Token's one-year anniversary, Worldcoin is struggling.

The former Worldcoin now seems to have become a joke.

A year ago, this project, born with a golden key, was highly regarded. It won hundreds of millions of dollars in financing with the halo of Sam Altman, the founder of OpenAI, venturing into entrepreneurship again. Despite the controversial identity information device Orb, the vision of UBI has always been inspiring. However, within less than a year, allegations of fraud, damaged reputation, and business bottlenecks have repeatedly appeared in discussions about the project.

What is the cause of the project’s collapse, the result of sovereign rules or the deficiency of human nature operation? Worldcoin’s hardcore vision, like a castle in the air, is elusive.

Let’s take a simple look back at Worldcoin. In the initial construction, the project envisioned a global distribution system that could achieve universal basic income by collecting identity information to confirm individual existence. In terms of the main body, Worldcoin consists of the Worldcoin Foundation and Tools for Humanity, with the former focusing on community governance and the latter serving as the main body for actual technical development. The Worldcoin technology implementation framework includes three major parts: global identity ID, global currency, and the Wallet that carries both, corresponding to WorldID, WorldCoin (WLD), and WorldAPP respectively.

On July 24, 2023, Worldcoin officially launched Token WLD. At the time of its launch, the currency sparked considerable controversy, mainly due to the high centralization of the Token, with 5 market makers holding 91.74% of the total circulation, and implied call options with fixed pricing; secondly, the Token exhibited typical characteristics of high Market Cap and low circulation. Considering the project’s luxurious financing lineup, users suspected that this was another project for dumb buying by retail investors.

In addition to Token, the iris biometric recognition unique to ORB devices has also sparked controversy in the market over the protection of privacy data. The centralization of ORB device manufacturing and the suspected possibility of backdoors have raised concerns among the public and also attracted the attention of government regulatory agencies. In the commercial construction, the black market industrial chain spawned by the unique ground promotion market operation mechanism has once again sparked criticism of so-called ‘neo-colonial exploitation’.

Despite various controversies, WLD has become a hardcore AI concept coin in the encryption zone due to its special relationship with OpenAI. Thanks to the popularity of AI this year, WLD has also surged. In February, influenced by SORA, WLD skyrocketed 160% in a single week, from $2.5 to $6.77, and in March, it pumped to $10.8, reaching a new all-time high. However, due to market sentiment and news, WLD has been declining and is now reported at $2.87.

WLDPA, source: Coinmarketcap

From the perspective of the project itself, Worldcoin has achieved certain results so far. According to the official website data, World ID users currently cover up to 160 countries/regions, with more than 6 million ID verifications. Orb device certifications have been conducted in 38 countries/regions, and the number of manufactured Orb devices has reached 3154. Although it falls far short of Sam’s initial goal of reaching 1 billion users by the end of 23 years, in terms of new projects in the identity recognition field, this data is considered satisfactory.

However, in the long run, the regulatory conflicts and data security pressure on the project have not been resolved, and there is even a growing trend.

The Worldcoin official website claims to have obtained permission to operate in regions including Europe, Argentina, Mexico, Singapore, Hong Kong, Japan, and South Korea. However, fundamentally, the project’s operation started in underdeveloped areas, with Kenya being the main region for WorldID applications. However, the Kenyan government quickly issued a ban, temporarily suspending 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 protection authority CNPD ordered Sam Altman’s Worldcoin project to stop collecting biometric data for 90 days to prevent serious harm to citizens’ data protection rights.

Just recently, Hong Kong has once again expressed opposition to Worldcoin. The Office of the Privacy Commissioner for Personal Data (PCPD) in Hong Kong, after investigating six venues involved in the operation of the Worldcoin project, stated that during the operation in Hong Kong, Worldcoin scanned the faces and irises of 8302 individuals for verification. However, collecting facial images for the purpose of verifying participants’ identities is unnecessary, as the operators of the iris scanning equipment are already able to personally conduct this verification at the operation sites, making the scanning or collection of facial images an unnecessary step. In conclusion, the collection of facial and iris images by Worldcoin is unfair and illegal, violating the data protection principles of Hong Kong.

Opposition is not just an unfounded rumor. As early as the Worldcoin test phase, there were reports that a Hacker installed malware to steal passwords on the devices of long Orb operators, allowing full access to the backend data of the Worldcoin operator.

In response to the above, Worldcoin is not sitting idly by. In terms of data security, in March of this year, Worldcoin launched a personal custody plan. World ID registered users can store and encryption biometric data on their mobile phones rather than on the operational background. Registered users can also request the deletion of iris codes. In addition, the Worldcoin founding team is actively negotiating with governments around the world in the hope of alleviating regulatory concerns. However, it is still evident that the sensitivity of biometric identification information is difficult to dispel in the short term, and the most concentrated user base in mainland China and the United States also faces difficulties in promotion due to regulations, undoubtedly limiting the project’s sustainable development.

In addition to regulatory issues, in recent days, there have also been allegations surrounding the price of Worldcoin.

According to the White Paper, the initial supply limit of Worldcoin after the Token launch is 10 billion. After the agreed-upon 15 years, users can decide through governance whether to activate the inflation mode, with a maximum inflation rate of 1.5% per year. The maximum circulating supply at the initial launch will be 143 million WLD, of which 43 million WLD will be allocated to users who verify with Orb during the project’s Pre-Launch phase, and 100 million will be lent to 5 market makers operating outside the United States, with a loan term of three months. At maturity, the market makers can choose to purchase WLD Token to repay. It is evident that this mechanism implies control over Token price Fluctuation.

