Worldcoin Market Making Deal Update

Everything That You Need to Know

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Worldcoin Market Making Deal Update
Everything That You Need to Know

  • The old MM agreement has been criticized for giving incentives for MM to suppress WLD price and volatility.

  • WLD token loans given to MM decreased from 75M to 10M WLD.

  • The new MM deal doesn’t include an option to purchase WLD at the end of the agreement.

  • After six months, MM must return the loans in full.

  • WLD token price soared by 60% in the past week.

When Worldcoin launched on July 24, 2023, World Assets Ltd, a subsidiary of the Worldcoin Foundation, entered into loan agreements with five trading firms operating outside of the US. Collectively, the five entities received loans of 100M WLD.

  • The goal of the deal was to ensure sufficient liquidity for WLD traded on CEX outside the US, to facilitate price discovery, and to enhance the price stability of WLD.

Those loans were due to expire on October 24, 2023, but the loan agreements were extended to December 15, 2023. The extended agreements reduced the loan amount to 75M WLD in total with the terms of the agreements unchanged.

  • On October 24, 2023, the market makers had to return 25M WLD of the currently outstanding loan. Alternatively, they may elect to purchase any amount of tokens up to the loan amount to be returned.

Before October 24, the circulating supply of WLD was at ~135M and reduced to ~110M on October 26 according to Worldcoin’s Dune dashboard

  • The data shows that the market makers might choose not to purchase the 25M WLD and return it to World Assets Ltd.

Before December 15, the circulating supply of WLD was at ~122M and reduced to ~100M on December 17 according to Worldcoin’s Dune dashboard

  • The loan was 75M WLD and the drop in circulating supply was only 22M, meaning that the market makers might have opted to buy ~50M of WLD. 

Source: Worldcoin’s Dune dashboard

The purchase price per WLD is determined by the formula in the original agreements which is $2.00 + ($0.04 * X), where X equals the number of tokens bought divided by one million, as per the initial agreements.

  • If the formula from Worldcoin is applied, the market makers might buy WLD at the price of $2 + ($0.04 * 50M/1M) = $4.

  • However, on December 8, The Block reported that Worldcoin was offering WLD for $1 to raise $50M

On December 16, World Assets Ltd. entered new loan agreements with the same five trading firms. Under these agreements, the five entities will receive much smaller loans than before, now totaling 10M WLD, for six months.

  • In these new agreements, the market makers do not have the option to purchase any WLD from World Asset Ltd.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.