The entire business model of the X8 project is tokenized. In the absence of fees in the model the X8 utility token (X8X) plays the role of an indicator of business activity. This text describes how business activity effects are transformed into X8 utility token price appreciation.
CONTRIBUTION SUCCESS FACTORS
The X8 token model enables business effects to develop for the contributors without passive value distribution mechanisms. Because any user needs the X8X token first in order to trade a certain amount of X8currency from the issuer, X8X behaves as a license. It is the entry product of the system. The price of this license will be determined freely by the market.
Nevertheless, even though X8X holders and contributors will have subjective participation in the formation of the X8X market price, there are objective and observable factors, which will drive the price of the X8 utility token. These objective factors can be summed up by three main points. The first is the overall average trade size of the X8currency, second is the level of X8X token utilization and its scarcity and third is market capitalization developments in the crypto market and the level of cautiousness connected to it.
AVERAGE X8CURRENCY ALLOTMENT
If the user wants to use X8currency, the token model calculates the level of X8 utility token requirement for any requested X8currency allotment size. The formula shows that with increasing X8currency allotment size the relative requirement amount of X8X token decreases. Therefore, users with larger allocations will be able to afford to pay higher prices for the X8X token.
This table below shows how the price of the utility token can change when contributors will start to increasingly use the X8currency. With everything else unchanged, each time the average trade size of X8C increases by a factor of 100, the price of X8X can increase by a factor of 10.
The table shows 2 scenarios. The first assumption is that X8 utility token buyers will want to pay up to 1% of the value of their assets to buy X8X. The second scenario shows calculations if buyers want to pay up to 3% of the value of their assets to have this direct safe haven functionality ready.
Regardless of whether the subjective drivers put a higher premium or a lower premium than 1%, the effect of overall average trade size remains independent and will influence price development according to the ratios shown.
LEVEL OF X8X UTILIZATION
When the market will accept and start adopting X8currency, an increasing amount of X8 utility tokens will be taken out of circulation. Users will utilize their X8X tokens to start using X8currency functionality. However, the issuance volume of X8X tokens is fixed and no more than 100.000.000 will exist.
The scarcity effect will grow and by the time all X8X tokens will be utilized, contributors will gradually start pricing in an additional premium for the X8 utility token. This premium will reflect the level of return, which existing users will be able to generate on their X8currency contribution.
The level of this safe return, generated by Automatic Reserve Management AI is estimated to be between 1-3% p.a. on assets held. This represents additional potential to be built into the price of X8X as the utilization of this token increases.
This scarcity premium can amount to $160M – $480M in just one year. If X8X license tokens will have very high and stable utilization, the market has the potential to price in more than one years’ worth of scarcity premium.
MARKET CAP AND FEAR PREMIUM
Inevitably, the appreciation of the X8X token will also depend on the size of the entire market, in which our product will compete. Trends show that a lot of additional new liquidity is about to enter the crypto market.
The source of this new liquidity will increasingly come from financial institutions, who have not yet participated with significant shares so far because of investment policy rules adopted before the crypto market existed as an asset class. Efforts are being expended on the part of institutions to change the outdated asset class categorizations, which will enable crypto market capitalization to go from billions to trillions.
An additional 10-fold or larger increase in market capitalization will bring bigger opportunities for existing crypto contributors to take their profits. The average level of risk aversion is also higher among institutional contributors, who want to play it safe when dealing with larger volumes. This creates the demand for liquid safe haven instruments.
Currently the market cycle is still in its “Stealth Phase”, approaching “Take off” point as shown in the next chart. With the lack of regulatory certainty and fully compliant, liquid and stable crypto investment alternatives there is only minimum speculative institutional presence in the crypto market. This participation characteristic shows overall how early in the cycle the crypto market and blockchain technology is really positioned.
The effect of average X8C trade size increase is independent of any market capitalization growth effect. X8currency can increase average trade size by gaining market share, even if broader crypto market capitalization does not increase. When both are at work, the multiplication effect is magnified.
