Authors: Pomelo, ChainCatcher
Recently, the modular blockchain project Celestia, which has attracted much attention, has been embroiled in a trust crisis. "The disclosed $100 million financing was actually an off-exchange OTC coin sale, and the announcement was made at the countdown to a large unlock," these confusing operations have pushed the modular public chain leader Celestia to the forefront of the storm.
The community has questioned Celestia's behavior, suspecting that it may have colluded with VCs or institutions to "drive up the price and sell off" the coins, and before the unlock, announced the OTC coin sale proceeds as financing news to create a positive impression, using information manipulation and other means to guide retail investors to buy in, in order to seek private gains.
In the view of the community, the Celestia Foundation failed to provide necessary transparent disclosure of this off-exchange transaction, instead packaging it as financing news, which misled investors and triggered a trust crisis.
However, as of the time of writing, Celestia has not made any response to the recent controversy.
Countdown to the Unlocking of $1 Billion TIA, Announcement of " $100 Million Financing" May Suspect of Driving Up the Price and Selling Off
On September 24th, the Celestia Foundation publicly announced that it had completed a $100 million financing round, led by Bain Capital Crypto, with participation from Syncracy Capital, 1kx, Robot Ventures, Placeholder, and others, bringing the total amount raised for the project to $155 million.
Following this positive news, the native token TIA of Celestia surged in response, with the price rising from $5.6 to a high of $6.9 on the same day, an increase of over 20%, and currently settling around $6.5.
However, just as the crypto community was celebrating Celestia's massive financing, well-known crypto investor Sisyphus revealed on social media that the announced $100 million financing by Celestia was actually an off-exchange transaction reached several months ago with multiple institutions, with the financing valuation at that time being $3.5 billion. These token shares may face unlocking in October.
Sisyphus also added that if the institutions were able to sell all unlocked assets at a price of $7.5, they would break even.
It was later revealed by users that Sisyphus's real identity was Kevin Pawlak, former head of OpenSea Ventures.
After Sisyphus's remarks, what was originally positive financing news took a turn. In the community's view, Celestia's $100 million financing was actually the proceeds from an off-exchange coin sale several months ago, but was packaged as new financing and announced at the time of the unlock.
These series of operations have angered the crypto community, with the general consensus being that the foundation or team should not disclose off-exchange trading proceeds as new financing, and should not release packaged fundraising news before facing a large unlock, as this raises suspicions of inducing users to buy in and drive up the price for selling off.
According to token unlock data, Celestia will have over 175 million TIA tokens unlocked on October 30th, accounting for a high proportion of 17.68% of the total TIA supply, worth approximately $1.08 billion. This is likely to lead to a significant increase in the market circulation of TIA, thereby causing short-term price fluctuations. According to historical data, large-scale token unlock events often exert downward pressure on the token price.
The off-exchange transaction that was completed several months ago was only announced as fundraising news a month before the token unlock, which raises suspicions that the project or institutions may want to drive up the price for selling off.
In fact, as early as September 7th, Sisyphus had warned on his social media that Celestia had completed a $100 million off-exchange transaction, with the coin price at around $3.5. The team and investors would unlock $1 billion in funds in the next six months.
However, Sisyphus's tweet did not attract community attention until Celestia officially announced the financing on September 24th.
Crypto KOL @Ericonomic posted on social media, suggesting that if Sisyphus's remarks were true, Celestia's $100 million financing event might be another collusion between the project and VC institutions. The project team sold to institutions at a high token price a few months ago, and only announced the so-called financing news a few days before the unlock, making users think that the financing had just occurred. These institutions that bought tokens through off-exchange trading are currently very optimistic about the project, leading to blind follow-up by users.
In response, community user @minjung has a different view, believing that Celestia's off-exchange trading in the secondary market is not a bad thing, and directly cooperating with VC trading institutions helps to mitigate the impact of a huge token unlock. Syncracy Capital, 1kx, Robot Ventures, and other institutions are likely hedging their positions. If it is indeed from the secondary market, it is inappropriate for Celestia to announce this transaction as financing, especially before a major unlock.
The main point of controversy in the community regarding Celestia's recent financing storm is that the project should explain the source of the financing funds.
In addition, off-exchange transactions are common, and there is no problem with announcing them before the unlock. However, the project could have disclosed the funding information in a transparent and reasonable manner, clarifying the project valuation and fund ownership, making it clear that this was proceeds from off-exchange trading rather than financing, and publicly disclosing the relevant information to investors, rather than resorting to deception and misleading tactics.
However, as of September 27th, the Celestia official has not made any response to the financing storm, and ChainCatcher has also not received a response from the official regarding the verification of the financing disclosure in the community.
Celestia's Valuation and Revenue Disconnect?
Celestia is a modular infrastructure designed specifically for Data Availability (DA) networks, which can reduce data costs by 99.9% compared to the largest DA layer, the Ethereum mainnet. The project caused a market frenzy in February of this year due to the TIA token airdrop, with the price soaring to over $21, and was once hailed as a new blue-chip project in the crypto space. As the Layer2 narrative cooled down, the TIA price also began to plummet from its peak, dropping to a low of $3.7, a decrease of 80%.
In addition to triggering a trust crisis for Celestia, the recent financing storm has also revealed the widespread problem of the disconnect between the valuation and actual revenue of crypto projects.
Despite Celestia's valuation reaching $3.5 billion, its potential annual revenue is only estimated to be just over $5 million, a huge disparity that has prompted a reevaluation of the true value of crypto projects.
As early as January of this year, a report showed that Celestia's current data usage rate is 0.1%, with significantly low total costs. Celestia generates approximately 5 TIA or $65 in fees per day. If Celestia's data is fully loaded in the future and the TIA price is calculated at $13, the network could generate approximately $5.2 million in annual fee revenue, which would be 65 times the data released to Ethereum at present.
At that time, Blue Fox also stated that although Celestia's revenue is only in the hundreds of dollars, its diluted market value is very high, and is not much different from the diluted market value of leading L2s with more mature ecosystems and annual revenues in the tens of millions of dollars. The current diluted market value of TIA is approximately $19 billion, which is similar to Arbitrum and exceeds Optimism.
Recent data released by Blockwork on August 6th showed that Celestia's DA data space consumption reached a historical high within the week, with a network utilization rate of 1.5%, accounting for 36% of the DA market share, while Ethereum remains the main player in the DA market.
A company valued at tens of billions of dollars with an annual revenue of only over $5 million indicates a huge gap between valuation and actual value.
Sisyphus also added in a tweet on September 7th that if a product with an annual revenue of only $5 million is bought at a valuation of $3.5 billion, it is not a good deal.
Regarding the overvaluation of projects, crypto investor Kiki stated that currently, the valuation of crypto projects relies too much on future imagination, ignoring the current operational situation. For example, although Celestia has proposed a promising concept of a data availability network, its technology implementation and commercialization still need further verification.
The main reason for this current phenomenon is the lack of a mature valuation system in the crypto industry, with no mature valuation system and a lack of standards and logic in the valuation process. Compared to traditional industries, the valuation of crypto projects relies more on conceptual imagination, market speculation, and investor sentiment, lacking in-depth analysis of fundamental indicators such as operational data and profitability.
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