#MON The classic "high FDV, low float" scam and extraction trap

The classic "high FDV, low float" scam and extraction trap of Monad
Arthur Hayes offered sharp criticism of Monad on Altcoin Daily, calling its so-called "next-gen ETH killer" just a "high FDV, low float" trap designed for founders and VCs to cash out. He stated that Monad is unable to compete with Ethereum, and is even inferior to Solana. Initially, he was bullish at 10 USDT, but after the decline, he turned bearish to zero.
🔍 Understanding the "high FDV, low float" trap
The phenomenon Arthur Hayes criticizes centers on the huge gap between a project's fully diluted valuation (FDV) and its current circulating market cap. The table below uses a hypothetical high FDV project as an example to illustrate its potential risks:
Feature Description Potential Risk
High Fully Diluted Valuation (FDV) The project's valuation is pushed up by capital early on, reaching several billion dollars, for example. The valuation severely overdraws future growth potential, leaving limited upside for the secondary market.
Low Circulating Supply The proportion of tokens freely tradable on the market is extremely low, possibly only a small fraction of the total supply. Artificially creates "scarcity," inflating the initial price, but this is unsustainable.
Future Token Unlocks A large number of tokens held by the team, early investors, and advisors are locked and will be gradually released to the market over the coming months or even years. Once unlocks begin, token supply on the market surges; if demand can't keep up, this leads to huge selling pressure and price crashes.
As some analyses have pointed out, this model makes the project at launch more like a liquidity exit tool for early investors, rather than a fair investment opportunity for the general public.

💎 Summary and Takeaways
Although Arthur Hayes' sharp criticism was not specifically targeted at Monad, the "high FDV, low float" phenomenon he points out is indeed a core issue widely faced by many high-profile new projects in the current cryptocurrency market.
For investors, this means:
· Stay vigilant: Whenever facing a hyped new project with an astonishing valuation, be sure to thoroughly understand its tokenomics.
· Focus on key data: Carefully check the ratio of circulating to total token supply and the detailed unlock schedule. If most tokens are not yet in circulation, you need to be sure the project can generate enough demand to absorb this supply in the future—otherwise, the risks are extremely high.