Hi all - I have a Market Cap discrepancy that hopefully someone can answer.
I was reading the Tokenomics page on the Main Website and 1.25 Billion tokens were originally minted and distributed to early investors, devs, etc. Yet, when I look at CoinGecko, the circulating supply is 23 million.
That seems to cause an issue with overall value of the company.
The originally minted 1.25B coins are locked until Oct 2021, what happens when these enter the market? You would have to divide the price per token of these bringing overall price per token way down:
Current circulating supply:
24.13€ x 23 Million = 550M€ Market Cap(MC)
Actual Circulating supply come Oct:
24.13€ x 1.25B = 30B€ MC?
If we assume the price stays the same, that would mean.
When calculating market cap, why would you multiple price by circulating supply and then divide by total minted tokens? Until those tokens are released into the market, as part of the circulating supply, they should be ignored.
Also, look at what the Stellar Development Foundation did with their billions in XLM that they had minted but kept as part of the SDF, they burned them years into the project because they realized the community would benefit more from burning them.
The reason for dividing the price by total minted tokens is because those coins exist and are merely off the market ‘at the moment’. These 1.25Billion tokens exist, so the company would have to burn 1billion tokens come October.
Now, if you are developer or employee, you received x amount of tokens for working on this project. Come October you have access to your new found riches only to:
A) Find out the company burned 90% of your initial holdings
or
B) Attempt to sale them along with everyone else crushing the price to nothing.
I’m truly excited about this project but love to know how the Flow management will keep the price stable at release come October. Because my math is correct. Come Release date, you will have to divide market cap by the new circulating supply - or the company is valued at 30billion overnight.
If you have more arguments, I would love to hear them because I do want to invest more but this is troubling. If no solid solution is found, I would liquidate my holdings a day before they unlock all tokens.
Well, the $30 billion market cap is most certainly massive, but DOT and ADA both have greater market caps and arguably FLOW could be compared to those in terms of tech and perhaps even adoption.
I agree, the current price per FLOW is huge and it’s painful to enter the ecosystem using your own funds if you didn’t have any at the ICO, but such is the market because of the small float and staking, which reduces the float even more.
However, I do believe the market is pricing in the billion tokens and any news of supply reduction would only increase the price.
That also means there is not much air up and the investment risk/reward ratio is massivly decreased because we are already in the top10 considering the maximum supply.
And since the maximum supply is well visible on any site potencial investors can do the math and I doubt that this is going to attract them since the trend is to invest more in low cap. tokens/coins.
Also this allows haters to attack FLOW by spreading FUD due to that fact.
These are three major serious points to be considered as problematic from investor site.
I would like to invest actually more as I have now but I am hesitating and currently not willing to do so with these risks.