Project Spotlight: Bitwave
Digital asset finance platform for enterprise. Features include tax & inventory, accounting, DeFi monitoring, NFT tracking, Payments, and Reporting + APIs.
Digital asset finance platform for enterprise. Features include tax & inventory, accounting, DeFi monitoring, NFT tracking, Payments, and Reporting + APIs.
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Exploring memecoin domination
🔹 Top 3 cryptocurrencies - $BTC, $ETH, and $USDT - have an average of $9-13Bn daily inflow volume.
🔸 Top 3 memecoins - $SHIB, $WIF, $PEPE - have an average of 2x - $20Bn.
Full article: https://thoughts.simplicitygroup.xyz/p/memecoins
🔹 Top 3 cryptocurrencies - $BTC, $ETH, and $USDT - have an average of $9-13Bn daily inflow volume.
🔸 Top 3 memecoins - $SHIB, $WIF, $PEPE - have an average of 2x - $20Bn.
Full article: https://thoughts.simplicitygroup.xyz/p/memecoins
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Imagine a coffee shop with free WiFi.
You have two types of people inside:
1. those who come to buy the coffee, and
2. those who just come to sit inside for the free WiFi.
From the outside, it looks like the coffee shop is busy and thus high quality, so it attracts more people to come and try the coffee. Even people who come just for free WiFi indirectly increase revenues.
Additionally, advertisers may start to pay the coffee shop to put up ads given the great foot traffic.
However, the issue starts to build under the hood as the coffee shop reinvests its revenue into improving the WiFi, instead of improving the coffee, service, and food...
the number of people who come and stay for WiFi keeps growing, but the number of people who come for coffee doesn’t (they try it, and leave).
Then one day, a new coffee shop opens with better WiFi.
> Every single person who was there for WiFi leaves.
> The advertisers also leave.
> Whatever advertisers there are left just make the experience worse for coffee buyers, so the buyers leave.
And now, what seemed to be a great business, hopefully has just enough revenue to survive.
⛔️ Welcome to the world of projects that focus on token holders instead of users 🫵
Full article: https://thoughts.simplicitygroup.xyz/p/token-holders-are-not-users
You have two types of people inside:
1. those who come to buy the coffee, and
2. those who just come to sit inside for the free WiFi.
From the outside, it looks like the coffee shop is busy and thus high quality, so it attracts more people to come and try the coffee. Even people who come just for free WiFi indirectly increase revenues.
Additionally, advertisers may start to pay the coffee shop to put up ads given the great foot traffic.
However, the issue starts to build under the hood as the coffee shop reinvests its revenue into improving the WiFi, instead of improving the coffee, service, and food...
the number of people who come and stay for WiFi keeps growing, but the number of people who come for coffee doesn’t (they try it, and leave).
Then one day, a new coffee shop opens with better WiFi.
> Every single person who was there for WiFi leaves.
> The advertisers also leave.
> Whatever advertisers there are left just make the experience worse for coffee buyers, so the buyers leave.
And now, what seemed to be a great business, hopefully has just enough revenue to survive.
⛔️ Welcome to the world of projects that focus on token holders instead of users 🫵
Full article: https://thoughts.simplicitygroup.xyz/p/token-holders-are-not-users
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One of our clients wanted to use a "mining" mechanism to supply tokens to the market, whereby users would "mine" the tokens by simply using the product.
If you want to do something similar, keep this in mind:
Without $BTC miners, the infrastructure would fail, hence, they're incredibly valuable, and are rewarded with a lot of money.
Will your infrastructure fail if you don't have your "miners"?
If not, then be careful with how much you reward them, and consider rewarding specific activities instead.
If you want to do something similar, keep this in mind:
Without $BTC miners, the infrastructure would fail, hence, they're incredibly valuable, and are rewarded with a lot of money.
Will your infrastructure fail if you don't have your "miners"?
If not, then be careful with how much you reward them, and consider rewarding specific activities instead.
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The crypto market has a lot of money in yield farming. Lido Finance alone has $32Bn locked up.
