Author: Pomelo, ChainCatcher

Recently, the modular blockchain project Celestia has been embroiled in a trust crisis. The disclosure of a $100 million financing was actually an off-exchange OTC coin sale, and the announcement of a large-scale unlock countdown has led to a series of confusing operations that have put the leading modular public chain Celestia in the spotlight.

The community has questioned Celestia's behavior, suggesting that there may be collusion with VCs or institutions to artificially inflate the coin price and sell off before the unlock. In the days leading up to the unlock, the OTC coin sale proceeds were announced as financing news to create positive sentiment, using information manipulation to guide retail investors to buy in and profit from it.

In the eyes 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 responded to this controversy.

Countdown to the Unlocking of $1 Billion TIA, Announcement of " $100 Million Financing" May Involve Artificially Inflating the Coin Price

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, a 20% increase, and currently settling around $6.5.

However, while the crypto community was celebrating Celestia's substantial financing, well-known crypto investor Sisyphus revealed on social media that the announced $100 million financing by Celestia was actually the proceeds of an off-exchange transaction reached several months ago with multiple institutions, with a valuation of $3.5 billion at the time. These token shares may face an unlock in October.

Sisyphus also added that if the institutions were able to sell all unlocked assets at $7.5, they would break even.

It was later revealed 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 eyes of the community, Celestia's $100 million financing was actually the proceeds of an off-exchange coin sale from several months ago, packaged as new financing and announced just before the unlock.

This series of operations has angered the crypto community, with many believing that the foundation or team should not present off-exchange transaction proceeds as new financing, especially by releasing packaged fundraising news before a large unlock, which raises suspicions of inducing users to buy in and artificially inflating the price.

According to token unlock data, Celestia will have over 175 million TIA tokens unlocked on October 30th, accounting for 17.68% of the total supply and worth approximately $1.08 billion. This is likely to lead to a significant increase in TIA's market circulation, potentially causing short-term price fluctuations. Based on historical data, large-scale token unlock events often exert downward pressure on the token price.

The off-exchange transaction, which was completed several months ago, was only announced as fundraising news a month before the token unlock, raising doubts about the motives behind the project or institutions attempting to artificially inflate the price and sell 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 at a token price of around $3.5. The team and investors would unlock $1 billion in funds in the next six months.

However, this tweet from Sisyphus did not attract community attention until Celestia's official announcement of the financing on September 24th.

Crypto KOL @Ericonomic posted on social media, suggesting that if Sisyphus's claims were true, Celestia's $100 million financing event might be another collaboration between the project and VC institutions. Several months ago, the project sold tokens to institutions at a high price, and only a few days before the unlock did they release the so-called financing news, leading users to believe that the financing had just occurred. These institutions that bought tokens through off-exchange transactions are currently very bullish on the project, leading to blind follow-up by users.

In response, community user @minjung had a different perspective, stating that Celestia's trading in the secondary off-exchange market is not necessarily a bad thing. Direct cooperation with venture capital institutions can help mitigate the impact of a large token unlock. Institutions such as Syncracy Capital, 1kx, and Robot Ventures are likely hedging their positions. If the transaction was indeed in the secondary market, it was inappropriate for Celestia to publicize it as financing, especially just before a major unlock.

The main point of contention in the community regarding Celestia's recent financing controversy is that the project should explain the source of the financing funds.

Furthermore, off-exchange transactions are common, and there is no issue with announcing them before an 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 off-exchange transaction proceeds rather than financing, and openly sharing this information with investors, rather than resorting to deception and misleading tactics.

As of September 27th, Celestia has not responded to the financing controversy, and ChainCatcher's inquiry to the official source about the authenticity of the financing disclosure has also gone unanswered.

Discrepancy Between Celestia's Valuation and Revenue?

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 on the Ethereum mainnet. The project caused a market frenzy in February of this year due to a TIA token airdrop, with the price soaring to over $21, making it a newcomer to the crypto blue-chip projects. As the Layer2 narrative cooled down, the TIA price also began to decline from its peak, dropping to a low of $3.7, an 80% decrease.

In addition to triggering a trust crisis for Celestia, the recent financing controversy has also revealed the widespread problem of a 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 utilized 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 published to Ethereum at present.

At that time, Blue Fox also stated that although Celestia's revenue was only in the hundreds of dollars, its diluted market value was high, similar to the diluted market value of matured L2 projects with annual revenues in the tens of millions of dollars. The diluted market value of TIA is currently around $19 billion, which is similar to Arbitrum and exceeds Optimism.

Recent data from 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 illustrates the significant gap between valuation and actual value.

Sisyphus also added in a tweet on September 7th that if a product with a valuation of $3.5 billion is purchased with an annual revenue of only $5 million, it is not a good deal.

Regarding the overvaluation of projects, crypto investor Kiki stated that the current valuation of crypto projects relies too much on future imagination, overlooking 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 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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