SOPHON’s utility token, SOPH, experienced a sharp decrease of more than 33% within 24 hours of debut.
The basic driver of the price plunge seems to be an air drop of 900 million soft tokens, and 9%of the total supply was released when firing.
Why is the price of SOPH fall?
Depending on the situation, SOPHON is a layer 2 ZK (zero knowledge) blockchain built on the Validium technology and ZKSYNC’s elastic chain vision. Designed as a consumer -centered platform that targets entertainment applications. Blockchain provides high throughput, low fees, and Etherrium levels.
The project has raised more than $ 70 million from prominent investors, including Binance Labs. On May 23, Binance published a list of SOPH through X (previous Twitter) posts.
Binance said, “We are pleased to announce that Binance will be the first platform to introduce SOPHON (SOPH).
The transaction began at 13:00 UTC on May 28. On the same day, SOPH began to display a wide range of rollouts on other major exchanges, including OKX, KUCOIN, UPBIT, BITGET and MEXC.
According to Coingecko’s data, the token rose to an all -time high of 0.11 immediately after its launch. But after that, there was a steep drop. Last day, the price of the Sop was depreciated by 33.3%. At the time of writing, Altcoin was traded for $ 0.06.
This decrease also disappeared more than $ 80 million in its market cap. In addition, the volume of trading increases by 2,724.8%, indicating a large distribution by the initial air drop receiver.
In the Token Generation event, SOphon unlocked 9%of SOPH’s total distribution. This included 6%of 6%hierarchy and initial contributors, ZKSYNC users and NFT holders.
In particular, air drops often cause short -term prices due to increased supply. This is especially true if the token’s utility is not yet fully established.
The immediate utility of SOPH is limited to gas fees and sequencer decentralization. Therefore, this may not yet provide enough demand for balancing air drop driving sales.
SOPHON said, “We expect that utility will evolve over time as the new utility is integrated with our new utility as we grow.
In addition to volatility, Binance has a “seed tag” to SOPH. The seed tag is a classification of cryptocurrencies that are more risk and volatile than other tokens. In general, we identify new projects that are more likely to change more price.
In addition, EXCHANGE amplifies price fluctuations by introducing futures transactions for SOPH with up to 75 times leverage. Given these factors, the market sentiment surrounding SOPH remains weak.
That’s not everything. Three months later, 20%of the SOPH supply assigned by node rewards begins to unlock each week. If the market sentiment is not improved, this can also be lowered.
Nevertheless, the hot chain activity provides some optimism. According to DEFILAMA’s data, SOPHON’s total value lock (tvL) has reached $ 22.8 million today.
This reflects a 14.1% increase from the previous day. Distributed exchanges also reached the highest record of $ 44.4 million.
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