Analysis of Celestia and Selling Events: The Token Dilemma Under Profit Pressure

Recently, the Celestia project has experienced a large-scale Token dumping, sparking widespread discussion in the industry. This article will delve into the ins and outs of this event and its implications for the industry.

It is normal for investors to profit

Some believe that the large-scale selling behavior of a certain investment institution is inappropriate, but this is actually a routine operation in venture capital. As early investors, they took on significant risks, betting on the then cutting-edge concept of "external data availability layer." It is their duty to seek returns, just like other investors.

It is worth noting that it is not only this one institution that is selling. Other investors are also engaging in similar operations, but they are not easy to track. The selling by a single institution is not sufficient to cause such drastic price fluctuations, and blaming only one institution is unfair.

The Profit Dilemma of Project Parties

The cryptocurrency sector generally faces profitability issues. Data shows that Celestia generates only about $200 in daily revenue while distributing approximately $570,000 in Token incentives. This is just on-chain data; the actual operating costs may be even higher.

Many projects view Token sales as a primary means of profit, neglecting sustainable business models. When the Token and investment funds are exhausted, problems will arise. It is somewhat understandable that project parties have to sell part of their tokens to cover expenses.

Incentive Misalignment of Token Model

Compared to equity, investors are more inclined towards token investments. This presents a dilemma for founders: on one hand, the token model makes it easier to raise funds, while on the other hand, they may realize that the product does not actually require a token.

Token issuance can attract more investors and provide a clear exit path. For project parties, this means higher valuations and more funding. However, this model often results in losses for retail investors and profits for venture capitalists.

Insights and Reflections

1. Venture capital firms aim for profit and should not be overly criticized for their legitimate dumping activities.

2. The deceptive behavior of promoting while dumping should be condemned.

3. The project needs to design a sustainable business model, rather than relying solely on Token sales.

4. Token economics should be given high importance in the early stages, otherwise it may come at a heavy cost.

5. There is no direct correlation between technological innovation and Token prices.

6. Market sentiment often changes dramatically with price fluctuations, and it is important to rationally assess the project's value.

Overall, the Celestia event reflects the many challenges currently faced by the crypto industry. Project teams, investors, and users all need to rethink the token economic model and seek a healthier and more sustainable development path.