The token swap ratio is of continual debate, let us debate it here.
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I like the ratio the way it is. Though I have heard some great counter arguments & collectively as a community it could be fun to continue the discourse on the logic & merit of changing or not changing the ratio. Though if it is changed what should it be changed to and why?
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copy/paste from Discord on this subject
ratio really makes no diff, although I do think a lot of the success from DOGE, XRP and ADA stemmed from the fact that they were in the âSweet Spotâ of $0.01 to $0.99 when they really took off. If we aim to do the same, a 10 MFT for 1 HiFi would be the correct ratio to duplicate that success. Unit bias only matters to retail, doesnât bother institutions/VCâs.
Im personally fine with leaving the ratio the same. However, if the goal of the community is to use this tokenswap opportunity to create FOMO in addition to NFT launch, NFT lending launch, or any other big news event with the goal of creating as much intense FOMO as possible, then any ratio that puts it between $0.01 and $0.99 is ideal prior to the swap. Be aware that in this method here is a high chance you will burn the new holders and create a new cycle of forced bag holders who will not be saying happy things about HiFi from their perspective.
edit
After thinking about this shortly after posting, iâve come to the hypothesis that the following ranks have the following effects
1:1 = nothing changes
10:1 = ideal for creating a âsweet spotâ temporary FOMO
100:1 = ???
1000:1 = ideal for getting tokens off exchanges
Using the current price of $0.008, if we did a 1000:1 swap, 1 HiFi would be equal to $8.00. In Discord, we have seen hesitancy expressed by users that they donât want to get hit with the exchange withdrawal fee as it doesnât feel good. A $30 withdrawal fee on $0.008 tokens feels like a bad experience, but a $30 withdrawal fee on $8 tokens feels within an acceptable range. These fixed costs of network fees between $20-$50 to withdraw to ethereum is starting to make sense to me that the token needs to be on the expensive side, so users feel the withdrawal fee is not a friction point. Just to hit home on this example, a $30 withdrawal fee to withdraw 1 BTC, nobody complains about, because the fee is so insignificant to the amount being withdrawn.
Changing my answer for the swap to be 1000 MFT for 1 HiFi.
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Can you expand upon this part to clarify further?
Be aware that in this method here is a high chance you will burn the new holders and create a new cycle of forced bag holders who will not be saying happy things about HiFi from their perspective.
Sure. Imagine that MFT reaches $0.03 right before the tokenswap. The tokenswap happens at 10:1 so 10 MFT for 1 HiFi, would mean that $0.30 of MFT would be equal to 1 HiFi. Then the current holders dump their tokens and push the price back to $0.01 HiFi (or previously $0.001) and as a result so many holders would be justifiably upset that they bought the yearly top.
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Iâm for a 10:1 token swap ratio.
There are several reasons why, which include:
1. The current supply is too large making some people (wrongly) believe that the price of our token isnât as volatile as it could if it had a smaller supply. Their reasoning is that a smaller token supply leads to more volatility.
2. Decreasing the supply more than 10 times will result in a high token price, making it seem unattractive to new unexperienced crypto investors who care more about the price than about the Fully Diluted Valuation (FDV). The gas fee problem @Mainbrain talks about isnât a problem long-term, as most transactions will eventually be done on (very) cheap ZK-rollups.
3. We need a smaller token supply, as the current large supply previously led to problems with Binance where the price of our token went too low (due to a combination of low market cap and large supply) which resulted in the delisting of the MFT/BTC and MFT/BNB trading pairs.
Edit: added links.
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There are a number of factors in my opinion which affect token price,
- Scarcity - The less tokens there are, the greater the demand. Fact. âScarcity Principleâ read about it.
- Demand - (see above) and also the building confidence in the Hifi platform as it consistently improves by adding various collateral types (traditional crypto assets and NFTs) as well as increasing liquidity, and of course increasing accessibility by making on-ramping for newbies and experienced users as quick and easy as possible.
- Familiarity - decreasing token supply to that of our closest competitors. Theyâve done the ground work already, and we can see the evidence of how this has affected the token price, specifically AAVE and COMP.
Iâm all for 1:1000 swap ratio, bringing the supply to 10,000,000.
(Iâm following in the footsteps of @Mainbrain (who followed my original proposal))
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I support 1000:1 token swap. The lower the supply the faster & higher the price appreciation.
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I will respectfully disagree here with you @Skyvault:
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A smaller supply doesnât increase scarcity. Holding 1 token with a supply of 100 tokens, is the same as holding 0.5 tokens where the supply is 50 tokens. Yes, everyone has less tokens, but that doesnât make it actually more scarce. What leads to scarcity is when actual economic value is being locked away or burned out of the total supply like it is with EIP-1559 for Ethereum.
