ai16z and VVV see double-digit price drops since 'death-trap' perps listings, analyst says
Quick Take
- AI tokens like AI16Z and VVV have declined by over 84% and 67%, respectively, since their Binance perpetual futures listings.
- Binance’s perpetual futures listings have reportedly become a “death trap” for recent tokens like ai16z, allegedly enabling traders to short aggressively while offloading spot holdings, an analyst said.
AI tokens like ai16z and Venice Token (VVV) have suffered severe price drops since their listings on Binance’s perpetual futures market. ai16z, which was priced at $2.42 on January 2, fell by over 84%, now worth just $0.38. Similarly, VVV, which was valued at over $18 at the end of January, has dropped by 67%, now trading at $5.82.
In early January, Binance launched perpetual futures for ai16z — whose associated DAO has since been rebranded as ElizaOS — and later that month introduced VVV, the native token of the AskVenice AI infrastructure platform. These listings have raised concerns about their alleged role in exacerbating price volatility.
"Binance’s perpetual futures listings have become a death trap for many popular recent tokens, from ai16z to vine," Arete Capital founding partner Ilya Paveliev told The Block. "Instead of fostering healthy price discovery, these listings create an easy way for traders to short tokens aggressively while dumping their spot holdings."
Perpetual futures markets, unlike spot markets, enable traders to influence prices with relatively low capital. While spot prices reflect organic buy demand, perpetual futures can allow significant market influence by large players, according to Paveliev. "Market makers, who should provide stability, often step back after listing, letting prices crash," he added.
The Arete Capital founding partner said that introducing perpetual futures for low-liquidity tokens exacerbates price swings, favoring short-term traders over long-term holders. Paveliev highlighted a broader issue with the current structure of centralized exchange listings, alleging that tokens are often subjected to aggressive market strategies with little regard for long-term sustainability.
A Binance spokesperson said that as with traditional assets, crypto derivatives lead price discovery and provide liquidity which helps the market develop. "A less liquid market is relatively-speaking more volatile, and derivatives allow participants to express their view both ways, and a two-sided market decreases volatility and improves price discovery," the spokesperson told The Block.
Update (Feb. 7, 13:30 UTC): The story was updated with comments from a Binance spokesperson.
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