Off The Grid confidential letter sparks speculation around tokenomics

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The shooter game Off The Grid has faced some disapproval — and some praise — over a purported confidential letter.

The letter in question was reportedly emailed to Gunzilla Games’ private investors in regard to its GUN token that became tradeable on Binance this week. GUN launched on Monday and hit a $68 million market cap within hours of launch, but that number has since fallen to $40 million.

The letter references a SAFT, or a Simple Agreement for Future Tokens, that means investors gave the company money upfront for tokens at a later, future date.

The copy-pasted text of the letter was posted on X yesterday by a crypto trader and got over 115,000 views in less than a day. The larger post also included the trader’s scathing criticism of the decision. We don’t know more about the specifics of the SAFT yet, though.

The supposed text of that email also references a change to GUN’s vesting tokenomics — and offers investors a chance for a refund if they don’t want to agree to the new terms.

What exactly might these changes be? The trader who leaked the purported letter, Grail.eth, claims seed round investors were supposed to get 5% of their GUN tokens unlocked on launch day, while strategic round investors were supposed to see 2% of their tokens unlock on launch.

According to the public GUN whitepaper, the strategic round is seeing 0% of tokens unlocked on launch. The Private A and B rounds have been granted the same. This means these groups’ tokens won’t be unlocked for at least a year because their tokens have a 12-month cliff, with 18 months of vesting.

Some traders on Twitter speculate that the changes may be in order to fund the token’s listing on Binance, though this has not been confirmed by Gunzilla or Binance.

“We do not charge listing fees to projects listing on Binance,” a Binance spokesperson tells Blockworks. “Regardless, deposits from project teams are refundable and designed to help protect users by ensuring that projects are serious about building their projects, keeping them alive and continuing to build after listing on Binance. The deposit also serves to help protect users in situations where projects harm them by failing to deliver on their commitments.”

Others have criticized GUN’s tokenomics for allotting a significant amount to investors in the first place.

But not everyone’s seeing these tokenomics in a negative light.

I’m personally a fan of any project that makes investors wait longer to unlock their tokens. The “dump on retail” price action isn’t fun for anyone, and it can kill excitement around a new project fast if it happens shortly after a token launches.

“A rare instance where the project chooses its users over VCs,” wrote Ava Labs Marketing Lead Avery Bartlett in response to the post with the letter, while also admitting he understood the criticism around it (Gunzilla is using its own Avalanche L1).

In a DM, Bartlett told Blockworks: “The people I know didn’t get [a letter]. I got nodes on secondary and didn’t get it,” suggesting validator investors did not see a change to their tokenomics.

Theodore Agranat, Gunzilla’s Director of Web3, told Blockworks he was “not sure” when asked about the letter’s legitimacy.

“I do know that whatever letter was sent out had [a] confidentiality clause attached to it. So not sure,” he said, adding that he would speak with his team.