Original | Odaily

Author | Loopy Lu

On August 1st, Binance announced that Binance Launchpool will launch CyberConnect's token CYBER on August 15th. Since its launch, CYBER has become the market focus in unexpected ways.

CYBER first set a record high price of $36 on the CEX in South Korea, with a premium of up to 120% compared to other mainstream trading platforms. Then, at lightning speed within 12 hours, it passed the "Ultravires" governance proposal - unlocking tokens with a super circulating supply. During this period, there was even the presence of the leading market maker DWF. In the following text, Odaily will take you to review this absurd drama that happened over the weekend.

Highest Premium of 120%, Controversy over Low Circulating Supply

According to the token economics of CYBER released by Binance, the total supply of CYBER is 100 million, of which 9% is for community rewards, 34% is for ecological development, 25.12% is allocated to private investors, 15% is allocated to the team and advisors, and 10.88% is included in the community treasury. CoinList and Binance Launchpool each allocate 3% of the tokens.

The initial circulating supply is very small compared to the total supply, with only 11,038,000 CYBER tokens, accounting for 11.04% of the total tokens.

At the beginning of Launchpool, the listing of this token did not attract much market attention. However, about a week after the launch, the listing of CYBER on Upbit made the project instantly "exciting".

On August 22nd, Upbit started trading CYBER. According to Coingecko data, the CYBER/BTC trading pair on Upbit currently accounts for more than 10% of the CYBER market share, making it the second largest trading pair for CYBER in terms of trading volume. Yesterday, this data even briefly exceeded 20%.

The price of CYBER has been soaring along with the active trading enthusiasm of Korean investors. At its peak, the price of CYBER was approximately four times what it is now.

However, this price exists only in the Korean market. The "kimchi premium" has once again brought some minor Korean shocks to the market.

On Upbit, CYBER reached a high of approximately $36. On Binance, the highest price of CYBER was only $16.2. The premium rate on Upbit was about 120%.

CYBER/BTC trading pair on Upbit

According to the official explanation from CyberConnect, the main trading platforms in South Korea only support CYBER deposits and withdrawals on the Ethereum platform. Due to the lack of liquidity for CYBER on Ethereum, this has resulted in price differences.

However, an interesting fact is that at the time of the proposal, the circulating tokens for CYBER include approximately 5.64 million CYBER-ETH, 2.4 million CYBER-OP, and 3 million CYBER-BSC.

Despite Ethereum's network accounting for more than half of the circulating supply, it is still confusing why there is such a high premium for CYBER. Are there no other reasons?

One possible explanation could be the significant holdings by Upbit. According to monitoring by 0xScope, on-chain data shows that Upbit's wallet address holds over 3.6 million CYBER tokens. This quantity represents 33% of the circulating supply.

As the largest holder of CYBER tokens, Upbit's holdings exceed those of Binance.

On one hand, this reflects the enthusiasm of Korean traders towards CYBER. On the other hand, CYBER also carries risks of concentrated holdings and high control of the market.

Another revealing move further strengthens these concerns. On August 31st, well-known crypto market maker DWF Labs deposited 40,000 CYBER tokens into another leading Korean market, CEX Bithumb, with a market value of approximately $360,000 at the time. If calculated at the historical high point of $36 per token, the value would exceed $1.44 million.

Coincidentally, within 24 hours after DWF entered the market, CYBER experienced a rapid rise and reached its historical high point in 48 hours.

Unlocking over 100% of token circulation: a misunderstanding

Yesterday morning, CyberConnect's governance proposal quickly extinguished the just-started carnival. CyberConnect has released an emergency proposal "CP-1". CyberConnect believes that due to the lack of CYBER cross-chain bridges on multiple chains, CYBER lacks multi-chain liquidity, resulting in high premiums for CEX. To address this issue, token unlocking will be used to balance liquidity and solve CYBER's liquidity imbalance between Ethereum, Optimism, and BNB Chain networks.

Implemented in three specific steps:

• Deploy the CYBER-ETH, CYBER-BSC, and CYBER-OP bridges supported by LayerZero's ProxyOFT.

• The Cyber DAO treasury will unlock CYBER and use it to provide liquidity for such bridges. The unlocked CYBER in the treasury is used to maintain the liquidity of the bridging service. Providing bridging services will not affect the total supply of CYBER.

  A total of 7,000,000 CYBER-BSC and 3,888,000 CYBER-ETH will be unlocked.

• Balance chain liquidity by burning and minting tokens. For example, when the CYBER-ETH in the treasury is depleted, new CYBER-ETH will be minted and an equivalent amount of CYBER-BSC or CYBER-OP will be burnt.

As soon as the proposal was made, CYBER plummeted.

According to Coingecko data, the total circulating supply of CYBER is only about 11 million tokens. This unlocking will release 10.88 million tokens in one go, which is approximately the entire circulating supply. CYBER investors were shocked.

After the proposal was released, CYBER fell by 67% on Upbit and by 26% on Binance within one hour.

However, a reversal occurred after the crash. The astronomical token unlock turned out to be a mistake.

After confirming with CyberConnect, official personnel stated that the unlocking quantity of CYBER in the treasury should be only 1.08 million tokens. The 10.88 million tokens described in the Snapshot were a typo. Although the on-chain vote has passed, it will temporarily not be executed due to the data error.

Subsequently, CyberConnect issued a public statement stating that there was an error in the proposed amount of CYBER unlocking. The proposal has been declared invalid. They also announced that a new proposal will be introduced to address the issue of insufficient liquidity mentioned earlier.

“Centralized” Community Voting Farce

In its announcement, CYBER pointed out that "despite the swift repeal of the proposal by the official, it has not stopped rumors in the market, triggering panic, uncertainty, and scrutiny about CYBER."

At the same time, they also addressed the most concerned question from the community: they "assured the community" that "the rumors about market manipulation of CYBER tokens are baseless."

However, this proposal has further fueled dissatisfaction within the community. Despite the promise that market manipulation is a baseless rumor, this proposal undoubtedly reinforces the impression of "centralization" for CYBER, which is not desirable for a cryptocurrency project.

For a cryptocurrency project, "decentralization" is the stance that every project (claims to) adhere to. Yet, on CyberConnect, we witness a scene that is both ridiculous and absurd:

A user named "cybergov.eth" (cyber governance) initiated a voting with a validity period of only 12 hours. Only one user cast a vote that accounted for 87% of the total votes.

With the support of an overwhelming majority of users, the proposal was quickly passed, but it was subsequentlyrejected by the official due to a drafting error.

Indeed, such an absurd vote ultimately ended in failure. If the governance proposal had succeeded, wouldn't it have become a "self-written, self-directed, self-performed" farce?

In the current world of blockchains, "centralized" governance is still the common choice for the majority of projects.

What will happen next?

According to Chain Analyst Yu Jin's monitoring, starting from August 29th (CYBER price at $7), the CYBER holdings in the Upbit wallet have been continuously increasing until noon on September 2nd (CYBER price at $13), when the Up.bit wallet reached its peak holding of approximately 3.947 million tokens. It was during this time period that the price of CYBER soared.

Now, the pressure is on Binance - Upbit's CYBER has flowed out 3.6 million tokens, with the majority flowing into Binance. It's hard not to suspect that this is a script for price manipulation. Will the same drama be staged on another CEX?