DeepBook token soared after airdrop, but gains could be brief

DeepBook token became one of the best-performing cryptocurrencies on October 15 following its much-anticipated airdrop.

DeepBook (DEEP) token is up over 261% from Monday’s low to $0.0380. Its market cap rose to over $85 million, while its fully diluted valuation rose to $339 million.

Developed by former Meta Platforms engineers, DeepBook has become one of the biggest players in the Sui (SUI) ecosystem. DeepBook offers a platform that provides higher liquidity, high efficiency, low latency and transparent trading.

Data shows that DeepBook has become one of the largest players on Sui Blockchain. According to DeFi Llama, the network has processed over $65 million in volume in the last seven days. This makes it the third largest decentralized exchange network after Cetus and Turbos.

DeepBook distributed DEEP tokens to 100,000 initial backers who bought DBClaimNFT a few months ago. The token will be used to pay transaction fees on the DeepBook platform, provide liquidity and facilitate the management of the network.

Dilution is a major concern

According to the website, DeepBook has a maximum supply of 10 billion DEEP tokens and an initial circulating supply of 2.5 billion.

The challenge, therefore, is that long-term holders can expect further dilution over the next seven years as the remaining tokens are released. Token unlocking is highly dilutive as it reduces the value of existing tokens by introducing more coins to the market.

The next potential catalyst for the DeepBook token will be further exchange listings by centralized exchanges such as Binance and Coinbase. Most of the current trading takes place on centralized and decentralized platforms such as Bybit, Gate, MEXC and Cetus.

DeepBook is at risk of experiencing a sharp reversal as many of the newly listed tokens rise and then experience a significant decline. For example, the Wormhole (W) token initially rose to $1.8632 following its airdrop and has since fallen over 83%.

The ZkSync (ZK) token first rose to $0.2942 in June before falling to $0.1337, a drop of over 54%. Likewise, Hamster Kombat rose to $0.0132 and then dropped to $0.0040.

One potential hope for DeepBook’s token is that the crypto industry will improve as Bitcoin (BTC) rises to $66,000 and the crypto fear and greed index reaches the greed level. If this crypto recovery continues, the token may continue to rise.