Veteran cryptocurrency expert Arthur Hayes has issued a warning about Monad, stating that the newly launched layer 1 blockchain could drop by up to 99% and become another failed experiment due to the hype of venture capital rather than actual adoption.

Speaking on Altcoin Daily, the former BitMEX director described this project as "a cryptocurrency with a high fully diluted valuation (FDV) and low circulating supply," arguing that its token structure alone puts retail investors at risk. FDV stands for Fully Diluted Value, which is the market value of a cryptocurrency project if all of its tokens were in circulation.

According to Hayes, projects with a large gap between the initial investment value (FDV) and circulating supply often experience initial price spikes, followed by significant sell-offs when internal tokens are unlocked. "This will be another price decline," Hayes said, adding that although every new coin is initially pumped, that does not mean it will develop a long-term use case.

Hayes stated that most new layer 1 networks ultimately fail, naming only a few—Bitcoin, Ether, Solana, and Zcash—as a small group of protocols he predicts will survive in the next cycle.

Last year, Monad raised $225 million in funding from venture capital firm Paradigm. The layer 1 blockchain officially went live on Monday, accompanied by the MON token airdrop.

Cointelegraph has contacted Monad for comment but has not yet received a response at the time of publication. #MON