Solana News Today: Whales Profit, Retail Traders Lose Big in YZY Token Chaos

Kanye West’s YZY meme coin, launched on the Solana blockchain, has experienced a dramatic price collapse, losing over 80% of its value just one week after its release. The token, branded as “Yeezy Money,” initially surged to a $3 billion market cap following its launch on August 20. However, within days, its value plummeted to approximately $1.5 billion. The token’s volatility has drawn scrutiny from analysts and blockchain observers, who point to irregular trading patterns and potential insider advantages.

According to blockchain analytics firm Nansen, 13 wallets alone have realized more than $24 million in profits from the YZY token, with many of these addresses having accessed the contract address prior to the public launch. This early access likely granted these traders an unfair edge in purchasing the token at a lower price and offloading it at a higher one during the initial surge. One such wallet, identified as 6MNWV8, spent 450,611 USDC to buy 1.29 million YZY tokens at $0.35 each, then sold 1.04 million of them for $1.39 million, securing a profit of over $1.5 million within minutes. Another trader, 2DNb2C, initially lost $710,000 by purchasing a fake version of the token before the launch but later recouped the loss by acquiring the correct version and flipping it for a similar profit.

The token's distribution raises additional concerns regarding centralization. Solscan data shows that the top 10 holders control approximately 92.23% of the total supply, a concentration that deviates from the decentralized ethos promoted by the project. According to the token’s "YZYNOMICS," 70% of the total supply is allocated to Yeezy Investments LLC, with vesting schedules ranging from three to 12 months. Meanwhile, 20% is allocated to the public and 10% to liquidity. This allocation structure has led to speculation about whether the token is more of a speculative investment vehicle for a select few rather than a decentralized currency for the broader public.

Compounding concerns, Lookonchain reported that insiders manipulated the liquidity pool to facilitate trades, potentially distorting market dynamics. One whale spent 12,170 SOL (worth $2.28 million) to acquire 2.67 million YZY tokens, now valued at $8.29 million, representing a profit of $6 million. The liquidity pool, which holds only YZY tokens, could allow developers to manipulate the market by adjusting liquidity in and out of the pool, a tactic similar to that used in past manipulative trading schemes.

The YZY token has also been marred by a cybersecurity incident. On August 26, Kanye West claimed that his Instagram account had been hacked and used to promote a fake version of the YZY token. The compromised account followed a profile named “yzytoken,” which was linked to a different token on Solana’s Pump.fun platform. At its peak, the fake token reached a market cap of $7 million before plummeting to $160,000. This incident has raised questions about potential market manipulation and the legal liability of celebrities promoting tokens through compromised accounts. Bubblemaps identified Hayden Davis as a figure tied to wallets that generated $12 million in YZY trades, though the nature of his involvement remains unclear.

Despite the high-profile launch and initial enthusiasm, the YZY token remains a speculative asset with a volatile trajectory. Retail traders have borne the brunt of the losses, with Dune Analytics reporting that 64.1% of wallets recorded losses between $0 and $500. A further 5.3% of traders lost between $1,000 and $5,000, with some individual losses exceeding $1.8 million. The project’s long-term viability remains uncertain as experts call for caution and due diligence in the face of market manipulation allegations and centralized distribution concerns.