News
Solana welcomes the $Davido coin, but the party ends quickly as the valuation drops overnight
On his third lap in cryptocurrency, Afrobeats superstar Davido supported and promoted “Timeless Davido,” $DAVIDO a crypto token — or memecoin, depending on who you ask — on Wednesday night. While the utility of the token was unclear (the use cases appeared to be linked to an unknown website and a Telegram group), it was launched on the Solana blockchain and immediately broke through the noise of other obscure crypto tokens.
“Solana just ships. Welcome Davido,” Solana’s Twitter account wrote to the superstar on Wednesday evening as $Davido raced towards a $10 million market capitalization four hours after its launch. It seemed the only way from there was up, with the Grammy Award nominee who endorsed the coin in several tweets.
The excitement was short-lived. By Thursday morning, the valuation of $Davido had dropped by 90, and according to the DEX screener, the coin’s liquidity was at $291,000 at the time of this report.
This isn’t the singer’s first crypto rodeo. In November 2021, it launched $echoke on the Binance Smart Chain to “provide access to giveaways, NFTs, festivals, exclusive products, and other entertainment, media, and hospitality benefits.” The short-lived project was soon forgotten.
He also promoted Racksterli, a Ponzi scheme that allegedly defrauded users of ₦1 billion, on YouTubeand, sparking backlash and arguments for more responsible use of his star power.
With $Davido, coin holders are dealing with the possibility that they have been victims of a rug pull, a phenomenon in which the project’s developers abandon it and take all of their invested funds with them.
“Davido doesn’t need this kind of negative publicity. Whatever money he made, it’s not worth it,” a cryptocurrency expert told TechCabal.
Davido’s management did not immediately respond to a request for comment.
Many people who bought the coin were under no illusion that it was a long-term project, but they expected it to ride the wave and at least increase its valuation, allowing holders to profit from it. This would have required developers to resist the temptation to pump-and-dump on users.
In the world of crypto tokens and meme coins, pump-and-dump schemes are the norm and involve someone or a group of people artificially inflating the price of a token before selling their tokens at those high prices. Leave whoever bought into the hype holding the bag.
Memecoins often have periods of huge jumps in valuation before cooling off, but three cryptocurrency experts told TechCabal that in many situations, promoters of those coins structure them so that even many ordinary users can profit from them. For the $DAVIDO coin, the creators appeared to be willing to profit at the expense of coin holders from the jump.
Several major cryptocurrency managers began raising warning signs Wednesday evening, claiming that the wallet that created the token had sold a significant amount and raked in $200,000 in just a few hours.
“It’s obviously a pump and dump scheme. The wallet that launched the token is traceable and was downloading the token in real time as Davido was tweeting about it,” a cryptocurrency trader who asked to remain anonymous told TechCabal.
Another coin analysis tool claimed that the coin’s creators had made around $500,000 in just under 24 hours, causing the coin’s price to plummet and leaving users holding their hands.