Internal insiders have stopped buying new tokens for 2 years, pushing retail investors into a liquidity trap.

More than 80% of tokens launched in 2025 are currently trading below their initial valuation. Behind this wave of losses is not only market cycles but also a direct consequence of how insiders in crypto design, price, and quietly divest from projects right from the listing point.

Data from Memento Research shows that, among the 118 major token issuance events (TGE) in 2025, up to 100 tokens – equivalent to 84.7% – are trading below FDV at launch. The median token has lost approximately 71% of its value since listing.

This reality indicates that TGE this year is no longer a starting point but often the final distribution point. The price has been “pre-shaped,” and investors buying at listing mainly serve to provide liquidity for exit.

Detailed analysis of the 2025 initial token offerings (TGE) in the cryptocurrency sector (Source: Memento Research)## Internal price manipulation and capital withdrawal

The core issue lies in the confusion between market capitalization and fully diluted valuation (FDV). Retail investors can only purchase the circulating tokens, which usually account for 10–15% of the total supply. However, the price of this small portion is pegged to FDV – a figure reflecting the entire token supply of the fund, team, and advisors, most of which are not yet tradable.

The “low circulation, high FDV” model allows insiders to set valuations worth billions of USD even before the project generates sustainable revenue. When tokens hit the market, the small supply creates an illusion of scarcity, while potential selling pressure from locked tokens always looms ahead.

According to Memento, 28 projects with FDV of $1 billion or more in 2025 share the same fate: no project has appreciated in value, with median declines around 81%. Initial valuations are pushed far beyond actual worth, turning TGE into a risk distribution mechanism heavily skewed in favor of the final buyers.

Berachain (BERA) is a typical example. This layer-1 project was initially valued at over $4 billion but was quickly dragged down by the market to around $300 million. With internal token lockups, most of this is just paper loss. For investors holding circulating tokens, it’s a real loss.

Major cryptocurrency TGE events causing significant losses (Source: Memento Research)## Insiders stay out, retail bears the risk

An interesting detail is that insiders have stopped buying new tokens for many years. Jeff Dorman, CIO of Arca, admits he has not seen any liquidity funds purchasing tokens at TGE in over two years.

This means that those who understand the distribution structure, unlocking schedules, and market maker agreements have actively stayed out. The primary market is left to retail investors – a group lacking information and almost no tools for self-protection.

When hedge funds and family offices abstain, genuine demand nearly disappears. There is not enough capital flow to absorb selling pressure from airdrops, market makers, and related wallets, causing token prices to plummet with no other direction.

Liquidity trap masked by growth stories

The collapse of TGEs is also disguised by a negative macroeconomic backdrop. The crypto market lost about $1.2 trillion in value during the sharp correction at the end of the year, while institutional capital shifted into Bitcoin and Ethereum via spot ETFs.

However, this also provides a convenient excuse. When institutional funds have more transparent and safer options, insiders have no reason to stay in high-risk TGEs. They continue selling to retail investors with “long-term vision” stories while themselves exiting the game.

Alexander Lin, co-founder of Reforge, believes most marginal buyers in the altcoin market are participating in a casino disguised as a foundational investment. Academic content, podcasts, or lengthy blogs only serve to legitimize short-term speculation and irresponsible distribution.

Exploitation model exposed

The prolonged wave of losses has revealed the true nature of the current crypto venture capital model. Instead of building sustainable value, many projects optimize for early exit, as long as the market remains liquid.

Omid Malekan, adjunct professor at Columbia Business School, states that excessive fundraising and pre-selling too many tokens are directly destroying value. Teams continue doing this not out of ignorance but because they accept sacrificing the project’s future for short-term gains.

Nevertheless, a few projects go against the trend, often driven by specific catalysts. Aster, backed by Changpeng Zhao, saw its valuation increase by approximately 750% after launch, from a strategic FDV of $675 million to over $5 billion. Projects like Humanity or Pieverse also maintained their value.

However, even among winners, no token trades above the initial listing price with an FDV of $1 billion or more. This indicates that the market is willing to accept modest valuations with clear growth potential but firmly rejects the “unicorn fee” attached to unproven protocols.

Aster’s remarkable growth helps strengthen perpetual DEXs (Source: Memento Research)## Message for 2026

2025 has sent a clear message: tokens are no longer unconditional fundraising tools. Governance tokens that do not generate real economic value are gradually being phased out.

Nathaniel Sokoll-Ward, co-founder of Manifest Finance, describes current token design thinking as “cargo cult” – copying successful forms without core operational mechanisms. For most projects, tokens do not solve any problems that traditional capital structures handle better.

To survive, projects must change. Offering valuations need to be grounded in reality, linked to actual revenue. The initial circulating supply ratio must be large enough to create liquidity, rather than fake scarcity.

For investors, the lesson is also very clear: TGE is often not an opportunity but an exit point for insiders. Patience after price correction, completing airdrops, and revealing distribution structures are the only ways to avoid becoming the last to bear the consequences.