The Curious Case of $SHDW’s Tokenomics
Happy New Year everyone and welcome to 2022! On this, the first day of the year, I find myself prepping for the $SHDW IDO and wondering, “Okay… what did we forget? What’s left to do? What else needs to be done?”
I check and then recheck. I rereview talking points that I’ve repeated a dozen times. I get that what we’re doing is technical and obscure, which is why I find myself continually amazed at how much traction we’ve gotten.
Not only have you all been actively engaged in learning but now you’re all teaching others. So, even as we slowly reach the point where there’s nothing more to be done before the IDO… I find myself checking and rechecking, looking for any flaw… any miscalculation… any blind spot.
What I write now is the result of a realization that I had about a week ago… that the $SHDW tokenomics might actually be far greater than the sum of its parts…
I am not saying that $SHDW has perfect tokenomics, or even good tokenomics, or that the $SHDW token will even successful. I am, in a sense, open sourcing the key principles that the $SHDW token was built around to allow for community review. Because, surely I’m missing something obvious. However, if I am not then I believe the resulting discussion could result in huge leaps forward which will ultimately benefit the Solana community.
Key principles around designing $SHDW
- The token must be a utility token and the use case for that token must be directly related to the use case of the project
- Seed tokens only go to NFT Holders.
- No token giveaways, no free airdrops, no special allocations, nothing that devalues the token relative to its IDO price
$SHDW… can it dodge the post-IDO dump?
We’ve all heard the standard FUD that gets thrown around with any token… “Don’t ape into the IDO. Tokens always drop after IDO. I’m just gonna wait and pick it up cheaper than the suckers in the IDO.”
That led to us asking the question… Why? Why does a token always have to drop post IDO? Afterall, we heard the same thing about the Shadowy Super Coder NFT and yet that never happened. For those of you at home keeping score, the crowd who said they would pick up a SSC post-mint when the price dropped below mint were very disappointed.
Why didn’t the SSC NFT price see a meaningful drop post mint? We can talk about the utility of the NFT or the value that GenesysGo brings to the ecosystem all day long but, ultimately, that wasn’t the reason.
The reason that the SSC NFT never saw a drop in price immediately following the mint was for one simple reason… every SSC in every wallet was purchased for at least 2.5 SOL.
We did zero giveaways. We gave nothing to influencers. We did not sel- mint any SSCs to create fake volume. We had no team allocation of NFTs to go list on NFT marketplaces so we could try to squeeze a couple extra SOL per NFT.
Every single SSC in every single wallet was minted by someone who spent 2.5 SOL to do so.
This means that for the price of a SSC to drop below 2.5 SOL post-mint, minters would have had to actively decide to sell for a loss.
Now… let’s look think about the $SHDW tokenomics…
https://genesysgo.medium.com/the-comprehensive-guide-to-genesysgo-and-the-shdw-ido-278b90d3186c — If you aren’t familiar with our tokenomics please review them here.
We’ve given away zero tokens to influencers or promoters. We’ve sold zero tokens to VCs. There is no “Treasury Allocation” that the team has discretion over to “fund operations.”
So, to anyone saying that $SHDW will crash post-IDO because it’s “overhyped” or “oversupplied” or whatever… I ask one simple question… Where would the tokens for this dump come from?
See… this is the thing… upon release the entire supply of $SHDW will be coming from the IDO.
If we have an IDO auction that results in a price of $2 USDC per token… Then on day one every token in circulation will have cost $2 USDC to acquire.
Meaning, all holders of $SHDW will be equal. All holders of $SHDW will have commonly decided that $2 USDC per token was an acceptable.
Sure, NFT holders will be able to stake their NFTs and receive emissions in $SHDW but even if all 10,000 NFTs were staked on day one (won’t happen, let’s not kid ourselves… it is a statistical impossibility and you know it) that represents .9% of what the circulating supply would be at that time and that % would only decrease.
The Orca Double Dip Liquidity Pools? Ya… that removes more tokens from circulating supply (by requiring them to be staked with Orca.so) than they emit.
If you think .9% would be enough to cause a massive price dump then I think we’ve probably reached the point where we’ll just have to agree to disagree.
The Whales and the Minnows…
The reality is, dumping is the result of insiders or team members selling and selling at an amount that is meaningfully below what the current market price is trading at. I’ve received enough messages to make me start to think that we have attracted interest from some very large possible participants, however what’s interesting is that those large participants… the ones that could walk in and potentially scoop up a large portion of tokens… the whales… they’re getting the exact same IDO price as the minnows.
Meaning, the whales and the minnows… institutional and retail… VC and community member… we’re all aligned. All our interests are aligned with one another…
This is not to vilify or demonize large IDO participants. As I’ve said before, it’s not about keeping VCs out… it’s about letting the community in.
So, again… to those saying the token will dump post-IDO, I ask the question… Who will be doing the dumping and where will those tokens come from? Because, as I said, immediately post-IDO all the tokens in existence will have been purchased from the IDO and all IDO participants will be on equal footing as far as what it cost to acquire their $SHDW tokens.
Is it possible that something as simple as not giving away stuff for free can provide a meaningful level of stability to a token in the days following an IDO? Stability enough to allow a smoother ride for token holders as the token’s utility kicks in and hopefully begins an upward trend? What if a team simply had to not lose the faith of the community by shipping real and meaningful product?