Demand Deep Dive
Tokonomics DOA suggested we define actual demand numbers to get a more granular understanding of the potential demand on our token.
The below is public data on a Top 2 cash-rewards provider - FY-2018.
> $15 Mil in cashback commissions.
> if 10% of that went to token = $1.5 Mil of $OODLZ could be staked per year.
Benchmark comparison
Compared with the StormX ($STMX) token, during the first months after TGE, we can rule out any initial speculating noise and say that in May 2018, it had approximately a $150 Mil market cap with a spot price of around $0.036. In turn, the circulating supply was about 4b tokens. So, according to our tokenomics proposal, you'll release about 600 Mil tokens at the end of the first year. We can argue the same competitor's market cap ($150 Mil) for comparison purposes. That leads to a $OODLZ estimated average price of $0.25. Thus, $1.5 Mil worth of $OODLZ corresponds to 6 Mil tokens expected to be staked during the first year.
I made a draft on our THUB page, have a look in the Supply & Demand Overview section.
You may notice that, according to such estimations, there is a considerable gap between overall supply and estimated demand, meaning that the actual token use cases and utility (i.e. demand) could not be enough to absorb the issuance (i.e. supply), thus increasing the chances of price depreciation. Of course, data should also be adjusted based on the available user base growth estimation. The demand gap could be cut by properly deploying suggested demand drivers and mechanisms.
Always for comparison purposes, we can have a look at on-chain data. $STMX boasts a staked supply of about 1.13b out of 11b circulating, which means around 10% staked. The number of total holders is approximately 2.600, which suggests a staking participation rate of ~0.15% (token holders / total users; more than 2m total users according to the official website), and an average staked tokens per holder equal to 435k tokens (averaging falls into StormX Gold tier). You may want to seek to not concentrate staked supply in the hands of such a few users (token centralization and manipulation).
Additional demand considerations
To give a better estimate of the token demand, we should also consider the demand that comes from other parameters. While the 10% of the expected commissions can be a good source of truth, users may want to increase/decrease their staked participation depending on the following:
How much yield is derived from DeFi's proposed investment
How much yield (i.e. new token emission on top of DeFi yield – community rewards) you'd add to further incentivise users' adoption
Staking mechanism in place (good/bad behaviours incentives, lockup, progressive taxes)
And users would also consider further potential token demand drivers on top of staking rewards such as lotteries, competitions, referrals, discounts, promotions.
Estimating demand for a specific token is a complex process involving both technical and fundamental analysis. Consider the below factors to assess your particular token demand further.
Demand = f (Market Sentiment, Use Case, Partnerships, Tech & Team, Regulatory Environment, Tokenomics, Market Conditions, Exchange Listings, Roadmap, Competitors)
Market Sentiment: it could be quantified using sentiment analysis on social media posts or news articles about the token.
Use Case and Utility: it depends on what problem the token solves and what utility it provides in its ecosystem. Each additional token demand driver, which brings more utility to the user (as suggested in the deliverables doc), increases the demand for the token. The use case parameter might be quantified by the market size the token targets.
Partnerships and Integrations: if the token is being adopted or partnered with well-known brands or other crypto-relevant projects, this can increase its visibility and credibility, thus potentially increasing demand. The number and reputation of partners could quantify partnerships.
Development Team: assess the credentials of the development team. A solid technical foundation and a team's credibility (and experience) can lead to increased demand.
Regulatory Environment: regulatory news can significantly affect demand. It would help if you deeply understood the regulatory environment for specific countries to which you propose your service.
Tokenomics: parameters like total supply, circulating supply, emission rate, incentives sustainability, and any mechanisms for controlling supply and demand balance are essential to assess the demand for your token. Adjust $OODLZ tokenomics based on our recommendations. This helps you to optimise such parameters.
Market Conditions: the overall condition of the cryptocurrency market will also affect token demand. Also, emergent crypto narratives help to understand the market's direction and how they can affect your specific service/product.
Exchange Listings: the availability of the token on major exchanges can significantly affect its demand. Exchange listings could be quantified by the number and reputation of exchanges the token is listed on.
Roadmap and Future Plans: consider the project's roadmap and plans. If they have ambitious and achievable goals, this can increase demand for the token. The roadmap could be quantified by looking at the number and significance of upcoming milestones.
Competitors: look at similar tokens or projects and compare the value propositions. Competitors could be quantified by looking at similar tokens' market cap and popularity. If it has clear advantages or unique features, demand may be higher.
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