Whales Dominate Plasma Launch Leaving Small Scale Investors Trapped in ‘Gas War’

The recent initial coin offering (ICO) for Plasma, a blockchain project designed for stablecoins, has sparked controversy due to allegations of significant whale domination.

The ICO, structured around the purchase of “units” that guarantee the option to acquire XPL tokens, witnessed a frenzied rush that left many smaller investors struggling to participate.

Plasma’s Launch Triggers ‘Gas War’

Plasma, which touts itself as a “high-throughput, scalable blockchain,” launched its ICO on June 9th with an initial deposit cap of $250 million and a per-wallet limit of $50 million.

The deposit vaults were filled almost immediately, prompting the Plasma Foundation to double the total cap to $500 million. Moreover, reports indicate that at least one account spent close to $100,000 in gas fees alone to ensure participation.

Data from Etherscan reveals a stark concentration of capital. The top 10 wallets secured approximately 40% of the total increased allocation, representing roughly 80% of the original $250 million cap. The ICO ultimately attracted 1,108 holders, highlighting the disparity between the number of participants and the concentration of allocated tokens.

The dominance of whales in Plasma’s $500 million ICO raises crucial questions about the accessibility and fairness of token launches. The exorbitant gas fees and rapid depletion of allocation caps effectively exclude many smaller investors, prompting concerns that this pattern may become the new normal for ICOs.

Notably, Plasma has previously garnered investment from prominent entities including Bitfinex, Tether, and Peter Thiel, as well as Paolo Ardoino, the Chief Executive Officer of Tether and Chief Technical Officer of Bitfinex. This backing undoubtedly contributed to the ICO’s high profile and the subsequent influx of capital.

Market Analyst Opinion

Hitesh, the creator of dyorcryptoapp, is doubtful about Plasma and the upcoming Sonar ICOs. He thinks they are a plan by crypto investors. Furthermore, in a post on X, Hitesh talked about what he called a “Desperate Crypto VCs Game Plan.” This includes ICOs resurfacing as a means for investors to become anonymous public investors and acquire tokens that can be easily sold.

“The most likely success of Plasma ICO will eventually lead us through a massive liquidity crunch period where the whole focus will shift to ICOs on Sonar. These launches will eventually benefit sized-up capital allocators more, while people with less capital will end up just waiting for an alt szn,” Hitesh states on X.

Additionally, market experts argue that substantial investments in Initial Coin Offerings (ICOs) can create systems where agents control access. Consequently, sophisticated methods for transferring funds will likely become increasingly crucial.

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