Step Finance Token Launch Spurs Complaints After 200x Rise
One of Solana’s most anticipated projects has shot up in value after its token launch this weekend. However, some early supporters aren’t happy.
Step Finance’s STEP token soared almost 200x on release over the weekend, but some followers have complained that the launch was unfair.
STEP Launch Proves Divisive
Step Finance, a popular project within the Solana ecosystem, has caused a stir after its native token launched on Saturday.
STEP was initially priced at $0.05 but began trading as high as $9.50 on Sunday night. Within 12 hours, Step Finance had attracted around $64 million in liquidity.
Even in DeFi terms, the near 200x rise in a matter of hours is staggering. Step Finance is also a brand new project: it recently launched off the back of a Solana hackathon, and its app is currently in alpha mode. After the token launch, there are currently 4 million of a maximum 1 billion STEP tokens in circulation—only 0.4% of the total supply.
They’re trading at $6.82 today, which puts Step Finance’s Fully Diluted Valuation (FDV) at $6.8 billion.
Step Finance acts as “the front page” for Solana. It provides an interface that allows users to view their transactions and activity in one place, similar to Ethereum apps like Zapper and Zerion.
STEP traded above $1 within seconds of going live, which has led some to criticize how Step Finance executed the launch. Replying to a Twitter post Step Finance shared on Saturday, several of the project’s followers shared their complaints.
One user posting under the pseudonym CryptoWaifuu said it was “not the best and most transparent launch.” Another called AChuieb commented that it was the “worst launch” they’d ever seen. Many of the comments suggested that bots had infiltrated the sale to get hold of the tokens at $0.05 on release.
George Harrap, Step Finance co-founder, defended the launch process in a statement to Crypto Briefing. He said:
“All capital is treated equal at STEP. We don’t discriminate or care if one address with 1 USDC is any different to another with 1 USDC. Limiting these addresses in search of ‘fairness’ is literally the opposite of the definition of the word fair. There were 26,000 participants at launch, these individual addresses are indistinguishable from a ‘bot.’ Nobody has even been able to point to a smart contract on Solana which is a bot, and even if they did as per the above we don’t treat them any differently, that’s fairness.”
Although many have pointed to bots as a reason for the sudden surge, no clear evidence of bot activity has been found.
The STEP launch was executed via an Initial DEX Offering (IDO), meaning the tokens are put up for sale through a decentralized exchange. STEP was made available on Raydium, a new Solana protocol. According to STEP’s tokenomics page, 11.78% of the supply went to investors in a presale, though this allocation is subject to vesting.
Despite the divisive launch, many Step Finance supporters celebrated the returns paid in Raydium’s STEP/USDC liquidity pool. At one point last night, liquidity providers were earning 6,692.33% APR.
So ummmm….STEP/USDC Staked @RaydiumProtocol LP rewards now showing on Step Dashboard…..
You know how we show compounded APYs for APRs right
so like…..how do you pronounce this number? 🙃$STEP pic.twitter.com/jkrtuNyzCD
— Step Finance (@StepFinance_) April 25, 2021
DeFi is known for paying generous yields that far surpass the traditional finance world.
The phenomenon helped define 2020’s DeFi summer when Ethereum users rapidly moved assets between liquidity pools to take advantage of “yield farming” opportunities. With apps like Step Finance growing rapidly, some have forecast a similar craze playing out for the Solana ecosystem in 2021.
While other tokens looked shaky throughout last week, Solana’s SOL token rose by more than 40%. Its market cap is now $12.45 billion, making it the 14th most valuable cryptocurrency. Serum’s SRM token, meanwhile, is up 63.2% in the last 24 hours.
Many such tokens have affectionately been dubbed “Sam coins,” owing to cult crypto figure Sam Bankman-Fried’s involvement in each project. Bankman-Fried runs Alameda Research, which has invested in Step Finance and many other Solana projects.
It remains to be seen how an extended Solana season would impact the rest of the cryptocurrency market. The project faces an uphill battle to topple its biggest rival, Ethereum, which is still the main hub for DeFi today. In 2021, Ethereum will ship EIP-1559 and Proof-of-Stake, while Layer 2 solutions like Polygon continue to pick up the pace. Soon, the rollup solutions Optimism and zkSync will also go live.
Still, with so many projects like Step Finance grabbing attention, it’s hard to see the Solana ecosystem failing anytime soon.
Disclosure: At the time of writing, the author of this feature owned ETH, MATIC, and several other cryptocurrencies.
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