Rollup Platform Dymension’s DYM Reaches $5.2B Valuation After Botched Start

The start of Dymension’s much-hyped token was marred by transactional errors, delays, and delegation issues as the new DYM token clocked a massive $5.2 billion fully diluted valuation on the first day of going live.

Fully diluted valuation is the theoretical market capitalization of a coin if the entirety of its supply were in circulation, based on its current market price, according to Coingecko. Based on just the supply that's currently in circulation, the market cap is a little under $900 million.

DYM, the token of the rollup platform, was highly anticipated within crypto circles and was distributed to users of Celestia, Solana and Ethereum blockchains based on certain criteria. It airdropped $390 million worth of tokens to these users.

Dymension is a so-termed modular settlement layer that provides all the tools and infrastructure needed to easily launch “rollApps” – a portmanteau of "rollup," denoting a type of layer-2 blockchain, and "dApp," which is a decentralized application.

In cryptocurrency terms, modular blockchains try to specialize in a few specific applications, such as gaming or trading, while rollups process transactions on another, faster blockchain (known as a layer 2), and then port the transaction data back to the parent blockchain.

But Tuesday’s start was less than ideal. Users claimed the blockchain was unable to process transactions for at least five hours. Some were unable to add the blockchain to crypto wallets as RPCs – which point blockchain data to user wallets – took several minutes to update.

Validators failed to achieve consensus in the early hours of the network as Chorus One, a large validator, experienced node issues. The team addressed these issues in an X post, stating its large token holdings likely contributed to the “failed launch.”

“A couple of other validators and us had an (as yet unknown) issue with the network node software,” Chorus One said. “We staked our significant holdings in the genesis block. We are early Dymension supporters. Other early-stage investors didn’t stake to genesis, which led us to have 34% power in the failed launch.”

Validator Concerns

As of Wednesday morning, validator “Big Brain Staking” holds over 35% of staked DYM tokens – attracting criticism from DYM holders for its large network influence. Validators are entities that maintain any blockchain network and process transactions.

A single validator yielding large influence over a network increases risks of collusion and may, as in Dymension’s case, lead to slower transaction times. This is due to an overload of transactional requests to a single or small group of entities.

DYM traders have shaken off the technical hurdles, however, with some $380 million in trading volumes over the past 24 hours. Users have staked over 123 million DYM to various validators, the protocol’s staking monitor shows, with annualized rewards currently hovering around 70%.\

CORRECTION (Feb. 7, 11:10 UTC): Corrects headline and lede to clarify that $5.2 billion is the fully diluted valuation of the token.