Solana welcomes $Davido coin but party ends quickly as valuation tanks overnight

In his third go-around in crypto, Afrobeats superstar Davido backed and promoted “Timeless Davido,” $DAVIDO a crypto token—or memecoin, depending on who you ask—on Wednesday night. While the token’s utility was unclear—the use cases appeared to be linked to an unknown website and telegram group—it was launched on the Solana blockchain and immediately broke through the noise of other obscure crypto tokens.

“Solana just ships. Welcome Davido,” Solana’s Twitter handle wrote to the superstar on Wednesday night as $Davido raced to a $10 million market capitalisation four hours after its launch. It seemed like the only way from there was up, with the Grammy Award nominee endorsing the coin in several tweets.

The excitement was short-lived. By Thursday morning, $Davido’s valuation had tanked by 90%. 

It is not the singer’s first crypto rodeo. In November 2021, he launched $echoke on the Binance Smart Chain to “provide access to giveaways, NFTs, festivals, exclusive merchandise, and other entertainment, media, and hospitality benefits.” The short-lived project was soon forgotten. 

He also promoted Racksterli, a Ponzi scheme that allegedly defrauded users of ₦1 billion, on YouTube, prompting backlash and arguments for a more responsible use of his star power. 

With $Davido, coin holders are coming to terms with the possibility that they may have been victims of a rug pull, a phenomenon where the project developers abandon it and take all the invested funds with them. 

“Davido does not need this type of negative publicity. Whatever money he made from it is not worth it,” a crypto expert told TechCabal. 

Davido’s management did not immediately respond to a request for comments.

Many people who bought the coin were under no illusions that this was a long-term project, but they expected it to ride a wave and at least increase its valuation, allowing holders to profit from it. That would have required the developers to resist the temptation of pulling a pump-and-dump on users.

In the world of crypto tokens and meme coins, pump-and-dump schemes are par for the course and involve someone or a group of people artificially inflating the price of a token before selling their tokens at those high prices. It leaves anyone who bought into the hype holding the bag. 

Memecoins often have periods of huge valuation jumps before cooling, but three crypto experts told TechCabal that in many situations, the promoters of those coins structure them so that many ordinary users can also make a profit. For the $DAVIDO coin, the creators appeared to be willing to take profits at the expense of coin holders from the jump. 

Several prominent crypto handles began sounding the warning signs on Wednesday night, claiming that the wallet that created the token had sold off a significant amount and had cashed out $200,000 in a few hours.

“It’s obviously a pump and dump scheme. The wallet that launched the token is trackable, and was dumping the token live as Davido was tweeting about it,” a crypto trader who asked not to be named told TechCabal.

Another coin analysis handle alleged the creators of the coin had raked in around $500,000 in just under 24 hours, cratering the price of the coin and leaving users holding the bag.