$NX Launch Down 80% in Minutes Highlighting Flaws in Presale Model

Less than month after the ruinous $GM launch, the Solana ecosystem has suffered yet another catastrophic TGE (Token Generation Event).

On September 9, lending aggregator NX Finance launched its native token, $NX. However, not everything went according to plan, with the majority of presale buyers suffering severe losses as the token plunged within minutes.

$NX Token Launch Suffers Brutal Sell-Off

NX Finance have delivered a token launch that its investors and supporters won’t soon forget. Presale buyers were shocked to witness $NX over 70% from its opening price of $0.20 to exchange hands at $0.06 within minutes of the token launch.

The devastating drop sent secondary waves of fear and panic throughout the asset’s holder base, causing additional sell pressure as holders raced to liquidate their holdings. Within 35 minutes of launch, $NX had dropped further, completing a -80% move to trade at $0.039. 

The catastrophic launch erased over $13M from NX Finance’s launch FDV (Fully Diluted Valuation), which began at $16.8M.

The following day the NX Finance team took to 𝕏 to address their community’s concerns and explain how the events unfolded. According to NX Finance, two large presale contributors used bots to mercilessly dump their holdings and offload over 500 SOL worth of $NX.

NX Finance assured its users and investors that the team hadn’t sold any tokens and asserted that they remained committed to the platform’s long term growth. Reinforcing this statement, NX Finance reminded the community of its intention to burn unsold tokens from the presale.

Based on $NX tokenomics and the percentage of tokens sold during the IDO, approximately ​​8,265,407 $NX (valued at just over $30k) is expected to be permanently removed from circulation.

Are Presales a Flawed Model?

NX Finance’s disappointing TGE has sparked debate surrounding the effectiveness of token presales and IDOs in current market conditions. 

The protocol’s presale was launched on September 3rd, with the intention of raising 21.45k SOL. Despite NX Finance attracting over $20M in TVL (Total Value Locked) when the presale opened, the $NX presale only raised 8.45k SOL, or 39% of its target.

Arguably, NX Finance’s presale structure was inherently flawed. Presale buyers were promised a favorable price, with contributors buying $NX at a 10% discount with no caps in place to stop individuals from dominating the supply.

Additionally, presale buyers had full access to their allocations straight from launch.  Typically, presale buyers are subject to vesting periods in exchange for reduced prices, a mechanic that suggests contributors are aligned with the protocol’s long-term goals.

Lending weight to the debate, Jupiter founder Meow argues that the current standard of presale mechanics are “horrible for alignment”.

Despite a forgettable launch, NX Finance remains committed to doing right by its community. The team has assured supporters “We’re not discouraged—if anything, we’re more determined than ever to build, to grow, and to make NX Finance something we can all be proud of.”

Beyond poor price performance, NX Finance TVL has also suffered harsh losses. According to DeFiLlama data, NX Finance TVL has dropped 26% since the presale opened and currently sits at $14.78M.

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