Karrat token rallies but dilution and concentration risks remain

Small-cap gaming token Karrat has surged for two consecutive days, reaching its highest point since August 24.

Karrat (KARRAT) has risen over 65% from its lows this year, taking its market cap to over $48 million. However, it remains around 68% below its all-time highs.

This recovery was accompanied by a surge in some of the most popular gaming tokens. Immutable X (IMX) is up over 44% in the last seven days, while Beam (BEAM) is up 15.7% in the same period. Similarly, Gala Games (GALA), The Sandbox, Ronin, and ApeCoin are all up over 15%.

Karrat also saw a rally after My Pet Hooligan, a popular non-fungible token platform, launched Hooligans and Zuckbot NFTs on its platform. Data from CryptoSlam shows that My Pet Hooligan’s NFT sales have totaled $174,393 in the last 30 days. Its 24-hour sales increased by 88% to $9,575.

Karrat’s recovery also came as the crypto fear and greed index moved from the fear zone of 34 to the neutral point of 51 after the Federal Reserve cut interest rates by 0.50% last week. The rate cut pushed more coins higher, sending Bitcoin soaring to $64,800, its highest point in over a month.

Karrat, a gaming and NFT-focused blockchain, made headlines in June when it announced a partnership with Peter Thiel-backed tech company Palantir. As part of that partnership, AMGI Studios, a key contributor to Karrat’s network, will use Palantir’s architecture in its products. This announcement follows a partnership with Nvidia the previous month.

As with Jupiter, the main concern with Karrat is the concentration of large holders. Data from CoinCarp shows that the top ten holders account for 92% of all coins. The total number of wallet addresses rose to 5,572 on September 23, the highest point since September 12.

Another risk is the significant increase in token dilution expected over the next few years. Karrat has a maximum supply of 1 billion tokens and currently has 116 million tokens in circulation. The next coin unlock will be on October 19th, followed by a total of 25 million tokens in the last two months of the year.

Karrat’s token unlocks will end in October 2028, meaning holders should be prepared for significant dilution. A token unlock dilutes existing holders by increasing the number of coins in circulation.