In his third venture into the cryptocurrency world, Afrobeats superstar Davido backed and promoted “$Davido,” a crypto token or memecoin depending on who you ask, on Wednesday night.
Despite an unclear utility and use cases linked to an obscure website and Telegram group, the token, launched on the Solana blockchain, quickly grabbed attention.
“Solana just ships. Welcome Davido,” the official Solana Twitter handle announced as $DAVIDO soared to a $10 million market capitalization within four hours of its launch.
Davido, a Grammy Award nominee, enthusiastically endorsed the coin through several tweets, which further fueled the initial excitement.
However, the excitement was short-lived. By Thursday morning, $DAVIDO’s valuation had plummeted by 90%, and per DEX screener, the coin’s liquidity stood at $291,000 at the time of reporting.
This isn’t Davido’s first foray into the volatile world of cryptocurrencies. In November 2021, he launched $ECHOKE on the Binance Smart Chain, promising access to giveaways, NFTs, festivals, exclusive merchandise, and other entertainment benefits.
The project quickly faded into obscurity. Additionally, Davido previously promoted Racksterli, a Ponzi scheme that allegedly defrauded users of ₦1 billion, leading to public backlash and calls for more responsible use of his influence.
Many investors were under no illusion that $DAVIDO was a long-term project, but they hoped to ride a wave of increasing valuation to make a profit.
This would have required developers to resist the urge to execute a pump-and-dump scheme, where the price of a token is artificially inflated before being sold off at high prices, leaving late investors holding the bag.
Several prominent crypto analysts began issuing warnings on Wednesday night, alleging that the wallet responsible for creating the token had sold off a significant amount, cashing out $200,000 within hours.
In the risky and often unregulated world of crypto tokens and memecoins, such schemes are not uncommon, but they typically allow ordinary users to profit as well.
In the case of $DAVIDO, the developers seemed poised to take profits at the expense of their investors from the outset.
