LAP team explains the price decline: blaming robot trading and lack of liquidity

Core Points

LAPTOP prices briefly approached US$200.

CoinMarketCap subsequently showed a decline of 97.87%.

The project party attributed the reason to robot trading and insufficient liquidity.

4 million tokens will be awarded to liquidity providers.

10 million locked coins face destruction.

LAPTOP fell below US$1 after approaching US$200.

According to the Wall Street Journal, LAPTOP opened at US$0.05 on September 9, and then briefly hit a high of US$199.51. By 4:15 p.m. EST, the coin price had dropped to about $1.30, erasing a record increase of more than 99%. Subsequently, CoinMarketCap's snapshot data on September 10 showed that the LAPTOP price was approximately US$0.7907, a decline of 97.87% in 24 hours. The percentages displayed are based on the platform's reference price for that period, rather than a brief peak of $199.51.

This snapshot shows that LAPTOP has a market value of close to US$276.8 million, with a fully diluted valuation of approximately US$790.8 million. This difference reflects the initial circulation supply of 350 million tokens, compared with the maximum supply of 1 billion tokens; neither of these numbers represents the total amount of money invested in the token.

This release has previously disclosed the deployment and planned allocation of LAPTOP on the Base chain. After the price crash, Hunter Biden said X (formerly Twitter) had suspended the foundation's account and directed users to a statement posted on Medium.

Weak liquidity amplifies opening trading volatility

Phoenix Veritas Foundation said in a post-release update that strong demand and automated traders have overwhelmed the limited liquidity provided by market makers. The team pointed out that so-called "rushing" or sniper robots were the main source of initial market chaos.

LAPTOP was originally traded through a decentralized liquidity pool rather than against a set price on a large centralized exchange. Automatic market makers set prices based on the proportion of assets held in the pool. When reserves are shallow, early purchases can remove a large number of available tokens, driving prices up sharply.

Multiply the short-lived transaction price of US$199.51 by LAPTOP's maximum supply of 1 billion tokens, resulting in an implied valuation of nearly US$200 billion. Only a very small portion of supply is traded at that level, so the calculation does not show buyers committed close to $200 billion.

The same mechanism has accelerated the decline in prices. As early buyers sell, there are not enough matching assets in the pool to absorb these transactions without causing serious price slips. As a result, the surge at the opening and subsequent plunge reflect the depth of the market and the demand for the token.

"Shooting sniper" refers to an automated process that buys immediately after a new pool is activated. "Rush" is a narrower practice that involves looking at pending transactions in advance or taking advantage in the ranking of transactions. The foundation has not yet released detailed trading level reengineering data to show how much of LAPTOP's price changes come from these two activities. Currently, its account only explains one possible mechanism and does not establish a division of responsibilities between the robot's presence in it, the market maker and the initial pool design.

Aerodrome incentives aim to address liquidity shortages

The Foundation announced that it will allocate 4 million LAPTOP tokens (equivalent to 0.4% of the maximum supply) to the LAPTOP-USDC pool on Aerodrome starting at 00:00 UTC on September 10.

These rewards can encourage liquidity providers to deposit LAPTOP and USDC, thereby increasing the assets available for trading. A deeper pool will reduce the impact of individual purchases or sales on token prices.

The allocation consists of LAPTOP rewards rather than directly selling 4 million tokens or pairing them with an equivalent amount of USDC. The impact will depend on the amount of deposits made by external liquidity providers, the concentration of liquidity, and whether they continue to keep assets in the pool after rewards fall.

Destruction reduces future lock-up supplies

According to the foundation, two events in LAPTOP's forecast allocation have been confirmed as "yes", resulting in 10 million tokens being destroyed in the first week of the project. This amount is equal to 1% of LAPTOP's maximum supply.

These tokens come from a predicted allocation, and this portion of the tokens will be locked for 12 months before a 24-month release program begins. Therefore, destruction would reduce the supply that could enter circulation in the future, rather than removing 10 million tokens from the current trading pool.

This process follows previous analytical rules on who decides on the destruction of LAPTOP tokens. The Phoenix Veritas Foundation is responsible for identifying the relevant incidents and instructing Coinbase Custody to transfer the corresponding tokens to the announced destruction address.

Completing the transfer will make the reduction in supply visible on the chain. But this will not add USDC to the liquidity pool or create new buying demand, so destruction does not directly solve the market depth issues that cause issuance fluctuations.

Token lock-in period limits the immediate supply of founders.

The foundation reiterated that LAPTOP does not pre-sell and does not reserve shares for investors, Internet celebrities or key opinion leaders. It said that 30% of the founder's share is held through Coinbase Custody, which is locked for six months, and then unlocked for a 24-month period.

These restrictions reduce the risk of founder shares entering the market immediately. But they do not address issues about initial pools, including the amount of liquidity available in initial transactions and the use of market maker inventory.

Previous disclosures confirmed that 20.5 million LAPTOP pieces were loaned to the G20 and GSR for market-making purposes. This difference is important: No pre-sales or influencers share does not mean that no tokens will flow before a public transaction, because market makers need inventory to support the issuance.

In addition, 80 million LAPTOP pieces can be purchased by Hunter Biden's "Where's Hunter?" Received by qualified persons among newsletter subscribers. Successful claims may expand the number of tradable coins, while unclaimed tokens are planned to be destroyed after the 30-day claim period ends. Therefore, even if the maximum supply is reduced, collection activities will still affect the circulating supply.

Next in-depth market testing

The next test for LAPTOP is whether Aerodrome plans to build a functioning market after a distorted opening. This requires sufficient continuous liquidity to process transactions without extreme slippage, as well as clear records of market maker transfers, liquidity changes and announced destruction.

If liquidity providers leave after incentives fall, the temporary depth created by token rewards will be less convincing. If the pool remains liquid after the initial reward, this will provide stronger evidence that LAPTOP has exceeded the conditions that distorted its price on the issue date.