#Crypto-theory: Internal Unintended Expungment

#Crypto-theory: Internal Unintended Expungement

Just another theory on alternative digital asset valuations

To Alt or not to Alt, that is the question…

What happens when an untested-digital economics model meets the brutal reality of the global economy?

You are about to hop into the driver’s seat of a crypto project and begin to feel just what kind of role economics play in just about everything about a crypto projects long term viability.
Strap up in that Lambo (courtesy of Crypto Project XYZ Network) and let’s go. You’re on your way to building the decentralized crypto future through your own eyes and this is how:

I tried to steer clear of complex mathematics and technicalities: and stay Layman

Let’s start this party with a little mixture of real-world economics and simple algebra.


You want to leverage the power of DLT / blockchain technology and create a provably fair gambling platform. To do this you would need a team, lets just for the sake of it say 7 people. However, you have no funding of your own to use and raise money in an ICO. EYY, congratulations!; You successfully raise $2 million. Now you’re off to the races, developing, networking, traveling, hosting events, hiring new people, firing old ones; Not to mention that you’re doing this in an unregulated, unstructured, and still horrendously underdeveloped market.

👇👇 — — — — — — — 👇👇

If we begin to incorporate legacy economic factors of supply and demand and the natural market conditions {order books and the such} into this picture, this begins to get very ugly — very fast. Oh yeah, how can we forget the already prevalent bear market which would only compound the severity of the downpour! Lets throw in those “extra unforeseen” costs of networking, traveling, and equipment and bam, before you know it, in just one year… Your entire project’s operational costs outweighed the value it can create in the adjacent time and the underlying token asset is now at the total whim of the market.

Therefore, we are going to assume the market is not bearish or bullish towards the asset and the asset is subjected to no outside influence(supply and demand, manipulation, etc); & please be advised that we are not going to include metrics regarding market factors [order books, slippage, etc] or the role of the USD’s value fluctuation or global economic buying power. And as well, we will not incorporate the compound effect from the cost of travel, sustenance, networking, equipment, etc.

☝☝ — — — — — — — — — — ☝☝

In the processes of accruing the 2 million you created an accordingly valued crypto ecosystem; for fun lets just say 100,000,000 tokens. That would mean:

Let’s just say that each team member needed to stay on the project for 5 years. Each month they must be compensated $5,000. [$5,000 x 12 months = $60,000 x 5 years = $300,000.] Now, your team has a life to live outside of crypto and need to support that life with fiat currency. While accruing the token is wonderful, it isn’t sustaining their lives right now. So, Month One goes by and 7 people are paid $35,000 (or 1,750,000 of the XYZ token). They turn around and liquidate it on the market at whatever the price is in order to sustain their lively hoods. As 1.75% of the entire token supply gets poured onto the open market, the price goes down. {[i am not going to bring up prominent market factors such as slippage, order books, etc]} we are just going to presume the economy is flat. $35,000 just left a $2,000,000 ecosystem; bringing the XYZ network to $1,965,000 (Now that same Token is worth 1.75% less. 1 XYZ = 0.01965)

Here comes Month 2 rolling in: 7 team members need to get paid $35,000 again; and again, in the XYZ token. NOW, at the current Token value, they must receive: 1.781% of the token or 1,781,170.48 tokens. NOW, 1,781,170.48 tokens are dumped onto the market. Minus another -$35,000. As you have likely already understood, those same $35,000 are more impactful on a networks intrinsic value the less that network is worth less.

Month 3 and it is once again time to compensate the workers for bringing your vision to life. XYZ networks continue to stably stand at $1,930,000 since the last sell-off. You pay $35,000 to your team in the XYZ native token. Given the compounding nature of this approach, the raw amount of tokens need raises to 1,813,471.50 tokens or 1.813% of the total supply.

Are you beginning to draw a picture of where this ball is rolling?


Quick recap and regroup of thought:

The market can no longer ignore this constantly recurring pattern and those factors we avoided for so long begin to creep in. Widespread understanding that this asset is with-in in and of itself one that is designed to collapse under its own weight (so long as the token isn’t all of a sudden hyper-demanded.) And by “market” i am referring to the much more experientially equipped members of society aka the professionals & the market makers.

Before accepting something as true please DYOR.

Today in the Crypto-verse similar economic “models” are underlying many projects… Obviously, some are proving their effectiveness such as Binance (BNB)

Others, maybe not so much. Let’s just take FunFair(FUN) to be the counterpart in this situation. (FUN FAIR IS BY NO MEAN A FAILURE— just please dyor, however, I’m just highlighting that the market likes to treat it like one)

  • Do we blame the self-affirmed indexes that chose to correlate project asset value to money raise?
  • Do we blame ourselves for accepting these metrics to work with?
  • Do we blame the projects for not explaining this to us?

It’s too late already to point fingers.

I must say, there is something almost noble about the fact that the world can now being to create its own economic models; it is all the same disappointing that someone must suffer in order for its viability to be tested.



Through an endless battering of death & conspiracy theories, financial capitulations, and technical difficulties, some Alternative digital assets (otherwise known as Altcoins) have been calmly traveling to the Moon. Here are just a few of them:

  • Augur (REP)
  • ChainLink (LINK)
  • Waves (WAVES)
  • Zilliqua (ZIL)
  • Tron (TRX)

If your feeling a little on the adventurous side, i implore you venture down the rabbit hole of crypto’s on coinmarketcap.com or coinlib.io to dyor (do your own research)

The effects of the 2018 Crypto winter/bear market still lingers, those; of us involved in the cryptoverse are beginning to notice as though some light has begun to shine.

The snow will melt and feed the new seeds that will sprout.


🕋👘 May the BlockChain be with you 👘 🕋

#Crypto-theory: Internal Unintended Expungment was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.