The launch of Berachain’s BERA token has reignited debates over venture capital-backed (VC) coins, with critics pointing to its low circulating supply and high fully diluted valuation (FDV) as key concerns.
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The Controversy
- After an initial 71% surge, BERA plunged 63%. This raised concerns that its low float—just 15% of total supply—created artificial scarcity before a sell-off.
- Traders argue the tokenomics favor early investors while exposing retail participants to volatility. This is similar to past issues face by other projects like Starknet.
- With a fully dilluted valuation of 2.7 billion, critics say excessive valuations driven by VC funding inflate prices before launch, benefiting insiders at the expense of regular investors.
Market reaction:
- Investors like Moonrock Capital’s CEO Simon Dedic claim high-FDV tokenomics are unsustainable.
- Dedic warned that they primarily enrich VCs, market makers, and centralized exchanges.
- Some experts advocate for community rounds to allow early supporters to enter at fairer valuations rather than dealing with inflated FDVs post-launch.
- Hack VC’s Ed Roman, an investor in Berachain, argues FDV is set by the market, not the project itself, and points to BERA’s 21% float being higher than many competitors.
In a highly charged post on X, BitMEX founder Arthur Hayes recommended founders to work with market makers and exchanges so that their tokens will open at lower prices.
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This article is published on BitPinas: Quick Take: Why Berachain’s BERA Token Is Facing Backlash Over VC Influence
Sources: The Block, Defiant News
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