The crypto world has caught people’s imagination, but now another trend is emerging. Larger investors like financial institutions are preparing themselves to be able to enter the crypto market. The lures of amazing growth in crypto and promising prospects of the technology are both causing institutional players to rewrite their own investment policy rules.
This will enable them to start reallocating capital into a new asset class and it means much more liquidity is about to enter crypto markets in the not too distant future. Nevertheless, blockchain philosophy has a strong focus on delivering products directly to end-users without intermediaries. So it raises an important question for institutions – what’s in it for them?
Larger entities – and especially financial institutions – operate on a larger scale and they have dedicated departments and teams working in each particular area. There are many different functions in such an organization and continuous round-the-clock business activities that go with them. These factors create additional costs. Inevitably, new blockchain products will somehow need to create enough space in the business for the new type of player.
ECONOMIES OF SCALE
The X8 project has thought of that. Because of the size and the way institutions organize themselves they may want to play a larger role than simply being the end-user or an investor speculating on crypto market prices. A mechanism in the two tokens of our project (X8X and X8C) enables participants to operate at a larger scale and to do so efficiently.
It all starts with the X8X = √X8C equation. This relationship is a non-linear one. It postulates that higher on the scale of X8C allotment a lower percentage of X8X is required relative to the X8C amount. On one side this automatically helps to negotiate better terms for users who want to buy larger amounts of X8currency.
It eliminates the need for arbitrary deals to fix lower fees with increasing size, as in traditional business for example. Higher on the scale this means that for twice as much X8currency the buyer does not need to buy twice as much of the X8X utility token. The higher we look on the scale the lower the required ratio for additional X8C allotment increase will be.
LARGE DISTRIBUTORS’ EARNINGS
On the other hand, it opens up the required space for active participation in the business and lets institutional contributors earn from the distribution of the product, if they choose to pursue it. If an institution has the ability to distribute the product to smaller contributors, the equation can reward such activity.
10.000 X8X tokens allows for 100M allotment of X8currency. After the purchase the contributor can sell the same amount of X8X utility tokens to 100 smaller buyers. Every smaller contributor would buy 100 X8X tokens for individual access to 10.000 X8C units. If the tokens are distributed evenly it means that in total 100 smaller buyers together cumulatively will be able to access up to 1M X8C.
The effect of this is that utilization of X8X tokens becomes more stable and longer term in character. The possibility of 100 small contributors selling their X8X utility tokens all at once is significantly lower than that of a single larger contributor selling 10.000 X8X utility tokens. All in all, tokens become scarcer more quickly and at a lower market capitalization of X8currency. As a result, a large distributor will be able to charge a premium on the “wholesale” purchasing price of X8X utility tokens.
Institutions will be interested in all kinds of investments, yet because of the nature of these investors they will also look for safety and liquidity to match their size. The X8 project created a safe and stable currency – X8currency – with those characteristics which can satisfy institutional investors.
Because the X8currency product works without any fees and delivers the end product in a full fair value format, the token structure opens up many different possibilities. Institutions and large distributors can choose to play a proactive role in the X8 business. This will further increase liquidity and diversity in the X8X utility token market, which will also create more opportunities in the market for all participants.