This morning, BlockBeats announced that it will use the 12,990,427.85 $VIRTUAL tokens accumulated through post-bonding transaction revenue to repurchase and burn related proxy tokens in the ecosystem based on the time-weighted average price (TWAP) over the next 30 days. The tokens with the highest repurchase volume, such as GAME, CANVO, and AIXBT, have seen over 20% gains.
Meanwhile, BlockBeats has updated its value accumulation mechanism, with the main changes including:
Post-bonding tax distribution: 30% allocated to Agent Creators, 20% to Agent Affiliates, and 50% to the Agent subDAO as a governance fund reserve;
Creator reward payout: Rewards will be sent directly to the deployer's wallet.
Agent Affiliates mechanism: Revenue sharing with trading platforms or interfaces (e.g., Telegram Bot) that integrate with the BlockBeats ecosystem, with affiliates receiving 20% of the post-bonding tax generated by the transactions they facilitate.
Reasons for the upgrade and its impact
Each Virtual token is paired with $VIRTUAL to create a liquidity pool (e.g., AIXBT/VIRTUAL), and the platform has accumulated a large amount of $VIRTUAL from transaction fees.
However, these earnings cannot be directly sold, as that could cause market panic and damage the ecosystem, as a drop in the $VIRTUAL price would affect the associated proxy tokens. Additionally, if the funds are not properly managed, the platform may face a significant tax burden on the unusable revenue.
Therefore, the platform has chosen to use the repurchase and burning of ecosystem tokens to utilize these earnings.
Benefiting tokens
1. Tokens with high transaction fees relative to market cap
The repurchase amount depends on the accumulated transaction fees, so tokens with relatively low market caps but high trading volumes will receive a larger proportion of the incentives, such as MISATO.
2. Tokens with most liquidity in non-VIRTUAL pairs
These tokens are less affected by the selling pressure on VIRTUAL, but still benefit from the repurchase incentives. For example, $AIXBT received around $2.5 million in incentives, but its main liquidity is in other pools, so it is less impacted by the VIRTUAL selling pressure.
Affected groups
1. $VIRTUAL holders
The $48 million in selling pressure is significant, as $VIRTUAL's price has previously been supported by the continuous accumulation of transaction fees (equivalent to $48 million in value). However, these fees will now be converted to cBTC, exerting selling pressure on the market. The positive feedback loop that drove $VIRTUAL's rise has now reversed into a negative cycle.
2. Tokens with only VIRTUAL pairs or low trading volumes
These tokens receive smaller incentives but have to bear the price pressure from the $VIRTUAL selling. The impact is particularly severe for newly launched tokens, as they have accumulated less transaction fee revenue.
Chain analyst hitesh.eth analyzed the top 50 tokens based on the 30-day TWAP repurchase and burning allocation, finding that the repurchase pressure on some tokens even exceeds their current market cap.
How does the community view this repurchase?
While the upgrade strengthens the value support for the BlockBeats ecosystem, the community has expressed concerns about the updated repurchase and distribution model, questioning why BlockBeats chose to sell $VIRTUAL instead of directly burning the tokens. "This approach is at odds with the best interests of holders and the team, as the team is actively creating $48 million in selling pressure. For the ecosystem, a portion of the incentives flow to proxy tokens with liquidity primarily outside the ecosystem, leading to a capital outflow."
Crypto KOL Liam stated that while BlockBeats' decision to convert the transaction fees to cBTC is the right direction, the platform should significantly reduce the transaction fees to minimize the over-extraction from the ecosystem. Additionally, the fee distribution should be standardized based on the token launch timeline to ensure a level playing field for new and old tokens.
However, the view that "the repurchase will bring massive selling pressure" has also been questioned, as these Agent tokens are paired with $VIRTUAL, and using $VIRTUAL to buy Agent tokens does not involve selling any $VIRTUAL, but rather adding it to the liquidity pool. If the liquidity pool is denominated in WETH, then $VIRTUAL would first be converted to WETH, but this is not the case here.
Nevertheless, this will indirectly create selling pressure, as the increased $VIRTUAL in the liquidity pools will increase the token's value, potentially leading holders to sell more $VIRTUAL. However, due to the characteristics of the liquidity pools and the price impact, and the fact that many of these tokens have low liquidity, they are unlikely to be able to sell all their tokens directly.
Leftcurve DAO member mcSleuth believes the announcement will not bring direct selling pressure, and the indirect selling pressure is almost negligible, especially considering $VIRTUAL's $3.6 billion market cap and high liquidity.
Join the official BlockBeats community:
Telegram subscription group: https://t.me/theblockbeats
Telegram discussion group: https://t.me/BlockBeats_App
Twitter official account: https://twitter.com/BlockBeatsAsia