What was once Worldcoin now seems to be a joke.
A year ago, this project was born with a golden key and was highly sought after. It won hundreds of millions of dollars in financing under the halo of OpenAI founder Sam Altman's re-entrepreneurship. Although the identity information device Orb was controversial, the vision of UBI was always deafening. In just less than a year, suspected fraud, reputation collapse and business bottlenecks have repeatedly appeared in discussions about the project.
Was it the sovereign rules or the flaws in human nature that caused the project to collapse? Worldcoin’s hardcore vision is as vague as a castle in the air.
Let's take a brief look at Worldcoin. When it was first constructed, the project envisioned the construction of a global distribution system that could achieve universal basic income by collecting identity information to confirm the existence of individuals. In terms of the main body, Worldcoin consists of the Worldcoin Foundation and Tools for Humanity, of which the former focuses on community governance and the latter is the actual technical development entity. The Worldcoin technical implementation framework consists of three parts: global identity ID, global currency, and the wallet that carries the two, corresponding to WorldID, WorldCoin (WLD), and WorldAPP respectively.
On July 24, 2023, Worldcoin officially launched the token WLD. When it was launched, the currency was met with a lot of controversy, mainly due to the high degree of centralization of the token. Five market makers hold 91.74% of the total circulation, and there is a fixed pricing for implied call options; secondly, the token presents the typical characteristics of high market value and low circulation. Considering the project's luxurious financing lineup, users suspect that this is another retail investor takeover project.
In addition to tokens, the unique iris biometrics of orb devices have also sparked controversy in the market over privacy data protection. The centralized manufacturing of orb devices and the suspected backdoors have caused people to be suspicious and have also attracted the attention of government regulators. In the commercial construction, the black market industry chain spawned by the unique ground-market operation mechanism has once again triggered the so-called "neo-colonial exploitation" criticism.
Despite all the controversies, WLD has become a hard-core AI concept coin in the crypto sector due to its special relationship with OpenAI. As AI is hot this year, WLD has also taken advantage of the trend. In February, under the influence of SORA, WLD soared 160% in a single week, from $2.5 to $6.77, and in March it rose to $10.8, setting a record high. However, due to the market boom and news, WLD has been declining and is now at $2.87.
WLD Price Chart
Judging from the project itself, Worldcoin has achieved certain results so far. According to the official website data, World ID users have covered up to 160 countries/regions, the number of ID verifications has exceeded 6 million, 38 countries/regions have been certified for orb devices, and the number of orb devices manufactured has reached 3,154. Although it is far from Sam's original goal of reaching 1 billion users by the end of 23 years, the data is satisfactory for a new project in the identity recognition track.
Even so, from a long-term perspective, the regulatory conflicts and data security issues facing the project have not yet been resolved, and are even tending to intensify.
The official website of Worldcoin claims that the regions where it has been allowed to operate include Europe, Argentina, Mexico, Singapore, Hong Kong, Japan and South Korea, but at its core, the project's operations started in underdeveloped regions. Kenya was once the main region for WorldID applications. However, the Kenyan government quickly issued a ban and temporarily suspended Worldcoin's registration and certification in the country. France, Germany, Spain and other regions have successively investigated and restricted Worldcoin. In March of this year, the Portuguese data regulator CNPD ordered Sam Altman's Worldcoin project to stop collecting biometric data for 90 days to prevent serious damage to citizens' data protection rights.
Just recently, Hong Kong once again expressed opposition to Worldcoin. After investigating six locations involved in the operation of the Worldcoin project, the Privacy Commissioner for Personal Data (PCPD) of Hong Kong stated that during its operation in Hong Kong, Worldcoin scanned the faces and irises of 8,302 people for verification, but the collection of facial images was unnecessary to verify the authenticity of the participants because the iris scanning equipment operator was already able to conduct such verification in person at the operating location, which made scanning or collecting facial images an unnecessary step. It was ultimately concluded that Worldcoin's collection of facial and iris images was unfair and illegal, and violated Hong Kong's data protection principles.
The opposition is not groundless. As early as the Worldcoin testing phase, there were reports that hackers installed password-stealing malware on the devices of multiple Orb operators, giving them full access to the backend data of Worldcoin operators.
In response to all of the above, Worldcoin is not standing idly by. Regarding data security issues, in March this year, Worldcoin launched a personal hosting plan. World ID registered users can store and encrypt biometric data on their mobile phones instead of operating the backend. Registered users can request to delete the iris code. In addition, the founding team of Worldcoin is also actively negotiating with local governments in the hope of alleviating regulatory concerns. However, it can still be seen that the sensitivity of biometric information is still difficult to eliminate in a short period of time, and the mainland of China and the United States, where users are most concentrated, are also difficult to promote due to regulations, which undoubtedly limits the sustainable development of the project.
In addition to regulatory issues, accusations surrounding currency prices have also been leveled at Worldcoin in recent days.
According to the white paper, the initial supply of Worldcoin is capped at 10 billion within 15 years of the launch of the token. After the agreed 15 years, users can decide through governance whether to turn on the inflation mode, with a maximum annual inflation rate of 1.5%. The maximum circulating supply at the initial launch will be 143 million WLD, of which 43 million WLD will be allocated to users who use Orb verification in the Pre-Launch phase of the project, and 100 million will be loaned to 5 market makers operating outside the United States. The loan period is three months, and the market makers can choose to buy WLD tokens to repay when the loan expires. It can be seen that this mechanism implicitly controls token price fluctuations.
