On June 22, the native token of modular blockchain Celestia (TIA) plummeted to an all-time low of $1.32, representing a staggering 92% decline from its peak of $20.85. This sharp downturn triggered significant concerns within the community, forcing the project’s leadership to propose fundamental changes to its consensus model.
Price Collapse Raises Transparency Concerns
Market panic intensified after allegations circulated about insider trading and opaque token sales. A user under the pseudonym 0xCircusLover accused Celestia’s core team of conducting multiple over-the-counter (OTC) token sales and allegedly coordinating paid promotional campaigns to artificially inflate TIA’s visibility across social media.
The accusations suggested that since October 2024, the team had been selling tokens that were previously locked in vesting contracts - with an estimated total value approaching $1 billion at that time.
In response, Celestia co-founder Mustafa Al-Bassam dismissed the allegations as FUD (Fear, Uncertainty, and Doubt), asserting that the project remains intact and operational.
“Nearly every coin experiences a 95% drawdown at some point in its lifecycle,” Al-Bassam stated, emphasizing that Celestia retains a robust financial reserve.
“We still have a war chest of $100 million and a runway that extends for six years. We are fully prepared for the long game.”
Proposal to Transition from Proof-of-Stake to Proof-of-Governance
In response to growing pressure, Celestia co-founder John Adler unveiled a proposal to replace the current Proof-of-Stake (PoS) consensus model with a novel mechanism termed Proof-of-Governance (PoG).
The proposed system aims to significantly curb token inflation by reducing issuance from 5% to 0.25% annually, a forecasted change designed to stabilize tokenomics while maintaining network security.
Adler explained that the new model would eliminate the complexities surrounding liquid staking derivatives while offering a simpler, more equitable approach to passive income generation within the ecosystem.
Key Components of the Proof-of-Governance Proposal:
- Token issuance would be reduced by a factor of 20, directly addressing concerns about inflationary pressures.
- Validators would continue to receive issuance-based rewards for securing the network.
- Token holders would be empowered to select node operators without needing to lock up tokens, though they would forego staking rewards under this structure.
- The proposed system forecasts improved sustainability for the Celestia network by realigning incentives.
Following the release of the proposal, TIA experienced a modest price recovery, climbing approximately 10% to $1.65. However, analysts remain divided on whether this rebound signals a longer-term reversal or merely a reactionary correction.
Forecast and Industry Context
This governance pivot aligns with a broader trend where blockchain projects reassess tokenomics to improve resilience. Analysts predict that networks unable to effectively manage inflation and governance risks could face prolonged downward price pressure.
The Celestia situation echoes recent turbulence in other blockchain ecosystems. In May 2025, Movement Labs removed co-founder Rushi Manche amid allegations of price manipulation related to the MOVE token - underscoring the growing importance of governance transparency across the crypto sector.
Looking Ahead
What do we end up with?
- Analysts forecast that adopting Proof-of-Governance could stabilize TIA’s tokenomics if implemented effectively.
- Community response will play a critical role in whether the proposal garners sufficient support for activation.
- Market participants are closely monitoring whether Celestia’s case will become a blueprint for governance reform or serve as a cautionary tale for modular blockchain projects.
The coming months are likely to determine whether Celestia’s pivot can reverse the downward trajectory of TIA and restore confidence in its long-term fundamentals.
