Arthur Hayes has advised crypto project founders to open their token generation events (TGEs) at lower prices to avoid market instability. Citing Berachain coin’s (BERA) recent price drop, Hayes wants projects to build ecosystems where users can experience a “wealth generation journey.”
In an X post today, Hayes shared a screenshot of the BERA price chart on Coingecko, which showed that the crypto had gone down 13% in the last 24 hours. The BitMex co-founder made the comparison with launching inflated valuations for short-term gains.
Berachain, described as a layer 1 (L1) blockchain network, officially launched on February 6. The launch came after more than a year of planning and securing millions in funding. The project, which evolved from the Bong Bears NFT collection, introduced a Proof of Liquidity consensus model. To that end, it distinguished itself from traditional proof-of-stake systems.
Arthur Hayes: BERA TGE price was ‘too damn high’
Hayes has suggested that high initial valuations often lead to rapid sell-offs, hurting long-term market confidence.
Great advice to these sheep fleecers. I hope it goes to zero. They will never learn
— Polycarpus.eth (@Iam_Polycarp) February 10, 2025
When a crypto project inflates its token valuations immediately after a TGE, it can create a host of problems. This ultimately undermines investor confidence and the project’s long-term viability. One of the primary scares for investors diving into such projects is the risk of a “pump-and-dump” scheme.
Additionally, high valuations during ICO events, without corresponding progress in development or adoption post-exchange listing, typically translate to a lack of transparency. What else? A fraudulent intent.
In most cases, such projects prioritize short-term gains over long-term growth, leading to a collapse when FOMO finally kicks in, and the hype fades. As one crypto X member commenting on Hayes’ opinion explained, it’s retail traders that “always get hurt the most” by this.
VCs profit the most from high initial token valuations
Analysts and crypto community members argue that in recent times, founders of most new projects prioritize personal and venture capital (VC) profits over project stability.
One comment read: “If the goal of the founders is to make money for VCs and themselves, this is usually what they do.” They continued, “Will it kill the project for a good 6-8 months? Sure. They don’t give a shit because they can always revive the markets when they want, using a small fraction of the money they made early on.”
Another trader suggested a different approach – pushing for a “full TGE” model with no lockups. This approach, they reiterated, would create a healthier supply-and-demand dynamic. In the end, it will prevent price manipulation and force teams to focus on actual project development.
“Market appreciates on its own, basic supply/demand dynamic. Team is then forced to focus on driving usage, engagement, growth.”
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