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, etc.TokenAll of them have increased more than 20%.
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), as a reserve of funds for future governance decisions;
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), the platform accumulated a large amount of $VIRTUAL as income through transaction fees.
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
The unit of account (VIRTUAL) of such tokens is less affected by selling pressure, but still receives incentives from buybacks.AIXBT actually received about $2.5 million in incentives, but because its main liquidity is in other pools, it is less affected by VIRTUAL's selling pressure.
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?
It can be said that this upgrade has brought stronger value support to the Virtuals ecosystem, butCommunityHowever, they expressed their disagreement with the updated repurchase and distribution model. Some people thought that why Virtuals chose to sell $VIRTUAL instead of destroying these tokens directly. "This practice runs counter to the best interests of holders and the team, because the team actively created $48 million in selling pressure. For the ecosystem, part of the incentives flowed to the proxy tokens whose liquidity is mainly located outside, causing funds to flow out of the ecosystem."
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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