Worldcoin significantly extends the token unlocking period. Can it reverse the massive selling pressure?

Author: Nan Zhi, Odaily Planet Daily

Since March, the price of WLD (Worldcoin) has been on a downward trend, dropping from a peak of nearly 12 USDT to a low of 1.72 USDT. The fundamental reason for this, apart from the overall market downturn, is primarily the massive and continuous token unlock selling pressure of WLD.

However, in recent days, Worldcoin has made two consecutive adjustments to its token release rules, resulting in an 8% and 13% increase in token price within one hour. Odaily will interpret the extent of the selling pressure on WLD and the impact of these two adjustments on the ongoing unlocks in this article.

WLD Token Unlock Data

The WLD token was launched on July 14, 2023, with an initial circulating supply of 143 million tokens, including 100 million tokens loaned to market makers, for a total supply of 10 billion tokens. Excluding the loan portion, the real initial circulating supply is 43 million tokens.

The release of WLD tokens is most rapid in the first three years, with the first year entirely dedicated to community token unlocks, and institutional unlocks beginning in the second year, continuing for two years.

One year after the token issuance, the real circulating supply of WLD has risen to 276 million tokens, with an inflation rate of 541%. It is important to note that the real circulating supply is based on data returned from the Orb API. In contrast, Token Unlocks uses theoretical maximum supply data, with an initial circulating supply of 500 million tokens and a current circulating supply of 1.65 billion tokens. However, these tokens still need to be controlled by governance to enter the real circulating supply, depending on the rate at which these tokens enter circulating supply.

Three days ago, WLD marked its one-year anniversary and initiated the TFH (Tools for Humanity) unlock, which will increase the theoretical circulating supply from the current 1.65 billion tokens to 6.5 billion tokens. This corresponds to a daily unlock of 6.62 million tokens, which, at the current price of 2.8 USDT, will result in a daily selling pressure of 15.42 million USD.

If we calculate the daily selling pressure based on the current real circulating supply to the maximum supply ratio, it would be approximately 2.76/16.5 × 15.42 = 2.58 million USD. However, how long this ratio will be maintained and how it will change cannot be predicted.

(Odaily Note: Tools for Humanity is the actual technical development entity and also the operator of World App. The TFH unlock includes various parties such as investors, employees, and advisors.)

Impact of Modifying Unlock Rules

Worldcoin made two modifications to the token release rules, with the first modification occurring on July 10, when Worldcoin announced that the claiming deadline for unclaimed WLD reserved tokens would be extended by one year. This proposal effectively increased the selling pressure of WLD. The background for this portion of tokens is that shortly after the launch of Worldcoin in July 2023, the Worldcoin Foundation introduced a WLD token reservation mechanism, allowing users who had not yet passed Orb verification to reserve WLD tokens and redeem them at a future date. This was aimed at involving as many people as possible in Worldcoin, regardless of the availability of Orb devices.

This modification allowed WLD tokens that were previously unclaimable to re-enter the market, increasing the amount of WLD that can be sold in the coming year. The specific number of WLD tokens affected by this change is not publicly available, but according to a tweet from Worldcoin, this change impacted 6 million users.

TFH Unlock Extension

Yesterday, Worldcoin announced again that the token lock-up period for early Worldcoin contributors of Tools for Humanity would be extended, with 80% of TFH investors and team members having their token unlock duration adjusted from two years to four years.

According to the original release plan, the TFH team and investors would unlock 3.19 million tokens daily, currently valued at about 7.44 million USD. After the modification, the daily unlock amount is reduced to (3.19 × 80% ÷ 2 + 3.19 × 20%) = 1.914 million tokens, while the data provided by Worldcoin indicates a daily unlock of about 2 million tokens.

In summary, the token unlock amount has decreased from 6.62 million tokens daily to approximately 5.4 million tokens, without a significant change in magnitude.

Conclusion

Although this modification to the token release does not fundamentally reverse the massive and ongoing selling pressure on WLD, since the announcement, WLD has risen by 29%. Worldcoin has also demonstrated its ability to manage news effectively over the past year, theoretically suggesting a "long short" strategy. However, with the imminent launch of World Chain, if the specific rules grant WLD actual use cases, the fundamentals may reverse again, warranting close attention from readers in the future.