Soph Token drops 24.97% after $900 million airdrop despite strong TVL growth

• Binance has applied the “Seed Tag” and has begun trading futures with a leverage of up to 75 times.
• On-chain TVL reached $20 million and Dex volume peaked at $47.44 million.
• An additional 20% withdrawal is expected to begin in three months.

Soff’s utility token, Soff, fell 24.97% within 24 hours of its market debut in Vinance, flowing more than $80 million from its market capitalization on several other exchanges.

The sharp decline follows a massive airdrop event, followed by 900 million tokens (9% of total supply of softeners) Unlock and Distribute To early contributors, farmers, ZKSYNC users, and NFT holders.

Airdrops are a common strategy to promote early interest, but often lead to aggressive profit acquisition, especially when token utilities are still limited.

Binance began Soph Trading on May 28th at 13:00 UTC. Announce list via X post May 23rd.

Other exchanges such as OKX, Kucoin, Upbit, Bitget and MEXC also began trading support on the same day.

Soph initially peaked at $0.11 and fell to $0.06 within the same day, recording a 24.97% drop.

Market volatility is driven by limited utility and high leverage

Sov’s early volatility isn’t just the result of unlocked supplies. Binance assigned a “seed tag” to Soph, classifying it as a high-risk token that is prone to volatility.

These tags often warn investors about potential price fluctuations, particularly in new projects.

Additionally, Binance Futures has listed Soph with up to 75x leverage, creating an environment that drives speculative trading and fluctuations in amplified prices.

According to Coingecko, trading volumes have skyrocketed 2,724.8% over the past 24 hours as early recipients of airdrops rushed to sell their allocations.

This has resulted in a large supply overflow that could not absorb current market demand and exacerbate prices.

Sophon is built as a Layer 2 blockchain using Validium Technology and is part of Zksync’s elastic chain roadmap. It is intended to serve as a distributed infrastructure for entertainment applications.

For now, however, Soph’s practical utility remains narrow, primarily limited to gas fees, contributing to the decentralization process of network sequencer.

The lack of immediate use cases appears to have contributed to weak market support during the sale.

Despite the short-term DIP, investors’ interest remains high

Despite the price drop, on-chain metrics show an increase in user engagement.

According to Defillama, Sophon’s locked total value (TVL) rose to $22.8 million on the launch date, up 14.1% from the previous day.

The Decentralized Exchange (DEX) volume reaches $47.44 million, indicating a robust participation in token swapping activities.

While speculative activity dominated the launch, on-chain data shows that interest in the protocol continues to be strong.

The project raised more than $70 million from investors, including Binance Labs, and established itself as a key layer 2 player within the ZKSYNC ecosystem.

The next supply unlocking will be heavily woven in the future. An additional 20% of the total supply of Soph, designated as a node’s reward, will begin unlocking weekly from three months from the token generation event.

If current market sentiment does not improve, or if new utility use cases are not deployed in time, this inflow can cause further negative side pressure.

Roadmap promises more utilities, but Outlook is cautious

Sophone shows he intends to broaden Soph’s use cases in the coming months.

Although no specific dates are offered, the team plans to expand the network’s entertainment applications and distributed tools.

In a recent post, the project team said additional products and services will be launched as part of the long-term roadmap.

For now, however, the token performance is being viewed closely by investors, especially given its sharp debut revision.

Airdrops have historically proven to be double-edged swords. It depicts early adoption, but often at the expense of price stability.

Please share this article

category

tag