In a new report gathered, The new 1INCH token launched on December 25 and listed on Binance has seen its prices plummet just barely three days following its post-launch pump as airdropped tokens get dumped on markets. This is not strange to most new Defi tokens this year, as they have also seen price surges, but an upward spiral of prices from $0.20 to over $2.50 for a few hours on Christmas Day is a new all-time high.

In a surprise twist of fate, and coupled with the volatile nature of Defi Tokens, the price of the token has fallen by at least 60% and currently trades a little below $1.14. The token is not alone in the slip, as it seems its going down with other Defi tokens in a similar fashion.

The tokens were distributed at a giveaway

The token, named 1INCH and running on the Ethereum blockchain, is a DEX aggregator that sources liquidity from various sources, making it possible to spread a single transaction across multiple decentralized exchanges. In the same vein in which Uniswap distributed its governance token, the DEX also had an airdrop for previous platform users.

Tokens were dished out to users that had made at least one trade before September 15, or at least four trades in total, or trades for a total of at least $20. A researcher at the Block, Igor Igamberdiev, in his observation, reported that half of the addresses eligible to claim 1INCH tokens had done so within 24 hours of the launch. He also believed that about 25% of wallet owners sold their tokens at once, and less than 20% had either held or staked them on the protocol.

The Whales are in the driving seat already, Igor Igamberdiev

The token is designed as a protocol governance token with staking abilities, as in the case with many tokens. Igamberdiev, in his research, claims that like every other token, the whales are already in the driving seat as one of the whales already claimed 9.7 million tokens. He notes that the whales already sold6 .7M 1inch on Binance, with the remaining 3 million in the staking contract, should give the whale 80% of the total DAO voting power.

The model of airdropping tokens to incentivize community participation doesn’t work all the time. This is because most of the tokens are sold off as soon as they are received. A related case was that of Uniswap who witnessed UNI prices slump by 70% in the six weeks that followed the airdrop and token launch.

Scenarios like this will often leave the whales with the lion’s share of tokens and in a position to manipulate governance proposals. With 1inch also seeming to have a single whale now in control of what should have been a decentralized governance system, analysts can only hope that this method doesn’t prove to be a colossal failure.