1) ⚠️ FA CLASSES PART 4 ⚠️
As part of our weekly FA classes, we'll start with the 4th step of researching a cryptocurrency:
''Analysing the tokenomics of a crypto project''
Case-study and homework provided down below 🧵 👇
➡️ You will have 2 days to participate ⏰
As part of our weekly FA classes, we'll start with the 4th step of researching a cryptocurrency:
''Analysing the tokenomics of a crypto project''
Case-study and homework provided down below 🧵 👇
➡️ You will have 2 days to participate ⏰
2) People often forget that we are buying cryptocurrencies and not stocks.
They think they are investing into the project or company when they buy a token.
⏩ You don't.
Unlike traditional stocks, cryptocurrencies don't represent the project.
They think they are investing into the project or company when they buy a token.
⏩ You don't.
Unlike traditional stocks, cryptocurrencies don't represent the project.
3) This basically means the project can be a giant success while its crypto token is still worthless.
⏩ Not all projects need a crypto token.
There needs to be a specific reason why a crypto token is needed.
⏩ Its value capture.
That reason is called the tokenomics.
⏩ Not all projects need a crypto token.
There needs to be a specific reason why a crypto token is needed.
⏩ Its value capture.
That reason is called the tokenomics.
4) The tokenomics can be divided in 2 parts:
• It's value capture
• Supply
Let's start with the value capture like we explained above ↓
• It's value capture
• Supply
Let's start with the value capture like we explained above ↓
5) ⭐ Case-study
One of the previous crypto projects we analysed was $QNT.
An interoperability project that looks to connect different blockchains.
It does this through a blockchain operating system they call "Overledger".
Awesome concept, all star team, all star everything.
One of the previous crypto projects we analysed was $QNT.
An interoperability project that looks to connect different blockchains.
It does this through a blockchain operating system they call "Overledger".
Awesome concept, all star team, all star everything.
6) I did my fundamental analysis on the first few steps so it's a good investment right?
What if I could use or purchase the product called "Overledger" without needing the token $QNT.
What if the whole world adopted "Overledger"?
What if I could use or purchase the product called "Overledger" without needing the token $QNT.
What if the whole world adopted "Overledger"?
7) We would see a trillion dollar company in the making with a 0$ token.
See what could happen?
Luckily this was just an example.
Reality is that you can only purchase the license to obtain "Overledger" in $QNT tokens.
See what could happen?
Luckily this was just an example.
Reality is that you can only purchase the license to obtain "Overledger" in $QNT tokens.
8) There is no single other way to obtain it.
You can't purchase it in dollars, euros or any other currency besides $QNT.
See how this directly attaches the success of Overledger to the token?
#QNT does a lot more things btw but this was one of the "value capture" methods.
You can't purchase it in dollars, euros or any other currency besides $QNT.
See how this directly attaches the success of Overledger to the token?
#QNT does a lot more things btw but this was one of the "value capture" methods.
9) Some products however have no value capture in their token.
This can be because of bad design or just because there was never a need for a token.
And yet they do have one...
⏩ Investors buying into an unneeded token is free money for them.
This can be because of bad design or just because there was never a need for a token.
And yet they do have one...
⏩ Investors buying into an unneeded token is free money for them.
10) This is basically what the whole market is struggling with.
It's either full of scams or unneeded tokens out there.
So make sure there's a value capture before you buy into one.
Are we done? Not yet.
Next part is very short though. I promise. Almost there.
It's either full of scams or unneeded tokens out there.
So make sure there's a value capture before you buy into one.
Are we done? Not yet.
Next part is very short though. I promise. Almost there.
11) Token supply
In our previous lesson we talked about the market cap and fully diluted valuation.
The sole reason for this difference is because of the token supply.
When a crypto is created there's usually a limited amount of them.
In our previous lesson we talked about the market cap and fully diluted valuation.
The sole reason for this difference is because of the token supply.
When a crypto is created there's usually a limited amount of them.
12) This amount however isn't always fully released.
Many of the team's tokens or those reserved for partners or other parties are still locked.
This is a purpose design choice to protect price in the beginning and not make price dump (less sell pressure).
Many of the team's tokens or those reserved for partners or other parties are still locked.
This is a purpose design choice to protect price in the beginning and not make price dump (less sell pressure).
13) This is a good thing from the teams point of view.
Not so much from the investors point of view however.
The less tokens in circulation versus the total amount the worse it is.
⏩ Do you have a first edition charizard Pokémon card worth thousands of dollars?
Not so much from the investors point of view however.
The less tokens in circulation versus the total amount the worse it is.
⏩ Do you have a first edition charizard Pokémon card worth thousands of dollars?
14) What would happen if all of a sudden the Pokémon company started printing them again and release on the markets?
The value would significantly drop because of the increase in supply.
Token unlocks are no different.
The value would significantly drop because of the increase in supply.
Token unlocks are no different.
15) We visit @coingecko and look for $QNT.
The example below is near perfect.
Almost all of the circulating supply is already on the markets.
This doesn't mean anything less is bearish.
Token unlocks are normal. Even crucial.
Especially for newly released projects.
The example below is near perfect.
Almost all of the circulating supply is already on the markets.
This doesn't mean anything less is bearish.
Token unlocks are normal. Even crucial.
Especially for newly released projects.
16) An acceptable ratio is having at least 40% of the circulating supply already on the market.
This does NOT include newly released projects.
They usually have such a low market cap that this doesn't matter yet and is normal.
This does NOT include newly released projects.
They usually have such a low market cap that this doesn't matter yet and is normal.
17) So in general:
• Find the value capture from the token (use case).
• Find the supply ratio.
Some would argue tokenomics might be the most important aspect of a cryptocurrency investor.
Although the entire puzzle is still the most important and not the
individual pieces.
• Find the value capture from the token (use case).
• Find the supply ratio.
Some would argue tokenomics might be the most important aspect of a cryptocurrency investor.
Although the entire puzzle is still the most important and not the
individual pieces.
18) ⭐ Homework
Feeling confident? Now it's YOUR turn.
→ @Aptos_Network - $APT
→ @MNWSupplyChain - $MNW
1) You like both projects tremendously.
2) You do a tokenomics check.
3) What are your findings? Do you consider the token needed and supply favorable?
Comment below👇
Feeling confident? Now it's YOUR turn.
→ @Aptos_Network - $APT
→ @MNWSupplyChain - $MNW
1) You like both projects tremendously.
2) You do a tokenomics check.
3) What are your findings? Do you consider the token needed and supply favorable?
Comment below👇
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