Pi Network’s highly anticipated token release sends shockwaves through the cryptocurrency market, with its value surging to $195 billion before plummeting 50% in just two hours.
The highly anticipated release of Pi Network‘s native PI token has sent shockwaves through the cryptocurrency market. The token debuted at $1.70 and surged to as high as $2.00, before plummeting 50% in the next two hours.
Pi Network is a mobile application that allows users to earn cryptocurrency by contributing their phone's processing power.
Developed by the Stanford University graduates, Phuah and Nicolas Kokkalis, in 2019, it aims to create a decentralized network for digital assets.
Users can mine Pi tokens by solving mathematical equations, which are then stored on their device.
The app uses a proof-of-stake consensus algorithm, allowing users to validate transactions and earn rewards.
As of 2022, the platform has over 10 million registered users worldwide.
The price volatility was so intense that it raised concerns about liquidity on major exchanges. Even OKX, considered one of the most liquid exchanges, had a meager 2% market depth between $33,000 and $60,000. This means that an order of $100,000 would significantly move the price, creating a volatile trading environment.
Despite the initial surge, Pi Network‘s token currently has a market cap of around $6.1 billion. The fully diluted value (FDV) reached as high as $195 billion, almost double the value of Solana’s SOL. However, this FDV is based on the maximum supply of 100 billion tokens and the self-reported circulating supply of 6.3 billion.
Pi Network has drawn comparisons to viral projects from previous cycles, such as SafeMoon. Both projects have attracted a retail audience with aggressive marketing and referral schemes. In fact, Pi Network‘s mining model is similar to multilevel marketing (MLM) or pyramid schemes, where users are rewarded for referring others.
The project has been around since 2019, with its testnet going live in 2020. The token release marks the start of the Pi Network mainnet, allowing accrued tokens to be transferred and traded. However, exchanges currently lack sufficient liquidity to handle the billions of tokens being traded.
Pi Network has attempted to remedy a disparity between buyers and sellers by offering holders a ‘lock-up’ period, which can be up to three years. If holders opt to lock up their tokens, they will receive higher mining rewards. However, this approach has been employed by other projects in the past, such as Richard Heart’s HEX token, which lost over 99% of its value between 2021 and 2024.
Market depth measures the amount of capital required to move an asset in either direction. Based on the token’s market cap, a 2% move would equate to a $146 million shift in the project’s value. This highlights the need for increased liquidity and trading volume to stabilize the market.