We borrow, restake, borrow more, restake... But all that APY has to come from somewhere, and it does - from the future.
But if real value doesn't get created to back up all that yield, we're no better than TradFi just before 2008.
Full article: https://thoughts.simplicitygroup.xyz/p/the-4d-defi-paradigm
We borrow, restake, borrow more, restake... But all that APY has to come from somewhere, and it does - from the future.
But if real value doesn't get created to back up all that yield, we're no better than TradFi just before 2008.
Full article: https://thoughts.simplicitygroup.xyz/p/the-4d-defi-paradigm
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We modelled multiple airdrop scenarios (with different vesting) to see what would happen to our client's token price, ceteris paribus.
It was concluded that unlocking their entire airdrop on TGE was best for mid-term price performance, based on:
- users @ launch
- airdrop allocation
- tokenomics
- launch strategy
- CEXs & DEXs
Whilst cliffs and shorter vesting allowed for higher pumps on launch, it made it harder to uphold price for the following months, given the starting conditions.
It was concluded that unlocking their entire airdrop on TGE was best for mid-term price performance, based on:
- users @ launch
- airdrop allocation
- tokenomics
- launch strategy
- CEXs & DEXs
Whilst cliffs and shorter vesting allowed for higher pumps on launch, it made it harder to uphold price for the following months, given the starting conditions.
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What is the purpose of tokens?
Token utilities are the practical applications of the token's purposes. At Simplicity, we've identified three - decentralisation, control, and data transfer.
1. Decentralization
In systems of pure distributed governance, you need a mechanism to keep everyone aligned - a la a carrot and a stick. Moreover, you need some way to transfer value between participants in a transparent way. Launch a token.
2. Sovereignty
In more centralised systems, you face counterparty risk of using someone else's medium of exchange. Don't be like the €; set your own policies in your own country. Launch a token.
3. Data Transfer
Cut costs, increase liquidity, and add security to your data transferring by putting it on-chain. Launch a token (potentially a non-fungible one).
Full article: https://thoughts.simplicitygroup.xyz/p/token-utilities
Token utilities are the practical applications of the token's purposes. At Simplicity, we've identified three - decentralisation, control, and data transfer.
1. Decentralization
In systems of pure distributed governance, you need a mechanism to keep everyone aligned - a la a carrot and a stick. Moreover, you need some way to transfer value between participants in a transparent way. Launch a token.
2. Sovereignty
In more centralised systems, you face counterparty risk of using someone else's medium of exchange. Don't be like the €; set your own policies in your own country. Launch a token.
3. Data Transfer
Cut costs, increase liquidity, and add security to your data transferring by putting it on-chain. Launch a token (potentially a non-fungible one).
Full article: https://thoughts.simplicitygroup.xyz/p/token-utilities
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Utilising dual token systems in your economy creates tough situations for aligning incentives.
For example, imagine your infrastructure project has the option for operators to stake $ETH (via EigenLayer) and/or your own token, $X.
You want them to stake $ETH for extra security, but staking $X reduces circulating supply and boosts token price. Which one do you incentivise, and how?
🟠 More rewards for $ETH stakers sounds like you don't care about token performance, and begs the question: why even have a token?
🟠 Same rewards don't incentivise users buying $X at all.
🟠 More rewards for $X stakers sounds like you don't care about security, and users with $ETH might not be bothered to participate at all: missed opportunity.
What would you do? Our solution will be posted later...
For example, imagine your infrastructure project has the option for operators to stake $ETH (via EigenLayer) and/or your own token, $X.
You want them to stake $ETH for extra security, but staking $X reduces circulating supply and boosts token price. Which one do you incentivise, and how?
What would you do? Our solution will be posted later...
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Why you need modelling
Simulating your economy, fundamentally, saves you time and money. Being able to visualise cause and effect, stress-test your assumptions, find ideal parameters, and plan for unlikely (but possible) black swan events, allows you to mitigate severe problems or avoid them altogether post launch.
