized” governance is still the common choice for the vast majority of projects.
What happens next?
According to the monitoring of the on-chain analyst Yu Jin, starting from August 29 (CYBER price at $7), the number of CYBER holdings in the Upbit wallet address continued to rise, until 12 noon on September 2 (CYBER price at $13), the number of CYBER held by the Upbit wallet address reached the highest, about 3.947 million. This period coincided with the rise in the price of CYBER.
Now, the pressure is on Binance - 3.6 million CYBER tokens have flowed out of Upbit, most of which flowed into Binance. It is hard not to suspect that this is a price manipulation scenario. Will it be replayed on another CEX?