Omid Malekan, an author and professor at the Columbia Business School, has raised concerns about the tokenomics practices of recently launched layer-1 blockchains such as Aptos and Celestia. He believes that these practices may eventually attract regulatory scrutiny and crackdowns.
This “Insider” Practice By Crypto Projects Like Aptos And Celestia Is Unfair
In a tweet on January 7, Malekannoted the practice of projects allowing insiders with locked tokens to stake and earn rewards. While the professor acknowledges that increased staking can enhance network security, he finds it “unfair” to allow “insiders” to stake and earn rewards on their locked tokens, as retail token holders must pay full price for the assets.
Insiders, who are often early adopters participating in seed sales or other funding rounds, typically receive tokens at significant discounts, providing them with an advantage and the opportunity to amass substantial amounts of the asset, particularly if the project becomes a market leader commanding high valuations.
Malekan also voiced concerns about insiders being able to sell their staking rewards immediately, sometimes years before their tokens vest. He described this practice as a “backdoor unlock that allows privileged insiders to dump on ordinary users for a quick profit.”
In light of the actions of new projects like Celestia and Aptos, the professor advises upcoming and existing platforms to adjust their tokenomics strategy. He suggests prioritizing long-term sustainability and a path to neutrality for all token holders, rather than rewarding insiders and early investors.
The author is disappointed with the current setup and sees “many red flags.”
SEC And Other Regulators May Soon Step In
If these projects fail to address this concern, the professor warns that regulators, such as the US Securities and Exchange Commission (SEC) and others, will likely intervene. This is significant, considering that most agencies, especially the SEC, have been cautious in their assessment of altcoins beyond Bitcoin (BTC).
Some SEC officials have indicated that only Bitcoin is considered a commodity, suggesting that other cryptocurrencies may be classified as securities under their oversight.
Gary Gensler, in particular, has avoided answering questions about whether Ethereum, the most capitalized altcoin, is a security or a commodity like Bitcoin. This classification could have substantial implications for staking and network security.
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