'Useless Token' Is the Latest Wild Scheme Promising Crypto Riches

Useless Token says its useless, but still promises investors that it's 'pump-n-burn' strategy is totally 'hyper-hyper-deflationary.'
July 12, 2021, 1:00pm
'Useless Token' Is the Latest Wild Scheme Promising Crypto Riches
image: Useless Token Litepaper

Many cryptocurrencies and tokens hold little function or purpose outside of being speculative assets, but a recently-launched token is really leaning into the idea by painting itself as utterly useless—and hoping to make investors rich in the process.

As you might expect from something called “Useless Token,” the project is presented in a mocking tone. It’s all jokes on the official website, which claims that its token contract is a “total clone of some of the most popular meme projects right now."

Advertisement

But in the crypto world, even obnoxious projects like Dogecoin (DOGE) and knockoff Shiba Inu (SHIB) can make serious bank, as investors buy up dirt-cheap tokens and try to pump them to the moon. In this case, Useless Token teases potential riches via a process it calls "hyper-hyper-deflation." While other meme tokens such as SCAM have promised riches with complex schemes while also making it into a big joke, Useless Token's approach involves becoming an actual company. Useless Crypto LLC was registered as a corporation in Utah on June 21, according to state records. 

Many crypto tokens have deflationary elements to try and boost the price floor over time by gradually cutting the total supply, increasing the perception of scarcity. Popular exchange Binance, for example, reinvests a share of its profits into buying and burning (or removing from the supply) a chunk of its Binance Coin (BNB) every quarter—including some $595 million worth back in April.

Useless Token's hyper-hyper-deflationary approach burns a share of tokens based on the token’s trading volume, but the project also plans to invest all profits from external initiatives—such as selling merchandise—to buy and burn even more tokens. In other words, Useless Crypto LLC hopes to sell enough hats, mugs, and sweaters emblazoned with "USELESS" in order to buy back tokens from holders and destroy them, to boost their value. 

Advertisement

The Useless Token team calls this a “pump-and-burn” mechanism, and writes, “This token is so useless, we will do everything in our power to buy it back—just so we can burn it and get rid of it.” Granted, there were a quadrillion tokens minted, with a quarter of those already burned—an approach that recalls other recent meme tokens, like Shiba Inu, where burns have reached comical proportions, perhaps intentionally given the overall comedic thrust of these tokens.

Useless Token has done a lot to ward off speculation that it will be a pump-and-dump rug-pull scheme, in which the developers cash out and disappear after the token’s price soars, leaving investors with increasingly worthless holdings. It's registered as a corporation with an address and a name behind it, CEO David Wyly, and its website features photos of the team including Wyly. 

“The DeFi space is filled to the brim with low-effort, hyped-up projects that try to gain holders by over-promising on some form of future utility,” Wyly told Motherboard. “By transparently promising nothing, and with its self-deprecating humor, Useless [stands] apart.”

According to Wyly, selling Useless-branded merchandise is just the first step in generating additional income to pump into the coin. He says that the team is developing a mobile app ecosystem in the hopes of becoming the “Robinhood of crypto” (note: Robinhood already sells crypto), with plans to monetize those apps via partnerships and advertising. “For the corporation to be making a serious profit, you obviously don't want to rely on branded merchandise,” he admits, calling it an initial “proof of concept” for their token model.

Useless Token is clearly trying to stand out from the crowd of joke-y meme coins with teams of anonymous founders. But that's no guarantee that anyone will make money with Useless Token, or that it won't crash and burn like many tokens that came before it, leaving broken dreams and promises in its wake. Even if that happens, though, some savvy risk-taking whales (investors with deep pockets) could make a bundle on the way up. At least on paper. 

Currently, each Useless Token is worth a tiny fraction of a penny—just $0.0000000102145, as of this writing—and its market capitalization (a snapshot of the total value of all tokens in circulation) sits above $7.4 million in total. But as Dogecoin proved earlier this year, rising from less than a penny per token to a May peak above $0.73 each, it’s possible for these seemingly useless crypto coins to catch fire via social media and multiply many times over in value. On the other hand, amidst a widespread crypto market downturn, Dogecoin’s price is currently 70 percent off that all-time high mark.

Useless Token is based on the Binance Smart Chain (BSC) blockchain platform, which offers a lower-cost alternative to the longer-established Ethereum. That has led to a flurry of oddball, experimental crypto projects in recent months, including SAFEMOON, which whipped up a social media frenzy this spring, as well as the anti-Elon Musk STOPELON and the ASS token. Meanwhile, on July 1, popular esports organization FaZe Clan dismissed and suspended players after they participated in an alleged pump-and-dump scheme around a BSC project called Save the Kids (KIDS).

While some of these tokens have taken off, the new Wild West of crypto is also littered with the skeletal remains of failed projects that once targeted the moon.