Professor: Keep an eye out for emerging cryptocurrency projects like Aptos and Celestia

Introduction:
Cryptocurrency markets are abuzz with excitement as new layer-1 blockchains like Aptos and Celestia gain momentum. However, concerns have been raised by Omid Malekan, an esteemed author and professor at the Columbia Business School. In this post, we delve into Malekan’s insights regarding a potentially problematic tokenomics practice adopted by these emerging projects and the looming regulatory challenges they might face.

Heading 1: Unfair Tokenomics Practices Raise Concerns
Omid Malekan’s observations, shared on January 7, shed light on what he terms an “insider” practice among crypto projects like Aptos and Celestia. This practice involves allowing insiders with locked tokens to stake and earn rewards, a move that Malekan considers unfair to retail token holders who have to pay full price for their assets.

Bullets:

  • Malekan acknowledges the positive impact of increased staking on network security.
  • Criticizes the practice of insiders staking and earning rewards on locked tokens as unfair.
  • Highlights that insiders often receive tokens at massive discounts during early funding rounds.
  • Expresses concern about the potential for insiders to become significant holders, creating an uneven playing field.
  • Objects to insiders selling staking rewards immediately, terming it a “backdoor unlock” for quick profits.

Heading 2: Call for Adjustment in Tokenomics Strategy
Malekan urges upcoming and existing crypto platforms, including Celestia and Aptos, to reevaluate their tokenomics strategy. He emphasizes the need to prioritize long-term sustainability and fairness for all token holders, steering away from rewarding insiders and early investors.

Bullets:

  • Advises projects to focus on creating a tokenomics strategy that benefits all token holders, fostering long-term sustainability.
  • Encourages a shift away from practices that disproportionately benefit insiders and early investors.
  • Warns about the presence of “red flags” and expresses disappointment in the current state of affairs.

Heading 3: Regulatory Threats Looming
Malekan warns that failure to address these concerns might attract the attention of regulators, including the strict U.S. Securities and Exchange Commission (SEC). Despite the SEC’s careful approach towards altcoins, Malekan suggests that intervention could be imminent, potentially affecting the entire crypto space.

Bullets:

  • Highlights the SEC’s cautious stance on altcoins and its classification of Bitcoin as a commodity.
  • Expresses the possibility of other cryptocurrencies being classified as securities, impacting staking and network security.
  • Points out the ambiguity surrounding Ethereum’s classification and the potential regulatory implications.

Conclusion:
As Aptos and Celestia continue their upward trajectory, Malekan’s cautionary words serve as a reminder for the crypto community to address tokenomics practices that may invite regulatory scrutiny. The importance of fair and sustainable strategies cannot be overstated, especially in an industry where innovation coexists with regulatory challenges. As the crypto landscape evolves, staying attuned to these concerns becomes imperative for the long-term success of projects and the overall health of the cryptocurrency ecosystem.

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