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Fully agree that our general token-economics should strive to increase the demand for the Hifi protocol, but I fail to see how the token swap ratio will affect that.
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I donât think that what led to the price appreciation of COMP and AAVE was the token-swap ratio. Instead, I think itâs the fact that both protocols became the standard for lending and borrowing in DeFi.
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This isnât a good take, in my opinion.
The supply of a token has in no way a role in how fast and how much it appreciates. There are multiple tokens like Dogecoin, for example, which have done incredibly well with a very large supply. On top of that, the price of the asset doesnât matter in crypto, the Fully Diluted Valuation (FDV) does.
My opinion on:
1000:1 swap ratio
I think @Mainbrain points are valid and definitely make sense, especially in the shorter term. I think we have to look a bit more in the future(3,5+ years). Gas issues will be less of an issue as @max already mentioned. The other thing we have to look at besides supply is the market cap. Itâs very likely that our market cap will also increase with time, so after a 1000:1 swap and a market cap of 1-10b we would reach a few hundred dollars in token price. I think that is not really attractive for newer or less experienced users. I know AAVE and COMP were successful with similar supply, doesnât mean we canât do it differently. Especially since we are different to them.
10:1 or 1:1 swap ratio
With what mentioned above I think those two options would serve us well, even in the more distant future. If we keep the supply (1:1), thereâs definitely a risk with what @max mentioned in 3. point.
So I personally think 10:1 or 1:1 would be the best options for us, even long term.
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It will definitely be interesting at vote time, thatâs for sure.
I think you have 2 types of investor, those that are in it for the short term buying in to hype, and the more serious investor who buy in to longevity and stability. Dogecoin and itâs like are short term hype coins and therefore price isnât comparable IMO.
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I fully agree, but the Dogecoin example does prove that supply is meaningless regarding price appreciation. There are many other examples like Cardano, where the supply is very large and people invest in the long-term vision, and yet the price appreciates a lot too.
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Agree with 1 + 3.
2. Decreasing the supply more than 10 times will result in a high token price, making it seem unattractive to new unexperienced crypto investors who care more about the price than about the Fully Diluted Valuation (FDV). The gas fee problem @Mainbrain talks about isnât a problem long-term, as most transactions will eventually be done on (very) cheap ZK-rollups.
Agree that 10:1, 100:1, 1000:1 would have the intended consequence of removing moonboys from speculating by buying âcheapâ coins by price, rather than marketcap or FDV butâŚ
Ethereum layer 1 gas fees are still something we need to be cognizant about, until #L222 takes the world by storm. Ethereum layer 2âs like rollups have already solved the high gas fee problem by making transactions $5 or less and contrary to common belief, rollups actually get cheaper as demand increases, making them to the ideal chains to use. Until then, I currently believe the benefits of having an expensive token (1000:1) would encourage more users to withdraw from exchanges (eating the withdrawal fee) and thus participate in governance. I think thats the most important thing for the community to be aware for 2022.
(be aware that my opinion changes if MFT or HiFi token is designed be moved to Polygon / Optimism / zkSync / Metis / etc )
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Itâs important to think about the short term and long term outcomes from the ratio swap. I think short term, the large swap like 1000:1 or 100:1 would cause real price âactionâ and marketing optics. But that doesnât help the market cap and will scare off normal buyers and small ticket buyers. Long term, assuming massive crypto adoption and Hifi adoption, a large volume of tokens helps create a more liquid market leaving room for speculators, traders, stalkers, holders, whatever. I donât want to make a utility assumption here but it helps network effect. Iâve been leaning towards 1:1 but Iâd support 10:1 to nudge Hifi into the sweet spot for price action. Letâs just hope TVL builds fast enough to prevent it from being too much FOMO.
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Good points here. Question regarding your caveat. You say your opinion would change if it is designed to be moved to an L2*. What if it is designed to be on all? Would you default to your current opinion?
I agree with point # 1 and point # 3
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I donât think there is a right answer here. We can reference projects and bring in examples, though for every project that justifies an inverse split, we can find just as many that merit leaving it at the same ratio.
Possibly we should work to identify three (3) different pursuits, and then do a vote.
One would be to keep it the same, and then create two other proposed ratios & this would allow us (token holders) to choose one of the three pursuits.
Thoughts?
I am okay with 1:1 or 10:1. Maybe we vote on 10:1 or less or 100:1 or more first. Binary outcome. Then we can further discuss the pros and cons of 1:1 or 10:1 (or 100:1 or 1000:1) and vote on that.
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