Arthur Hayes flags Monad as a high-risk “VC coin”
Arthur Hayes, former CEO and co-founder of BitMEX, has issued a sharp warning about Monad, a newly launched layer-1 blockchain. He argues that Monad’s token economics make it extremely dangerous for retail investors and could lead to a 99 percent price collapse.
Hayes points to the combination of a very high Fully Diluted Value (FDV) and a relatively low circulating supply as the key reason why he views the project as a “VC coin” with limited long-term potential for ordinary traders.
High FDV and low circulating supply at the core of his criticism
In Hayes’s view, Monad’s valuation structure is skewed heavily in favor of early backers and venture funds. A high FDV means the project is priced as if all tokens were already in circulation, even though only a small fraction is actually tradable.
This setup often leads to:
– aggressive markup at launch
– heavy selling pressure as unlocks begin
– prolonged underperformance for late entrants
Hayes argues that this pattern has become common across new layer-1 launches and sees Monad as another example of venture capital capturing the majority of upside while leaving retail investors exposed to downside.
Monad’s launch and VC backing
Monad raised approximately 225 million dollars from prominent investors, including Paradigm, before launching its MON token via airdrop. The chain positions itself as a high-performance Ethereum-compatible L1 focused on scalability and throughput.
However, Hayes suggests that strong venture backing and a large war chest do not automatically translate into sustainable organic demand for the token, especially when supply unlocks begin to hit the market over time.
Hayes: most new L1s will fail
Beyond Monad specifically, Hayes makes a broader point about the layer-1 landscape. He predicts that the vast majority of new L1 networks will ultimately fail or fade into irrelevance, overwhelmed by competition and lacking durable network effects.
According to him, only a handful of base-layer networks are likely to survive long term, with Bitcoin, Ethereum, Solana, and Zcash among the few he sees as having a credible path forward.
Structural risks for retail investors
Hayes’s warning is aimed primarily at retail traders chasing new narratives and high-FDV launches without fully understanding tokenomics. Projects with:
– small free float
– large locked allocations for insiders
– high initial FDV
can experience severe drawdowns once early investors begin to realize profits.
For traders, his message is straightforward: look beyond hype and focus on supply schedules, unlock timelines, and who truly benefits from the token design.
What this means for the L1 narrative
Monad’s debut and Hayes’s critique highlight a growing tension in the market between innovation and speculative design. While new chains continue to push technical boundaries, the way their tokens are structured increasingly shapes whether they become sustainable ecosystems or short-lived speculative plays.
As more capital flows into high-FDV launches, scrutiny from experienced traders like Hayes is likely to intensify, forcing teams to justify not just their technology, but also how fairly value is shared between insiders and the broader market.
