What is the impact of Virtuals’ large-scale repurchase?

Written by Ismay

This morning, Virtuals announced that it would transfer the 12,990,427 accumulated from post-bonding transaction revenue toXiaobai Navigation.85 $VIRTUALs will be used to repurchase and destroy related agents in the ecosystem based on the time-weighted average price (TWAP) within the next 30 daysTokenThe top repurchased products include GAME, CANVO,AIXBT 等代币均有超过 20% 涨幅。

At the same time, Virtuals has updated the value accumulation mechanism. The main changes include:

Later pledge tax distribution: 30% is distributed to agent creators, 20% is distributed to agent affiliates, and 50% belongs to agent sub-agents. DAO（Agent subDAO），作为未来治理决策的资金储备；

Creator Reward Collection Method: The reward will be sent directly to the agent deployerwallet.

Agent Affiliates Mechanism: For various trading platforms or interfaces (such as Telegram Bot) and Virtuals ecosystem to achieve revenue sharing, the platform will obtain the promotion of the agent allianceexchangeGenerate 20%, a later pledge tax, to motivateCommunityand subsequent project planning.

Why this upgrade happened and what impact does it have

每个 Virtual 代币都会以 $VIRTUAL 为配对资产创建流动性池（例如 AIXBT/VIRTUAL），平台通过交易手续费积累了大量 $VIRTUAL 作为收入。

However, these revenues cannot be sold directly, otherwise it may cause market panic and damage the ecosystem, because the price drop of $VIRTUAL will affect the proxy tokens linked to it. In addition, if the funds are not properly handled, the platform may face huge tax burdens due to this part of unusable revenue.

Therefore, the platform chose to utilize this income by repurchasing and destroying ecological tokens.

Two types of tokens that benefit

1. Transaction fees are higher than the market value of the token

The repurchase amount depends on the accumulated amount of transaction fees, so tokens with a larger overall trading volume but a relatively lower market value will receive a larger proportional incentive.

For example, tokens like MISATO surged on the buyback news.

2. Tokens with most liquidity in non-VIRTUAL pairing pools

这类代币的计价单位（VIRTUAL）受抛压影响较小，但仍能获得回购带来的激励。例如，$AIXBT 实际获得了约 250 万美元的激励，但由于其主要流动性在其他池中，受 VIRTUAL 抛压影响较小。

The damaged groups

1. $VIRTUAL holders

The $48 million sell-off is a significant amount, as the price of $VIRTUAL benefited from the continued accumulation of transaction fees (equivalent to $48 million in value).

However, now these fees will be converted into cBTC, which will begin to exert selling pressure on the market. The positive cycle that drove $VIRTUAL up has now reversed into a negative cycle.

2. Tokens with only VIRTUAL pairing pool or low trading volume

These tokens receive less incentives and are subject to price pressure from the $VIRTUAL sell-off. Newly issued tokens are particularly affected because they accrue less fee income.

On-chain analyst hitesh.eth We analyzed the top 50 tokens based on their buyback and burn allocations based on their 30-day time-weighted average price (TWAP) and found that some of these tokens have buyback pressure that even exceeds their current market capitalization.

CommunityWhat do you think of this repurchase?

可以说这次升级为 Virtuals 生态带来了更强的价值支撑，但社区却对更新的回购与分配模式表达出了异议，有观点认为 Virtuals 为什么选择出售 $VIRTUAL，而不是直接销毁这些代币。「这种做法与持有者和团队的最佳利益背道而驰，因为团队主动制造了 4800 万美元的抛售压力。对生态系统而言，一部分激励流向了流动性主要位于外部的代理代币，导致资金流出生态系统。」

Crypto KOL Liam said that although Virtuals' conversion of handling fees to cBTC is the right direction of transformation, the platform should significantly reduce handling fees to reduce excessive extraction of the ecosystem. At the same time, the distribution of handling fees should be standardized according to the launch time of the token, so that new and old tokens stand on a fair starting point.

However, the view that "buybacks will bring huge selling pressure" has also been questioned as untrue, because these Agent tokens are paired with $VIRTUAL, and using $VIRTUAL to buy Agent tokens does not sell any $VIRTUAL, but only adds $VIRTUAL to the liquidity pool. If the liquidity pool is denominated in WETH, then $VIRTUAL will be converted to WETH first, but this is not the case this time.

However, this does create indirect selling pressure, as the value of the token increases due to the increase in the number of $VIRTUAL in the liquidity pool, and holders may sell more $VIRTUAL. However, due to the characteristics of the liquidity pool and the price impact, and the low liquidity of many of these tokens, they cannot directly sell all the tokens.

Leftcurve DAO member mcSleuth believes that the announcement will not bring direct selling pressure, and the indirect selling pressure is almost negligible, especially considering that $VIRTUAL has a market value of US$3.6 billion and extremely high liquidity.

The article comes from the Internet:What is the impact of Virtuals’ large-scale repurchase?

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