Solana, a well-known blockchain platform known for its fast transactions and low costs, recently made headlines when it announced the start of $DAVIDO, a new cryptocurrency backed by Nigerian superstar Davido.
This launch was a big step into the world of digital assets backed by celebrities. The goal was to combine Davido’s huge fan base with Solana’s creative skills.
It promoted Solana’s ecology in Afrobeats using Davido’s worldwide reach. A major launch event boosted Bitcoin and social media coverage. Crypto fans acquired $DAVIDO coins immediately, increasing their value. This enthusiasm suggests celebrity endorsements may attract investors and customers.
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The Party Ends: Rapid Valuation Dip
Despite a good start, the anticipation around $DAVIDO didn’t last long. Within 24 hours, the token’s value dropped significantly, which tempered the original excitement. Several factors led to this quick drop, which shows how volatile and risky the Bitcoin market is by its very nature.
It is not the singer’s first crypto rodeo. In November 2021, he launched $echoke on the Binance Smart Chain to “provide access to giveaways, NFTs, festivals, exclusive merchandise, and other entertainment, media, and hospitality benefits.” The short-lived project was soon forgotten.
On YouTube, he also promoted Racksterli, a Ponzi scheme that allegedly defrauded users of ₦1 billion, prompting backlash and arguments for a more responsible use of his star power.
With $Davido, coin holders are coming to terms with the possibility that they may have been victims of a rug pull, a phenomenon where the project developers abandon it and take all the invested funds with them.
“This kind of bad press is not what Davido needs.” “The money he made from it was not worth it,” a crypto expert told news outlets. When asked for comments, Davido’s managers did not reply right away.
Many people who bought the coin were under no illusions that this was a long-term project, but they expected it to ride a wave and at least increase its valuation, allowing holders to profit from it. That would have required the developers to resist the temptation of pulling a pump-and-dump on users.
Why are pump-and-dump schemes prevalent in the crypto world?
In the world of crypto tokens and meme coins, pump-and-dump schemes are par for the course and involve someone or a group of people artificially inflating the price of a token before selling their tokens at those high prices. It leaves anyone who bought into the hype holding the bag.
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Memecoins’ values often go through big jumps before settling down. However, three crypto experts told reporters that the people who support these coins often set them up so that many regular people can also make money. From the start, the people who made the $DAVIDO coin looked ready to make money from coin users.
Several well-known crypto handles started blowing the alarm on Wednesday night, saying that the wallet that created the token had sold off a lot of coins and cashed out $200,000 in just a few hours.
It’s a pump-and-dump plan. An anonymous crypto trader told reporters, “The wallet that launched the token can be tracked and was dumping it live while Davido was tweeting about it.”
According to another coin research handle, the coin’s creators made about $500,000. It caused the coin’s price to crash, leaving users carrying the bag.