Aggressive unlocks and a Foundation-heavy distribution have market participants doubtful
Tokenomic announcements are often polarizing, and HumidiFi’s grand unveiling is no exception.
Despite driving 52% of Solana’s DEX trading volume, traders and investors across Solana DeFi have expressed skepticism towards HumidFi after seeing the unlock schedule and distribution of its native token, $WET.
Why are Solana DeFi users calling the $WET tokenomics “abysmal”, and why are project founders calling for more transparency from the network’s leading Prop AMM?
After weeks of anticipation, HumidiFi has announced the tokenomics and utility of its upcoming native token, $WET. Slated for TGE on December 5, following an ICO on the 3rd, $WET will be allocated between the Zero Position Foundation (40%) and the team (25%), with 10% earmarked for the ICO sale and 25% reserved for ecosystem growth.
At launch, 23% of $WET’s total supply will be in circulation, with ~34.7% of the float being comprised of the Zero Position Foundation’s allocation, ~43.4% from the ICO, and ~21.7% coming from “Ecosystem”, which is believed to be an initial airdrop as teased by the HumidiFi 𝕏 account.
The remaining 77% of $WET tokens will be released linearly over the course of two years, with unlocks beginning within six months of TGE.
After insinuating that the Prop AMM wouldn’t “turn its back on the trenches”, HumidiFi’s distribution of $WET tokens has doused the fire of enthusiasm spreading throughout Solana DeFi.
Traders and investors have slammed $WET’s tokenomics, calling the distribution, vesting schedule, and utility everything from “absolute trash” to “the worst tokenomics I have seen in a while”.
Would-be investors’ chief concern lies with the allocations of tokens, and the ambiguity of the receiving parties. Critics argue that there is no differentiation between “Labs”, “Foundation” and “Ecosystem” allocations, implying that 90% of the supply will be controlled directly by the team, enabling them to potentially dump on retail with impunity.
Other contentious issues include the team’s unwillingness to disclose information surrounding its revenues and disappointment regarding the token’s proposed utility. Eshewing the buyback meta, HumidiFi has disclosed that $WET can be staked to earn trading rebates.
Eugene Chen, CEO of Ellipsis Labs, a firm operating Solana’s 2nd-largest Prop AMM, SolFi, has gone so far as to insinuate that $WET could simply be “exit liquidity for the team”. While a fair question, it should be noted that Chen is a direct competitor to HumidiFi.
Jupiter Stakers have also voiced their frustrations, expressing disappointment that only 2% of the supply will be made available to them in the ICO.
Valuations and allocations for the upcoming $WET ICO are still unannounced, compounding cynicism and distrust towards Solana’s leading DEX.
As part of the tokenomics announcement, HumidiFi has confirmed its ties to Temporal, the research and development firm long rumored to be operating the Prop AMM.
Despite an allusion to the firm in HumidiFi’s announcement, Temporal’s accounts and representatives have yet to formally acknowledge its operation of the DEX.
This has prompted a further line of questioning from Jito Foundation Executive Director Brian Smith, who criticized Temporal earlier this week for deliberately lagging block production to boost rewards through its new block marketplace, Harmonic.
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