Polychain Capital Sells $62.5 Million TIA to Celestia Foundation

Polychain capital's 12x return

Polychain Capital, an early investor in the prominent modular blockchain Celestia, has sold 43.45 million TIA tokens back to the Celestia Foundation for $62.5 million. To make the tokens available to new investors, the transaction took place on a gradual unlocking schedule from August 16 to November 14.

In less than two years, Polychain’s initial investment of about $20 million has increased by 12 times. This strategy is used by the Celestia Foundation to manage the token supply, reduce selling pressure from large investors, and prepare for the upcoming Lotus network upgrade.

Celestia’s innovative model and backing from major funds like Polychain have made it popular as the first modular blockchain that separates data, consensus, and execution.

Polychain, known for its early investments in projects like Coinbase and Compound, which has an asset management portfolio of around $5 billion, has leveraged Celestia’s staking mechanism to optimize returns by gradually selling off staking rewards without affecting the number of tokens. This comes at a time when TIA’s price is falling, currently hovering around $1.80, down sharply from $20.96 in February 2024 amid concerns.

What is the action behind this event?

Polychain’s clever strategy of using a staking mechanism to profit from rewards without selling the native token has allowed the $20 million investment to grow twelvefold. In addition to raising the fund’s reputation, it has also encouraged other venture capitalists to participate in early-stage blockchain projects.

When TIA acquired the Celestia Foundation for $62.5 million, they were able to redistribute tokens on a controlled schedule, reducing the risk of sudden price drops. Meanwhile, the upcoming Lotus upgrade, which includes changes to how staking rewards are handled, shows Lotus’s efforts to improve its token economic model, increase transparency, and improve token sustainability.

But Polychain’s choice has been controversial. While holding the native token has been criticized by many as favoring internal investors, the fund makes huge profits from staking rewards. This makes the token economic model unfair, as retail investors often only participate after the high-yield stages have passed.

Conclusion and evaluation

Polychain Capital’s sale of $62.5 million worth of TIA to the Celestia Foundation for a 12x return is a financial success story, but it has also opened up a debate about transparency in the crypto industry. While the Celestia Foundation seeks to stabilize the ecosystem through the Lotus upgrade, market and public pressure remain a major challenge. With the crypto market in full swing, this could be a turning point for both Polychain and Celestia, but it is also a reminder of the need for a more equitable economic model.

Disclaimer: The information presented in this article is the author's personal opinion on the cryptocurrency field. It is not intended to be financial or investment advice. Any investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The views expressed in the article do not represent the official position of the platform. We recommend that readers conduct their own research and consult with a professional before making any investment decisions.

Compiled and analyzed by HCCVenture

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