Messi-Backed Memecoin Faces Backlash Over Alleged Insider Token Allocations
Introduction:
In the fast-paced world of cryptocurrency, celebrity endorsements can sometimes make or break a token’s trajectory. Recently, the spotlight turned to WATER, a memecoin on the Solana blockchain, after soccer icon Lionel Messi shared a playful snapshot with its mascot, sparking a frenzied surge in its price. However, behind the scenes, concerns are mounting over the token’s distribution and sustainability.
Memecoin creators are finding brief success in recruiting soccer stars to promote their tokens. Yet, the spotlight cast by celebrity endorsements cannot obscure suspicions surrounding the centralized allocation of tokens.
The price of WATER, a Solana-based memecoin, skyrocketed by 323% in just 10 hours following a promotional post from Argentine football legend Lionel Messi.
On July 8th, Messi delighted his 504 million Instagram followers by showcasing WATER’s mascot perched on his shoulder. The response was immediate: WATER surged to a local high of $0.0012, up from an all-time low of $0.00028 earlier that day, as reported by CoinGecko.
The following day, Ronaldinho, another football star, joined in with his own photo featuring the cartoon mascot. This second endorsement briefly boosted WATER’s price again before stabilizing.
Despite these spikes, WATER currently trades at $0.000894 with a market cap of $65 million, representing a sharp decline of 67.6% from its peak just after launch in June.
Centralized Control
Behind the allure of celebrity endorsements, blockchain analysts are raising red flags regarding significant insider allocations of WATER tokens.
BubbleMaps analysis reveals a concerning trend: over 30% of WATER’s supply appears concentrated among insiders. Approximately a dozen wallets on the Solana network hold around 35% of all tokens, with the three largest wallets controlling 16% of the total supply.
Critics argue that such centralized control contradicts the ethos of decentralization that cryptocurrencies promise. BubbleMaps, in a critical tweet, suggested that transparency could be improved by consolidating these holdings into fewer, more identifiable wallets.
Crypto analyst Ericonomic warned of the potential for a “rug-pull” exit scam, where large holders abruptly withdraw liquidity, leaving smaller investors unable to sell. Ericonomic pointed out that WATER marks the third token promoted by Messi, following previous instances where similar projects faced severe price collapses shortly after his endorsements.
Ericonomic elaborated, “The first was Leafty, which saw liquidity removed just five days later. The second, PLANET, has seen a gradual decline of around 90% since his promotion. WATER seems poised for a similar fate.”
Despite claims of supporting water-related charities, WATER’s developers have not provided concrete details on which organizations they intend to partner with or how funds will be allocated.
Solana Surpasses Ethereum Amid Memecoin Craze
Solana’s ascent in memecoin trading has propelled the network to surpass Ethereum in on-chain trading volumes. On July 9th, Solana-based decentralized exchanges handled $14 billion in trades, a 93% increase from the previous week, edging out Ethereum’s $13.8 billion.
Raydium, Solana’s top DEX, reported 57 million transactions over seven days, dwarfing Uniswap’s 4.46 million transactions on Ethereum over the same period.
Data from Step Finance indicates a surge in token creation on Solana, with over 100,000 tokens launched in the past week alone, contributing to a total of more than half a million in the past month.
Conclusion:
While celebrity endorsements may initially boost visibility and trading activity, the sustainability of memecoins like WATER remains uncertain. As blockchain scrutiny intensifies, the focus shifts to transparency and the equitable distribution of tokens. Investors navigating these volatile markets are urged to exercise caution, lest they fall victim to the pitfalls of hype-driven investments.
By delving deeper into the realities behind flashy promotions, stakeholders can make more informed decisions in the ever-evolving landscape of cryptocurrency trading.
