I ended the last post, (3,3), with this: Explicating the incentive structures behind financial products and complex crypto schemes is a foresight-superpower in a market populated by retail investors and increasingly obfuscated tokenomics. “Show me the incentive and I will show you the outcome’
Love your post. But just wondering wouldn't the negative flywheel works both ways and become a powerful uptrend when looks price starts trending up? Looks price increase resulting in higher $ looks volume and higher weth and so on and so forth
It does work that way too! If there is an uptrend, then the project's staking APY gets better as the price goes up, making it even more attractive as it's trending up.
But the flywheel is negatively biased because the volume contains some people gaming the system to buy more $ LOOKS rewards than they spend in $ WETH fees. They then sell that LOOKS for WETH to repeat the process.
Eg. if they start with 100 ETH, they wash trade it for LOOKS rewards worth more than 100 ETH, and then sell LOOKS back to WETH hoping for 105 WETH or more. Then they do it again the next day.
But this process means a constant % of the newly emitted volume reward is just selling pressure, potentially driving the price down if it is excess of bid. If the price is down, the available $ amount of LOOKS volume rewards is also down since the LOOKS amount is fixed. If those rewards are lower, people will wash trade less, creating lower WETH rewards, making it less attractive to holders. And so on.
This is also a factor with the reduction in volume emissions in the future. As the fixed amount of LOOKS per day emitted reduces permanently, the amount of washtrading will too, and thus the rewards per LOOKS will. At the same time, more supply will be available, so the rewards will be shared amongst more staked supply reducing rewards per LOOKS even further.
Really, it just comes down to: can they build and sustain a real marketplace? If so, fees going to users/owners will be powerful continued network effect. If not, well...
why shouldn't they be able to build a real marketplace? it seems like a good alternative to the OS monopoly. Net of this continuous sell pressure that however will decrease with the decrease of the rewards and therefore of the wash trading, seems to me that for the avg/retail user it's an attractive alternative to OS...so the model is likely to work. or am i missing something?
Please create a post explaining good tokenomics for early projects and giving examples of tokenomics that entice, investors, retail and post-listing buyers to buy&hold. I know it's not only about that but I'm asking myself the question: is it better to have long vesting rounds (increased risk) or a big MC, closer to the FDV (low selling pressure) or something that I don't yet understand.
PS: I love your examples and I would love to see more in the tokenomics article.
Super dope post. Unlikely but would love to go through some of the bottom part of that article in more detail with you to better understand the flow of tokenomics working. Will probably just read it a few more times. If not though hit me up at @azeemk_ on twitter
What other resources would you recommend to better understand tokenomics vestings / FDV ranges / tokenomics <-> FDV <-> MC relation, etc. (some medium-advanced, not the classical youtube info)
Hi mate, another great post, thanks. I run a popular Premier League website and want to put together a balanced article pushing back a bit on a lot of the mainstream sports journalists that are peddling the crypto is the work of devil narrative. Was hoping you could help in pointing me in the right direction towards someone who could help. Cheers.
Great read as usual Sir!
If I may, you could have just skipped your "I am nobody, I am nothing" introduction though.
"The pride that prides itself under modesty is the most unbearable of all". M.Aurele.
You're brillant, your records speak for you, you know it and everybody knows.
No need to brag but, the same way, no need to "falsely" shame yourself.
Thanks for everything.
With love and respect.
Love your post. But just wondering wouldn't the negative flywheel works both ways and become a powerful uptrend when looks price starts trending up? Looks price increase resulting in higher $ looks volume and higher weth and so on and so forth
It does work that way too! If there is an uptrend, then the project's staking APY gets better as the price goes up, making it even more attractive as it's trending up.
But the flywheel is negatively biased because the volume contains some people gaming the system to buy more $ LOOKS rewards than they spend in $ WETH fees. They then sell that LOOKS for WETH to repeat the process.
Eg. if they start with 100 ETH, they wash trade it for LOOKS rewards worth more than 100 ETH, and then sell LOOKS back to WETH hoping for 105 WETH or more. Then they do it again the next day.
But this process means a constant % of the newly emitted volume reward is just selling pressure, potentially driving the price down if it is excess of bid. If the price is down, the available $ amount of LOOKS volume rewards is also down since the LOOKS amount is fixed. If those rewards are lower, people will wash trade less, creating lower WETH rewards, making it less attractive to holders. And so on.
This is also a factor with the reduction in volume emissions in the future. As the fixed amount of LOOKS per day emitted reduces permanently, the amount of washtrading will too, and thus the rewards per LOOKS will. At the same time, more supply will be available, so the rewards will be shared amongst more staked supply reducing rewards per LOOKS even further.
Really, it just comes down to: can they build and sustain a real marketplace? If so, fees going to users/owners will be powerful continued network effect. If not, well...
great post as always.
why shouldn't they be able to build a real marketplace? it seems like a good alternative to the OS monopoly. Net of this continuous sell pressure that however will decrease with the decrease of the rewards and therefore of the wash trading, seems to me that for the avg/retail user it's an attractive alternative to OS...so the model is likely to work. or am i missing something?
Yeah. I guess the network effect has to sustain and they might possibly be a true competitor to Opensea with a better incentive structure for users
Great insight brilliantly presented. Crypto is such a fast forward on everything that has up till now defined the world.
Please create a post explaining good tokenomics for early projects and giving examples of tokenomics that entice, investors, retail and post-listing buyers to buy&hold. I know it's not only about that but I'm asking myself the question: is it better to have long vesting rounds (increased risk) or a big MC, closer to the FDV (low selling pressure) or something that I don't yet understand.
PS: I love your examples and I would love to see more in the tokenomics article.
Super dope post. Unlikely but would love to go through some of the bottom part of that article in more detail with you to better understand the flow of tokenomics working. Will probably just read it a few more times. If not though hit me up at @azeemk_ on twitter
great post as always. as crowd sourced editor i just wanted to suggest consistency in writing $looks vs LOOKS
My portfolio thanks you.
What other resources would you recommend to better understand tokenomics vestings / FDV ranges / tokenomics <-> FDV <-> MC relation, etc. (some medium-advanced, not the classical youtube info)
Do people just non stop ask you for money? Dafuq...Now Im wondering who you actually are lol. Do they know? Or just ask anyone who comes off wealthy.
Ah cobie on the contrary you are quite smart and not so naked anymore. Thanks for these detailed insights, always a pleasure. Have a great day
thanks Cobie
Excellent post!
Great post @Cobie👍
Loved your opening remarks of not knowing shit, it was quite hilarious.
Humble King Cobie
pfff... I don't know why you brag about being an idiot. I out-idiot you everyday of the week like 20X without even trying! :))))
Hi mate, another great post, thanks. I run a popular Premier League website and want to put together a balanced article pushing back a bit on a lot of the mainstream sports journalists that are peddling the crypto is the work of devil narrative. Was hoping you could help in pointing me in the right direction towards someone who could help. Cheers.