For the average investor, randomly receiving massive amounts of any token, without any payment or effort, sounds like a dream. But not for Vitalik Buterin. Over the last few years, the Ethereum co-founder has received billions of dollars’ worth of dog-themed memecoins that he never sought or asked for. They were simply sent to his wallet address for no rhyme or reason.
It soon became a trend, with new memecoin projects and DAOs sending massive amounts of their token supply to the Ethereum co-founder. Buterin tried to put a stop to the practice by publicly announcing that he did not want to receive tokens without his permission, but to no avail. In this article, we will explore why these projects continue to shower Buterin with free coins and why the co-founder has expressly asked project developers to discontinue the practice.
It all started with Shiba Inu
Shiba Inu is a household name for the crypto community these days. However, this was not always the case. The coin began as a spin-off of Dogecoin, which itself started as a joke. And when the project’s pseudonymous creator, Ryoshi, launched Shiba Inu, he donated half of the project’s 1 quadrillion token supply to Vitalik Buterin. The coins were sent to his cold address, which Buterin uses for long-term storage of crypto assets.
Upon receiving this massive stockpile of SHIB, the Ethereum co-founder said he had little interest in the project. However, Buterin stores the private key to his cold wallet on two separate continents, for security reasons. As such, he was not able to immediately offload the SHIB that he received. This made it look like he was holding onto the coins when in reality, he just wasn’t able to get rid of them. He explained that nascent projects often send him large amounts of their tokens to build investor interest around the project. Think of it as a kind of marketing stunt. Owing to his stature in the cryptoverse, users perceive the tokens in his wallet as good investments and buy into them.
The strategy has worked for Shiba Inu. The token was relatively unheard of until half of its token supply landed up in Buterin’s wallet, who subsequently began burning and donating these tokens. Today, Shiba Inu is the 13th largest cryptocurrency in terms of market capitalisation. Seeing the success of this marketing strategy, several other crypto projects, memecoins in particular, continue to send Buterin-free tokens.
Why does Buterin advise projects against sending him tokens?
You’d imagine that anyone who receives free coins would have no qualms about it whatsoever. However, Buterin understands that having such a large amount of a project’s circulating supply puts a lot of power in his hands. “But for anyone making coins (or DAOs, or whatever else) in the future, PLEASE DO NOT GIVE ME COINS OR POWER IN YOUR PROJECT WITHOUT MY CONSENT! I don’t *want* to be a locus of power of that kind,” read one of Buterin’s tweets.
Moreover, for obvious tax reasons, Buterin is forced to offload these tokens, either by burning or donating them. However, the movement or reduction of such a large amount of tokens will result in its price rising or falling considerably. Most recently, Buterin offloaded 500 trillion SHIKOKU tokens worth almost $700,000. He swapped the SHIK for around 380 ETH, which can be assumed will be donated.
However, the token sale has resulted in a massive drop for SHIK. Its price plummeted over 90 percent after Buterin offloaded the token. However, the developers behind SHIKOKU have taken the price drop to the chin. While admitting they were disheartened by token’s plummeting valuation, the developers believe that the price drop could be a blessing in disguise. "Now that he has sold, there are no whales left in the project. A truly decentralized community can now form in the wake of his actions," the project said on Twitter.
Moreover, this isn’t the first time something like this happened. Back in May 2021, SHIB dropped 38 percent after Buterin donated 50 trillion SHIB (which was worth $1.2 billion at the time) to the India Covid Relief Fund.
Conclusion
Buterin has repeatedly asked memecoin projects not to send tokens to his wallet. Yet, several nascent projects continue to use his cold wallet as a marketing strategy, despite the risk of massive price drops. However, considering that Vitalik Buterin always puts these coins to good use, perhaps it's not such a bad thing that developers divert large amounts of their projects' circulating supply to the Ethereum co-founder.
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