PATNA (CoinChapter.com) — Solana’s Pyth Network airdrop occurred on Nov. 21. The next day, its price crashed. Does it sound like another free crypto token selloff?
Why is Pyth Network Airdrop Such Mess?
The PYTH token debuted with a market cap of $468 million after the project issued an airdrop to 90,000 wallets. Eligible traders must claim their free crypto tokens within 90 days of issuance. So far, this airdrop is one of the largest of its kind, targeting stakeholders across 27 blockchains and over 200 decentralized applications (dapps).
The Pyth Network’s airdrop token spiked to $0.55 post-launch on Nov. 20 but immediately corrected by 49% to $0.28 a day later. It now costs $0.40 — indicating huge price volatility notorious amid free crypto tokens distributions.
The recovery in PYTH price likely resulted from news of crypto exchange Bitget listing the Pyth Network token. Listings often serve as a bullish cue since they open up a new user base for the crypto asset.
PYTH’s real-time market data and cross-chain compatibility aligns with our commitment in offering innovative and reliable tools for traders.
Gracy Chen, Managing Director of Bitget, said
Traders usually end up selling airdropped tokens for profit, which is likely what happened to the Pyth Network.
Airdrop Tokens Do Not Last Long
Airdropping crypto tokens is a marketing strategy that involves sending a certain amount of cryptocurrency to eligible wallets. Eligibility often depends on early interactions with the project airdropping the tokens.
Ideally, projects expect recipients to hold onto the tokens airdropped to them. However, reality usually hits hard, and often, most tokens see a price plunge after an airdrop.
For instance, BLUR, the native token of its namesake NFT marketplace, went from $5.76 per token in Feb. 2023 to trade near $0.49 in March 2023, following three rounds of airdrops.
Several other free crypto tokens, such as Fight Out (FGHT), Tamadoge (TAMA), etc., witnessed similar price crashes following their airdrops. There are always some exceptions to the rule, but generally, airdrop recipients choose to dump their tokens soon after the airdrop.
What Is Pyth Network?
Pyth Network is a specialized blockchain-based platform that aims to provide high-fidelity financial data. The platform aims to compete with Chainlink by offering data with a higher refresh rate.
Pythnet claims to refresh its data every 300-400 milliseconds, while Chainlink’s refresh rate can be in minutes or hours.
The project originally launched on the Solana Network before moving on to its chain, Pythnet, based on Solana. Pyth Network has become the fourth largest oracle project, with over $1.57 billion in Total Value Secured (TVS), per data from DefiLlama.
TVS is a metric that measures the adoption of oracle networks by showing the value directly secured by the inputs provided by the oracles.
Pyth Network’s airdrop token has a self-reported circulating supply of 1.5 billion tokens and 10 billion tokens.
Typically, an airdrop acts as a bullish cue for the underlying blockchain on which the project is built. However, that was not the case for Solana, which declined more than 16% between Nov. 20 and Nov. 21 before rallying nearly 6% to reach a daily high near $56 on Nov. 22.
