PEARL Faces Major Inflation, Demand and Security Risks
Blockworks researcher Jake Koch-Gallup argues that PEARL’s rapid rise is not supported by strong fundamentals, despite its novel Proof of Useful Work (PoUW) model, which uses AI computation to help secure the network. He identifies four key risks for PEARL traders: annual token supply growth of about 85% could create heavy selling pressure; AI customers pay in US dollars, so rising computing demand may not translate into direct demand for PEARL; widely available, rentable data-centre GPUs could leave the network vulnerable to 51% attacks; and early Zcash’s sharp price decline during rapid supply growth offers a cautionary comparison.
The article estimates that newly mined PEARL worth about $2.2 million is distributed daily, against average daily trading volume of roughly $8.5 million. It also says the token’s market value has risen about eightfold from its August low, while Coinbase added PEARL to its listing roadmap on 19 October. The bullish case points to PEARL’s 2.1 billion hard supply cap, potential dual revenue for GPU miners and a team with academic and technology-sector credentials. However, the analysis concludes that high inflation and limited token-based demand could weigh on PEARL’s price, even if market enthusiasm continues in the short term.
Bearish
The article is bearish for PEARL because it highlights substantial potential supply pressure and questions whether real-world AI activity creates lasting demand for the token. The cited estimate that daily new issuance is worth about $2.2 million—around 30% of reported average daily trading volume—suggests that miners’ sales could absorb a large share of market liquidity. The author also argues that customers pay for AI services in dollars, meaning increased usage may benefit service providers without creating equivalent buying demand for PEARL. Concerns about rentable GPU capacity add a separate network-security risk.
In the short term, strong narrative momentum, the project’s reported price gains and Coinbase’s listing-roadmap mention could continue to attract speculative buyers and increase volatility. Traders may watch trading volume, exchange listings, miner selling and changes in circulating supply for signs that demand is keeping pace with issuance. Over the longer term, persistent high inflation without clear token-denominated demand could pressure prices and weaken confidence in PEARL’s monetary-premium thesis. The article compares the risks with early Zcash, whose price fell sharply during a period of rapid supply growth, and with attacks on smaller proof-of-work networks that relied on widely available hardware. These are cautionary parallels, not proof that PEARL will follow the same path; actual outcomes will depend on adoption, token economics, network security and market conditions.