Even at a time when major crypto coins are struggling to stay liquid, OKB, the native token of cryptocurrency exchange OKX, is up 100% this year. But its circulating supply, a key metric that determines its market capitalization, is a matter of dispute.
On Coinmarketcap, a crypto data site owned by Binance – the world’s biggest cryptocurrency exchange by trading volume, the token has a circulating supply of 60 million. The same coin has a circulating supply of more than 246 million supply on CoinGecko, another crypto data site. Crypto analytics firm Messari hews to the Coinmarketcap figure of 60 million tokens in circulation.
The massive difference in circulating supply is reflected in confusion about its market capitalization. OKB has a market cap of $2.88 billion on Messari and Coinmarketcap but the same figure jumps to $11.8 billion, as of this writing, at CoinGecko.
A ‘Loyal’ Customer Base
Researchers are puzzled at the discrepancy in figures. Blockworks, an online publication, also authored a long post about the matter. They found that most OKB tokens were, no prizes for guessing, dormant or locked away in inactive addresses on Ethereum’s blockchain.
OKX told them that the CoinGecko figure of 246.6 million was correct and the disparity was because they moved most user OKB tokens from hot wallets – those that are available online – to cold wallets that are disconnected from the Internet for “security” purposes.
The exchange said it had “very loyal” users who preferred to store the utility token rather than trade it in crypto markets. That explanation does not explain the sudden jump in its price in the last couple of months but that’s another story.
Meanwhile, OKX also claims that there is currently “no user demand” to move the tokens. There is much to admire about the loyalty of OKX’s customers. They seem to have stuck by the exchange even amidst its controversies and the repeated arrests of its CEO.
The OKB Story
I dug around a bit to know more about OKB. The token was launched in 2018. The issuer was the OK Blockchain Foundation. Its price mechanisms are like those of BNB – Binance’s native token. This means that its circulating supply is periodically reduced to bump up its price, offering a profitable exit to holders of the token.
The total OKB supply is set at 1 billion. Out of that figure, 300 million was set aside for trading, 300 million was for users and the token’s ‘community’, and 400 million assigned to the OK Blockchain Foundation team and developers at the exchange.
The foundation – holder of the biggest tranche of OKB tokens – seems to have vanished off the face of the earth. Its last mention online is in a 2020 press release, where it announced the latest supply reduction. There is no mention of it on OKX’s website either.
More than a third of OKB’s trading volumes come from its home exchange, meaning an OKX hack, which has occurred in the past, will tank the price and their holdings. Slightly more than 25% of the token’s trading activity at that venue is against controversial stablecoin Tether.
A Worthless Token
A reduced supply is meaningless without an increase in demand. But most crypto tokens serve no purpose beyond speculation or offering the prospect of profits to venture capitalists. Like others of its ilk, OKB is also worthless and its only use case is restricted to perks and trading discounts on OKX.
That gig isn’t going well. OKX, which was earlier called OKEx, had the second biggest trading volumes in cryptocurrencies at one point of time. By 2017, during the time of a bull run in crypto markets, its trading volume were the fifth largest. Now it doesn’t even rank in the top ten crypto exchanges. The exchange has attempted to kickstart a market in OKB and lists several, mostly unknown, services and exchanges with even more dubious credentials than its own, where the token is used.
Back in 2018, OKX also launched a white label service to “nurture a new generation of digital asset exchanges.” In simple words, the exchange was hawking its codebase to parties interested in launching a crypto exchange in the shortest possible time. Among the pre-requisites for that service was the holding of 500,000 OKB, worth about $2.5 million at that time, in online wallets.
Terms of Service
One of the reasons why customers might store their tokens in cold wallets might be for security purposes. But security is useless without proper guarantees. OKX is an unregulated exchange, which gives it carte blanche to author fantastic terms of service. Here are just two gems from the ToS posted on its website:
When the OKX Platform is unable to operate properly because of the following circumstances and the user is unable to access the Services or place or cancel an order, we assume no liability for damages.
we reserve the right to process, cancel, correct, clawback, and/or reverse, any Digital Asset transaction or transfers or cancel abnormal transaction results in our sole discretion, even after funds may have been debited from your account(s)…
Multicoin Capital Is Down
Multicoin Capital, one of the most prominent investor voices in crypto, went down by a whopping 91.4% last year, according to an investor letter seen by CoinDesk. 2022 was their worst year since inception in 2017 mainly because of its exposure to FTX – the latest crypto whipping boy. According to this site, it invested $400 million in FTX’s US operations last January and $900 million in FTX’s token FTT in June 2021.
The hedge fund has been a vocal enthusiast of Helium, a project that uses crypto for Internet access, and Solana, a Layer 2 solution for Ethereum. While the projects have yet to prove their worth, Multicoin Capital made off with profits. Helium benefitted insiders while Solana’s SOL token was reported to be subject of a potential class action lawsuit that listed Multicoin Capital as a defendant.
2023 might bring more bad news for Multicoin, what with gathering storm clouds over Binance. Multicoin capital and Binance are joined at the hip. The exchange invested in the hedge fund in 2021 and Multicoin has held or, perhaps still holds, a significant stash of BNB – Binance’s native token.