Excluding the tokens held by market makers, the actual initial circulation was 43 million. In October 2023, due to the expiration of the market maker lending agreement, Worldcoin announced a renewal but withdrew 25 million WLD tokens, further reducing the circulation. However, only one year after the issuance, according to the data returned by the Orb API, the actual circulation of WLD has reached 276 million, and the inflation rate is as high as 541%, which shows the speed of depreciation.
From the perspective of token release, all community tokens will be unlocked in the first year, and institutional unlocking will start from the second year, which will last for two years. According to the token unlocking schedule, the tokens belonging to early teams and investors such as Tools for Humanity will be unlocked from July 24, with 6.62 million WLD tokens unlocked daily, equivalent to about 18 million US dollars, and the unlocking will last for 730 days. Previously, on July 10, in order to attract more people to register IDs, the project announced that the claim period for unclaimed WLD reserved tokens can be extended by one year, which once again increased the implicit selling pressure.
The WLD market reacted violently to the large-scale unlocking and selling pressure preparation, and it fell all the way to $1.9, returning to its initial launch price. In response, the project team quickly rushed to put out the fire. On July 16, Tools for Humanity announced a change in the unlocking schedule of WLD tokens held by TFH investors and team members. The unlocking schedule of about 80% of TFH investors and team members' WLD tokens will be extended from 3 years to 5 years, and will remain locked in the first year, and then unlocked linearly every day for the next four years. In terms of quantity, the number of released tokens has been reduced from the original 3.19 million to 2 million, and the total daily unlocking has dropped from 6.62 million to 5.4 million.
WLD Circulating Supply Changes
Although there is not a significant difference in magnitude, WLD rose 45% to $3.13 due to the extension of the unlock, reaching its highest price this month. On the other hand, it is precisely because of the "just right" artificial changes before unlocking, and the typical washout behavior of quickly raising funds after negative gains, that WLD has been accused of fraud by industry insiders.
DeFi Squared published a long article on X, pointing out that the WLD team manipulated and misled prices by changing the issuance volume, market maker contracts, and issuing announcements before unlocking. It believed that the team claimed to maintain a low circulation rate to prevent price changes from being too drastic and affecting the UBI income of all people. However, it is expected that by next year, early-stage investment VCs and other institutions will release 1 billion tokens, while UBI will only allocate 600 million tokens. The total number of tokens held by venture capital accounts for 60% of the circulation, which undoubtedly harms the interests of token holders and is not in line with the original intention of the team.
It is worth noting that in April this year, the Worldcoin Foundation also announced that it would sell 500,000 to 1.5 million WLDs per week in private placements to institutional trading firms operating outside the United States over the next six months.
He also mentioned that, although it has not been confirmed, every time a good news is announced, a member of the team or venture capital is using insider information to trade first. Chain detective ZachXBT also agrees with his point of view, accusing Worldcoin of running a scam under the guise of humanitarianism to make profits for team members.
It is undeniable that WLD is already a typical high FDV low circulation token. As a project supported by top investors, the phenomenon of subsequent liquidity takeover is inevitable. This has nothing to do with its vision, but is determined by the economic model. From the perspective of model setting, similar to other crypto projects, the project party cannot obtain positive commercial profits from it, and the currency price is the core of maintaining the stability of the network. However, on the operational side, the project party also needs to pay operating expenses and hardware construction costs, etc. It is reported that the cost of each Orb device is about US$4,000. The profit method chosen by the operating team is also the same, selling WLD. From the data, only a single operator occasionally sells a total of 20,000 WLD tokens on the exchange every week.
Who will pay for these fees? From the perspective of holders, nearly 25% of the circulating WLD is held in the Korean exchange Bithumb, which means that the vast majority of holders are Korean retail investors, who are also the group that is directly affected. If the camera is pulled to South Korea, the popularity of Worldcoin in South Korea is visible to the naked eye. According to a local Orb operator, although they can only accept 100 people per day, they are full on weekdays and weekends during the available time.
The trend of WLD held in Bithumb exchange
What is certain is that most investors buy WLD for the fascinating AI story behind it, and Sam Altman is the soul of the project. But in fact, as one of the co-founders, Sam has not spoken for the project for a long time. The only public information that can be searched on search engines is that Sam and Worldcoin CEO Alex Blania went to the Malaysian government to communicate in April this year. There is not much relevant information released on its X platform. It seems that the soul of the project has been silent for a long time.
Of course, Worldcoin is not without merit. It has taken the lead in adopting advanced privacy system design, subsequently promoted the public chain World Chain, and tried to cooperate with well-known companies such as PayPal and OpenAI. These series of events represent that the project absolutely adheres to the concept of long-term operation, which not only has a positive impact on the promotion of the encryption field, but also makes the public re-examine the concept of inclusiveness in the sovereign world. However, judging from the token alone, the market of Worldcoin is bleak. The news of the project controls the price trend, and it eventually becomes a part of the AI dividend.
UBI, which has no one to give it blood, seems to have once again become a story of the leeks taking over. The decline of grand visions may just confirm Romain Rolland’s famous saying, "Realism without ideals is meaningless, but idealism divorced from reality is lifeless."