Excluding the tokens held by market makers, the actual initial circulating supply of Worldcoin was 43 million. In October 23, due to the expiration of the protocol borrowed by the market maker, Worldcoin announced the renewal but reclaimed 25 million WLD tokens, further reducing circulation. However, only one year after issuance, according to the data returned by the Orb API, the actual circulating supply of WLD has reached 276 million, with an inflation rate of up to 541%, demonstrating 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, lasting for two years. According to the Token unlocking schedule, Tokens belonging to early teams and investors such as Tools for Humanity will start to unlock on July 24th, with a daily unlocking of 6.62 million WLD Tokens, equivalent to about 18 million US dollars. The unlocking will last for 730 days. Previously, on July 10th, in order to attract more long-term registrants, the project party announced that the deadline for claiming unclaimed WLD reserved Tokens can be extended for one year, once again increasing implicit selling pressure.

With the large unlocking and selling pressure preparation, the WLD market reacted strongly, falling all the way to $1.9, back to its original listing price. In response, the project team quickly came to the rescue. On July 16th, Tools for Humanity announced a change in the unlocking schedule of WLD Tokens held by TFH investors and team members, with around 80% of them having their unlocking time extended from 3 years to 5 years. The first year will remain locked, followed by linear daily unlocking over the next four years. In terms of quantity, the amount released from this portion will drop from the original 3.19 million Tokens to 2 million Tokens, while the total daily unlocking amount will decrease from 6.62 million Tokens to 5.4 million Tokens.

WLD circulation supply changes, source: Worldcoin official website

Despite the lack of significant differences in the order of magnitude, due to the extension of unlocking, WLD still pumped 45% to $3.13, reaching the highest price this month. On the other hand, due to the ‘just right’ artificial changes before unlocking, this typical Whipsaw behavior of quick rise after Unfavourable Information Accumulation has led to fraud accusations against WLD by industry professionals.

Decentralized Finance Squared published a long article on X, pointing directly at the WLD team for manipulating and misleading prices through changes in circulation, market maker contracts, and announcements before unlocking, claiming that maintaining a low circulation rate is to prevent excessive price changes from affecting the UBI income of the entire population, but it is expected that by next year, early investment VC and other institutions will release 1 billion Tokens, while UBI funding is only 600 million, and the total amount of Tokens held by venture capital accounts for 60% of circulation, which undoubtedly harms the interests of Tokenholders and is not in line with the original intention of the team.

It is worth noting that in April of this year, the Worldcoin Foundation also announced that it will sell 500,000 to 1,500,000 WLD in private sale to institutions operating outside the United States every week for the next 6 months.

It also mentioned that although unconfirmed, every time Favourable Information is announced, a member of the team or a member of the venture capital is taking advantage of insider information to trade ahead. on-chain detective ZachXBT also agrees with his view, accusing Worldcoin of using eyewash under the guise of humanitarianism, allowing team members to profit.

**It is undeniable that WLD has become a typical high FDV and low liquidity Token. As a project supported by top investors, the phenomenon of dumb buying Liquidity in the subsequent period is unavoidable, which is determined by the economic model rather than its vision. From the perspective of model settings, similar to other encryption projects, the project party cannot obtain positive commercial profits from it, and the coin price is the core to maintaining the stability of the network. However, on the operational side, the project party still needs to pay operating expenses, hardware construction costs, and so on. It is reported that the cost of each Orb device is about $4000. The profit model chosen by the operating team is also the same, selling WLD. From the data, it is seen that a single operator occasionally sells a total of 20,000 WLD Tokens on the exchange per week.

And who will pay for these costs? 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 directly affected dumb buying group. If the camera is turned to Korea, the popularity of Worldcoin in Korea is visible to the naked eye. According to a local Orb operator, despite being able to accept only 100 daily reservations, they are fully booked on weekdays and weekends during the reservation period.

The trend of holding WLD on Bithumb exchange, source @Decentralized Finance Squared

It can be determined that the vast majority of investors who purchase WLD are attracted by its fascinating AI story, and Sam Altman is the soul pillar of the project. However, in reality, Sam, as one of the co-founders, has not spoken for the project for a long time. The only publicly available information that can be found on the search engine is from April this year, when Sam and Worldcoin CEO Alex Blania visited the Malaysian government. The X platform also has not released much relevant information, and the soul figure seems to have been silent about the project for a long time.

Of course, Worldcoin is not without its merits. Its pioneering advanced privacy system design, the subsequent launch of the public chain World Chain, and the attempts to collaborate with well-known enterprises such as PayPal and OpenAI all have their highlights. A series of events represent the project’s absolute commitment to long-term operation, bringing positive impacts not only to the encryption field but also prompting the public to reconsider the inclusive concept in the sovereign world. However, looking solely at Token, Worldcoin’s market situation can be described as bleak, with the project side controlling the price action, ultimately becoming part of the AI dividend.

**The UBI that no one is losing seems to have become a story of dumb buying for suckers again. The decline of the grand vision may be confirming the saying of Romain Rolland, “Realism without ideals is meaningless, but idealism detached from reality is lifeless.”