Arthur Hayes Issues Stark Warning on Monad's Risky Token Structure

Crypto veteran Arthur Hayes has raised alarms regarding Monad, a new layer-1 blockchain, suggesting it could fall by as much as 99%. He attributes this potential drop to the project’s reliance on venture capital hype rather than authentic user adoption.

In a discussion on Altcoin Daily, Hayes characterized Monad as “another high FDV, low-float VC coin,” emphasizing the token’s structure creates significant risks for retail investors. FDV is short for Fully Diluted Value, which indicates the market value of a cryptocurrency assuming all tokens are currently in circulation.

Hayes noted that cryptocurrencies with considerable discrepancies between FDV and circulating supply typically see temporary price increases followed by sharp declines when insider tokens become accessible. “It’s going to be another bear chain,” he predicted, stating that while initial market inflations may occur, they do not guarantee sustained utility.

He underscored that most new layer-1 blockchains are destined for failure, with only a few holding long-term viability. He regards Bitcoin, Ether, Solana, and Zcash as the select few likely to survive the upcoming market shifts.

Last year, Monad garnered $225 million in investment from Paradigm and launched its network on Monday, coupled with an airdrop for its MON token.

From the latest updates, Cointelegraph made attempts to connect with Monad for insights but hadn’t gotten a reply as of the publication date.

Monad’s MON token up 40% since launch. Source: CoinMarketCap

Hayes Remains Optimistic

Hayes shared an optimistic perspective regarding the overall cryptocurrency landscape, crediting monetary expansion as the driving force. He pointed out that governments, specifically the United States, are preparing for additional liquidity injections as political campaigns heat up and growth slows.

“I believe we are concluding the early phase of this cycle, and a wave of significant capital inflows from monetary stimulus is imminent,” he remarked.

He dismissed the notion of a predictable four-year Bitcoin cycle, asserting that historical market surges are influenced more by Credit expansion led by the US and China than by halving events. He noted that Bitcoin serves as an early indicator for market shifts.

The Future of Privacy Coins

Looking forward, Hayes anticipates that privacy technologies will dominate upcoming discussions in the crypto space. He foresees a resurgence in interest towards zero-knowledge solutions and privacy-oriented coins, suggesting that institutional backing will increasingly cluster around Ethereum, particularly via stablecoins and tokenized financial instruments.

Earlier this month, he disclosed that Zcash had become the second-largest asset in his family office, Maelstrom, with Bitcoin taking the lead.