In light of recent bans and regulatory hurdles in countries like Spain, Portugal, how is Worldcoin adjusting its strategy to make a place in the crypto market?
Worldcoin (WLD), a digital identity project founded by OpenAI CEO Sam Altman and co-founder Alex Blania, has once again captured headlines with its announcement of an increase in the supply of its WLD token through private sales.
Amid growing concerns over data privacy and regulatory issues, Worldcoin’s decision to ramp up its token supply raises questions about the project’s direction and its bid for market relevance.
With recent bans in several countries, coupled with scrutiny from global regulators, Worldcoin faces the challenge of balancing aspirations with privacy safeguards.
Against this backdrop, let’s examine the motivations behind its decisions and the potential impact on its market position.
Decoding the reasons behind token supply increase
In an announcement on April 23, Worldcoin unveiled plans to expand the supply of its WLD token by up to 19% over the coming six months.
The move, led by World Assets, a subsidiary of the Worldcoin Foundation responsible for token issuance, involves weekly sales of between 0.5 million and 1.5 million WLD to select institutional trading firms outside the U.S.
This expansion aims to inject an additional 36 million tokens into the market, valued at approximately $173 million as of current prices.
These placements are strategically designed to occur as close to prevailing market prices as possible, minimizing potential disruptions to the token value.
The recent downturn in the crypto market, heightened by Worldcoin’s price drop of nearly 60% from its all-time high, could be a catalyst. As of Apr. 26, WLD is trading at $4.8, down from its peak of $11.82.
By releasing additional tokens, Worldcoin might be seeking to stabilize its value and stimulate demand. Moreover, increasing the supply may alleviate selling pressure and reduce price volatility.
Currently, Worldcoin’s market cap is $968 million, representing the total value of all tokens being traded.
Another important metric is the fully diluted value (FDV), which considers Worldcoin’s potential value if all its tokens were available for trading. Worldcoin’s FDV stands significantly higher at $49 billion, indicating its growth potential.
However, flooding the market with too many tokens too quickly could diminish the value of each token. Hence, Worldcoin seems to be on a path of phased distribution to fight the ongoing volatility.
Ramping up for regulatory support
Amid Worldcoin’s bid for market relevance, recent engagements between its key figures, Altman and Blania, and Malaysian leaders hint that the game is getting more serious.
Blania, CEO and co-founder of Tools of Humanity and the lead developer of the Worldcoin project, held discussions with representatives from Malaysia’s digital ministry.
Additionally, Blania and Altman participated in a video call with Malaysia’s Prime Minister, Anwar Ibrahim, to establish constructive dialogue with government officials.
These interactions with Malaysian authorities were aimed at addressing data privacy concerns and building closer collaboration with regulators.
So far, Worldcoin has faced scrutiny from several regulators, with temporary bans imposed by Spain and Portugal over concerns about data collection practices. The project’s regulatory challenges extend beyond these countries, with scrutiny from regulators in Germany, France, Argentina, Kenya, and South Korea.
These concerns primarily revolve around the process of scanning users’ irises to create personal World IDs, which has raised the apprehensions of privacy advocacy groups.
Acknowledging the need to address these concerns, Worldcoin has implemented new measures to enhance privacy and data protection. The introduction of “Personal Custody” ensures that new World ID sign-ups no longer require the storage and encryption of biometric data.
Additionally, users can now request the permanent deletion of their iris codes, with stricter age verification protocols in place to prevent minors from signing up.
It seems likely that Worldcoin is trying hard to overcome both the regulatory and market challenges with two crucial moves at the same time.
Attracting users and developers
To attract users and developers, Worldcoin is rolling out a layer-2 Ethereum (ETH) blockchain known as World Chain. Based on Optimism’s OP stack framework, this blockchain promises cheaper fees and faster transaction speeds.
Moreover, it’s designed to prioritize verified humans over AI bots and trading algorithms, offering special benefits for sign-ups, such as block space and some free gas, enhancing the user experience and incentivizing adoption.
Meanwhile, World Chain’s integration with the OP Stack framework also facilitates increased adoption and accessibility for developers. Developers can leverage World Chain to reach millions of users with applications focused on real-world utility.
Furthermore, Worldcoin’s outreach efforts, including in-person scans at conferences and events, have facilitated the onboarding of over 10 million users across 167 countries.
As Worldcoin ramps up its efforts, the critical question remains: will these moves be enough to establish it as a key player in the crypto market? The outcome is yet to unfold.
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