CYBER Governance Farce: One Person's Blunder Proposal, Official Statement Refuses to Implement
Emergency intervention on "kimchi premium," proposal mistakenly wrote the unlocking quantity, price soared and then halved.*Written by: Loopy Lu, * Odaily Planet Daily
On August 1, Binance announced that Binance Launchpool would launch the token CYBER from CyberConnect on August 15. Since its launch, CYBER has become the market focus in ways that people had not imagined.
CYBER first set a record high price of $36 on the Korean CEX, with a premium of up to 120% compared to other mainstream trading platforms. It then swiftly passed the "flash proposal" governance proposal to unlock a large number of tokens in just 12 hours. During this period, the prominent market maker DWF was also seen. Odaily Planet Daily will take you through this absurd drama that unfolded over the weekend.
Premium as high as 120%, low circulation raises control controversy
The tokenomics of CYBER released by Binance shows that the total supply of CYBER is 100 million, of which 9% is used for community rewards, 34% for ecological development, 25.12% allocated to private investors, 15% to the team and advisors, and 10.88% to the community treasury. CoinList's public sale and Binance Launchpool each allocated 3% of the tokens.
Its initial circulation was very low compared to the total supply, with only 11,038,000 CYBER, accounting for 11.04% of the total token supply.
At the beginning of Launchpool, the launch of this token did not attract much market attention. However, about a week after its launch, the listing of CYBER on Upbit made the project instantly "exciting."
On August 22, Upbit opened trading for CYBER. According to Coingecko data, the CYBER/BTC trading pair on Upbit accounted for over one-tenth of the market share, making it the second-largest trading pair for CYBER by trading volume. Just yesterday, this figure once surpassed 20%.
The price of CYBER also soared as the trading enthusiasm of Korean investors increased. At its peak, the price of CYBER was about four times what it is now.
However, this price only existed in the Korean market. The "kimchi premium" once again brought a small shock to the market.
On Upbit, CYBER once surged to a high of about $36. In contrast, the highest price on Binance was only $16.2. The premium rate on Upbit was about 120%.
CYBER/BTC trading pair on Upbit
According to CyberConnect's official explanation, major trading platforms in Korea only support deposits and withdrawals of CYBER on Ethereum. Due to the lack of liquidity for CYBER on Ethereum, this has led to price discrepancies.
However, an interesting piece of data is that at the time the proposal was released, the circulating tokens of CYBER included about 5.64 million CYBER-ETH, 2.4 million CYBER-OP, and 3 million CYBER-BSC.
Although the Ethereum network accounts for more than half of the circulating supply, this high premium still raises questions. Is there another reason for such a strong premium on CYBER?
Upbit's large holdings may be a possible explanation. According to monitoring by 0xScope, on-chain data shows that Upbit's wallet addresses hold over 3.6 million CYBER. This amount accounts for 33% of the circulating supply.
As the largest holder of CYBER tokens, Upbit's holdings also exceed those of Binance.
On one hand, this reflects the enthusiasm of Korean traders for CYBER. On the other hand, CYBER also harbors risks of concentration of holdings and potential high control.
Another obvious action further strengthened this concern. On August 31, the well-known crypto market maker DWF Labs deposited 40,000 CYBER into another leading Korean CEX, Bithumb, worth about $360,000 at the market price at that time. If calculated at the historical high of $36, it would be worth over $1.44 million.
Coincidentally, within 24 hours after DWF entered the market, CYBER experienced a rapid rise and reached its historical peak within 48 hours.
Unlocking over 100% of circulating tokens: It was just a flash proposal
In the early hours of yesterday, a governance proposal from CyberConnect quickly extinguished this newly started celebration.
CyberConnect released an emergency proposal "CP-1". CyberConnect believes that due to the lack of a cross-chain bridge for CYBER across multiple chains, there is a lack of multi-chain liquidity for CYBER, which has led to the high premiums on CEX.
To address this issue, they proposed to unlock tokens to balance liquidity and resolve the liquidity balance issue of CYBER across Ethereum, Optimism, and BNB Chain networks.
The implementation is divided into three steps:
Deploy bridges for CYBER-ETH, CYBER-BSC, and CYBER-OP supported by LayerZero's ProxyOFT.
The Cyber DAO treasury will unlock CYBER to provide liquidity for such bridges.
The unlocked CYBER in the treasury (a total of 7,000,000 CYBER-BSC and 3,888,000 CYBER-ETH) will be used to maintain the liquidity of the bridging service. Providing bridging services will not affect the total supply of CYBER.
Balance the liquidity across chains by burning and minting tokens. For example, when the CYBER-ETH in the treasury is exhausted, new CYBER-ETH will be minted, and an equivalent amount of CYBER-BSC or CYBER-OP will be burned.
Once the proposal was announced, CYBER plummeted.
Coingecko data shows that the total circulating supply of CYBER is only about 11 million, and this unlocking will unlock 10.88 million at once, nearly equal to the entire circulating supply, causing an uproar among CYBER investors.
Within an hour after the proposal was released, CYBER plummeted 67% on Upbit, while the decline on Binance was 26%.
After the crash, a reversal occurred. The astronomically large token unlock was just a misunderstanding.
After confirming with CyberConnect, the official stated that the number of CYBER tokens to be unlocked should only be 1.08 million, and the 10.88 million mentioned in the snapshot was a typographical error. Although the on-chain vote had passed, due to the data error, it would temporarily not be executed.
Subsequently, CyberConnect released a public statement indicating that there was an error in the number of CYBER tokens to be unlocked as stated in the proposal. The proposal has been declared invalid. They also announced that a new proposal would be launched to address the previously mentioned liquidity issue.
"Centralized" community voting farce
CYBER pointed out in the announcement that, "Although the official quickly invalidated the proposal, it still did not stop rumors in the market, leading to panic, uncertainty, and questioning about CYBER."
At the same time, they responded to the community's most concerned question: they "assured the community" ------ "that the behavior of manipulating the market for CYBER tokens is baseless rumors."
However, this proposal further sparked dissatisfaction within the community. Despite the assurance that market manipulation is baseless rumors, this proposal undoubtedly reinforced the "centralized" impression of CYBER for a crypto project.
For a crypto project, "decentralization" is the stance that every project (claims to uphold). Yet at CyberConnect, we witnessed a comical scene:
A user named "cybergov.eth" initiated a vote with a validity of only 12 hours. Only one user cast votes that accounted for 87% of the total voting volume.
With the overwhelming support of one user, the proposal was quickly passed, only to be rejected by the official due to errors in the proposal writing.
Indeed, such an absurd vote ultimately declared failure. If the governance proposal had succeeded, would it not have become a "self-scripted, self-directed, self-performed" farce?
In the current on-chain world, for the vast majority of projects, "centralized" governance remains a common choice.
What will happen next?
On-chain analyst Yu Jin monitored that starting from August 29 (when the price of CYBER was $7), the number of CYBER held by Upbit wallet addresses continued to rise until noon on September 2 (when the price of CYBER was $13), reaching a peak of about 3.947 million. This time period coincided with the price surge of CYBER.
Now, the pressure has shifted to Binance ------ 3.6 million CYBER has flowed out of Upbit, most of which has entered Binance. It is hard not to suspect that this is a script for price manipulation, will it be replayed on another CEX?