VALUE REFERENCE POINTS
The equation for our contributors says that in order to achieve the highest possible return on contribution, it is best to deliver a working product to the market with the lowest possible contribution level. Because the project will create a fixed amount of 100.000.000 X8X tokens, the level of funds raised during the TGE (token generation event) inevitably translates into production price per X8X token. The production price of this token will be the benchmark against which the business effects for initial project investors will be measured.
When long-term production capability is already in place and the product is already on the market, the floating market price of this “entry ticket” token is the only remaining reference point. The difference between market price on the crypto exchanges and the production price of the license represents the entire upside above the amount of the contributions made to establish production.
This upside potential is split between the contributors and the project based on percentages from the X8X token distribution, which sums up a simple but effective business model working completely in the tokenized domain.
In 2017 the majority of fundraising for start-ups has been recorded to come from crypto investors for the first time. Bitcoin holders have become a dominating force in this field, taking over the reins from traditional VC investors. Nevertheless, Bitcoin investors see the environment from the perspective of their cryptocurrency.
Bitcoin started with a market capitalization of less than $2 million and was able to multiply by more than 5.000 times in around 8 years. The key point is can a new product be offered to the crypto market with the potential to appreciate at the rate at least equal to that of Bitcoin going forward?
Only if this cognitive link can be made and the answer is yes, then there is a good chance that Bitcoin holders will decide to contribute to such a new product and accept it. The low initial production price of the TGE product plays an important role in reaching this position in the market for us.
The calculation above shows that the X8X utility token price can multiply by 1.000 times. This can happen without taking into account the market fear premium. During phases when the market is fearful of 30%, 50% or larger crypto market price drops, contributors will be willing to pay prices higher than 3% to keep their investments safe. If speculative traders in crypto will start using X8X as a proxy for a crypto market short, the premium would rise beyond the 3% level.
The X8 project focuses on a market area which is currently uninhabited. Crypto market capitalization is projected to grow further, yet relative growth will be larger in the stable money segment. This segment will start gaining on the share that long-only instruments currently have.
More than 10% of total crypto market capitalization will be allocated from speculative long-only investments into stable and conservative investments during the period of 2018-2019. The prediction is that in 2-5 years conservative investments will match the level present in current densely populated speculative area. The majority of money will come from new liquidity sources such as TGE’s, institutions and traditional investors. More than $100B in additional market capitalization will be created in various stable instruments. X8currency targets a 5-10% market share in the segment.
Together with the neutral market segment, another sophisticated market segment will start to grow. By 2020 between 1%-5% of total market capitalization will be in crypto tokens that behave as market shorts. Total market capitalization of this market segment will reach $10B. X8X, which behaves as a benchmark volatility index (similar to VIX), is targeting a 10% or larger market share. We are positioning X8X to be the market leader in this segment.
X8currency (X8C) will target the neutral market segment with the following 3-year amount of assets under management (AUM) projection:
- $100.000.000 AUM – 2018
- $1.000.000.000 AUM – 2019
- $10.000.000.000 AUM – 2020
X8 utility token (X8X) will target the market short segment with the following 3-year market capitalization projection:
- $50.000.000 AUM – 2018
- $200.000.000 AUM – 2019
- $1.000.000.000 AUM – 2020
The unique and solid concept foundation of the X8currency and X8X utility token are the best precondition to enter a part of the market space which remains uninhabited. This space is ideal for market share growth. Differentiation of our products from general crypto market competition is very strong.
Working infrastructure, strategic market position and very high economic efficiency are the ingredients required for a new product to successfully compete for TGE contributors’ funds. We have a strong position here as well. The X8 project has a long-term development track record, existing fulfilled milestones and a team with experience.
We have created a unique business model with attractive economic dynamics. X8X TGE can become a vehicle of choice for dynamic crypto contributors – even for those who have grown accustomed to Bitcoin as their primary benchmark.