Full article: https://thoughts.simplicitygroup.xyz/p/modelling
Simulating your economy, fundamentally, saves you time and money. Being able to visualise cause and effect, stress-test your assumptions, find ideal parameters, and plan for unlikely (but possible) black swan events, allows you to mitigate severe problems or avoid them altogether post launch.
Full article: https://thoughts.simplicitygroup.xyz/p/modelling
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Simplicity Group Alpha
Utilising dual token systems in your economy creates tough situations for aligning incentives. For example, imagine your infrastructure project has the option for operators to stake $ETH (via EigenLayer) and/or your own token, $X. You want them to stake…
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Burning tokens is good for price charts, but often bad for long-term ecosystem health.
Whilst it can boost token prices by attracting speculative buyers and "reducing supply", it creates a free-rider problem, whereby every token holder is rewarded for simply owning tokens whether they add value to the ecosystem or not.
This value leakage can be costly in a super competitive market.
The solution: redistribute to real users.
8 other reasons why burning isn't good: https://thoughts.simplicitygroup.xyz/p/token-utilities-burning
Whilst it can boost token prices by attracting speculative buyers and "reducing supply", it creates a free-rider problem, whereby every token holder is rewarded for simply owning tokens whether they add value to the ecosystem or not.
This value leakage can be costly in a super competitive market.
The solution: redistribute to real users.
8 other reasons why burning isn't good: https://thoughts.simplicitygroup.xyz/p/token-utilities-burning
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Valuing your company is much easier than people make it out to be.
Let's say you're raising pre-seed at $20M val. Just ask yourself, "Would I buy my whole company for $20M if someone was selling it to me?"
Your brain goes from: "Haha I'm the guy, this is the best idea ever, and it's worth TRILLIONS! $20M is CHEAP!!!1!!1"
To: "Ok so I'll be paying $20,000,000 for a Canva presentation, a loose business plan, and a 40 line codebase."
Do that until it makes sense.
P.S. This is for equity. Here's our thoughts on tokens: https://thoughts.simplicitygroup.xyz/p/how-to-value-tokens
Let's say you're raising pre-seed at $20M val. Just ask yourself, "Would I buy my whole company for $20M if someone was selling it to me?"
Your brain goes from: "Haha I'm the guy, this is the best idea ever, and it's worth TRILLIONS! $20M is CHEAP!!!1!!1"
To: "Ok so I'll be paying $20,000,000 for a Canva presentation, a loose business plan, and a 40 line codebase."
Do that until it makes sense.
P.S. This is for equity. Here's our thoughts on tokens: https://thoughts.simplicitygroup.xyz/p/how-to-value-tokens
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Staking for rewards should not be the token’s main or only utility (unless you're using it as slashable collateral to disincentivise malicious behaviour).
It can attract users massively, but the question is, What kind of users are being attracted?
Don’t rely on staking rewards to boost your DAU as it's a false sense of achievement and success which can disappear in an instant.
It can attract users massively, but the question is, What kind of users are being attracted?
Don’t rely on staking rewards to boost your DAU as it's a false sense of achievement and success which can disappear in an instant.
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Wonder how much impact a token can have on market dynamics?
Opensea had ~70% market share, then Blur came along. Blur organised an airdrop, but in order to qualify for it, people had to not only list NFTs on Blur, but also delist from Opensea.
The chart speaks for itself.
A token can be a very powerful tool.
Opensea had ~70% market share, then Blur came along. Blur organised an airdrop, but in order to qualify for it, people had to not only list NFTs on Blur, but also delist from Opensea.
The chart speaks for itself.
A token can be a very powerful tool.
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Token modeling is not about predicting prices. It’s about understanding your economy on a deeper level:
→ Reveal hidden vulnerabilities
→ Prevent catastrophic failures
→ Avoid risks of liquidity issues
Don't be like Luna & UST.
Full article: https://thoughts.simplicitygroup.xyz/p/modelling
→ Reveal hidden vulnerabilities
→ Prevent catastrophic failures
→ Avoid risks of liquidity issues
Don't be like Luna & UST.
Full article: https://thoughts.simplicitygroup.xyz/p/modelling
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