Talking about the correct posture of Binance IEO from the perspective of valuation logic and historical data

MAV IEO has added a group of losers. Recently, there have been more incidents of cheating on the opening results of Binance Launchpad/Launchpool.

This article will take you to understand the basic valuation logic of various projects, avoid rushing to the highest point without thinking, and also review and compare the historical performance of Launchpool and Launchpad, and sharply comment on the similarities and differences and speculative posture of these two sectors

A. Valuation logic

If it is not "meaningless governance tokens" or memecoin, in theory, it is possible to compare the interests of token holders on a large scale, but after all, cryptocurrency is an attention game, and the so-called fundamentals are too important in front of narrative. It is too small, so the valuation is generally based on benchmarking in similar projects.

For example, MAV belongs to the DEX track in the DeFi category. The general indicators of DeFi are the more commonly used TVL for evaluating the scale, and the less commonly used total fee income and agreement income for evaluating the earning power. Specifically, there is an additional evaluation business for DEX Scale volume Vol indicator. As for the token itself, there are two indicators of current market value mcap and full circulation market value FDV, corresponding to short-term and long-term liquidity respectively

Refer to the valuation comparison diagram made by @BiteyeCN, which uses TVL or fee income as the business evaluation index, and gives valuation opinions under mcap/FDV respectively. Of course, there are often some tricks behind the data. For example, the problem with MAV using more than a week’s handling fee to evaluate is that MAV’s airdrop + listing on Binance, so naturally there is no shortage of fluffy parties to brush up the transaction volume, which is naturally inflated ( 3 /n)

It is also a good way to use more detailed logic and common sense to judge. The price of MAV $ 0.5+ will cause its FDV to be close to Pancake. No matter how close MAV is to Binance, it is not as close as Cake, so it is expected that the price will exceed $ 0.5 with the support of Binance. Not very realistic. The current FDV of DEX Hashflow, which was also launched through Binance launchpool before, is around 400 M, and the corresponding MAV price is less than $0.2.

So if someone really rushes with "belief in Binance's vision", $0.5 is obviously far beyond the range that the initial launchpool can support. The current market price of around 0.45 is already a relatively high position.

DeFi projects are more convenient to evaluate because they are partial to applications and have a certain actual ability to make money. However, the important user activity data of public chain projects are basically collected by the wool party, with low reference value, and only one TVL data can barely be seen. So compared to the data public chain, it seems to pay more attention to the background, which is one of the reasons why VC is so popular in this field. Anyway, a good background seems to be worthless to 10 B.

Please refer to the valuation of ARB in our previous years. According to TVL and ecology, we gave a valuation of 2 times OP FDV. However, after ARB was issued, the price difference was very large and it was beaten. On the contrary, after such a period of time, the price of OP continued to fall , ARB successfully achieved 2 times OP FDV.

B. FDV is not just a number

FDV = total circulation of tokens x currency price

When evaluating projects, I often prefer to use market value mcap instead of FDV for comparison. However, most of these are due to the low circulation of newly released projects with higher popularity, and it is cheaper to use mcap for comparison. But FDV is much more than just a number.

Take OKX/Bybit/Bitget three joint IEOs, and SUI, which gave Binance Launchpool free 40 M tokens at the door to avoid repeating the mistakes of Blur, as an example, the price has been falling all the way since the opening.

Recently, it was revealed that the project side was secretly unlocking and selling coins in advance, and claimed to be a flexible tokenomics. This is the painful process of mcap gradually moving closer to FDV, and the increment will turn into selling pressure.

However, even if SUI is honestly implemented according to the token unlocking plan, its growth rate will be very fast. Benchmarking and short-term hype allowed SUI to have an FDV of 10 B+ at the opening. At this time, mcap<1 B can barely be supported by the market heat. The price reduction in the process of slow cashing into mcap is also a matter of course.

C. Launchpool & Launchpad similarities and differences and speculation

Many people call MAV the XX Launchpad project, but in fact it is the Launchpool project. What's the difference between Launchpool and Launchpad projects? Launchpool is given away for free, while Launchpad requires BNB holders to pay for it, which implies Binance’s attitude towards it

Especially for projects launched through Binance, it can be said that the implicit support of the Launchpad project is a level stronger than that of Launchpool. As tweeted earlier, we've explored the overall return data for Launchpad

This time, we will analyze the following from the perspective of opening market users, analyzing the opening price (average price on the first day), the highest price in history (closing price) and the corresponding FDV, and the ROI of buying ATH at the opening market and selling it. The above picture shows the Launchpool data, and the bottom picture shows the Launchpad data. Focus on the last line of median (15/n)

From the historical data point of view, the performance of the previous Lauchpool project is far worse than that of the Launchpad project. Assuming buying at the average price of the first day and then selling at ATH, the median rate of return for Launchpad is 2.9 times, while Launchpool is only 1.9 times

In addition, Launchpool has two projects that are at the peak of their opening, and they have been used until now after buying them. This situation has not yet occurred with Launchpad (of course, the data of the average price on the first day of opening is convenient for horizontal comparison, but it cannot reflect the whole picture. EDU is currently bought on the opening day. There is a high probability that the entry is still in a locked state)

As for the reason, we can observe that in terms of FDV ATH, Launchpad and Launchpool are actually close to 1.9 B, but Launchpool's first-day FDV median of 780 M is much higher than Launchpad's 460 M.

This is mainly due to the liquidity problem of Launchpool. Launchpad generally gives about 5% of the share, while Launchpool generally gives less as free coins, generally less than 2%. Although the opening price of Launchpool is inflated, since most BNB holders sell directly at the opening, the higher the opening price is, the more beneficial it is for BNB holders, so Binance naturally does not have much motivation to distinguish this point.

For investors, the long-term game value of Launchpool is obviously lower than that of Launchpad, so for Launchpool projects, it is necessary to do a valuation analysis and be more conservatively prepared, and it is easy to get stuck if you hold it without brainstorming for a long time.

If you are too lazy to estimate, refer to the median first-day FDV of Launchpad 460 M. Once the opening FDV of Launchpool application projects exceeds this value, the probability of subsequent high returns is actually not very high.

Summarize

Using similar projects to benchmark is the most common valuation method. The performance of Launchpool’s projects is not as good as that of Launchpad. Due to liquidity problems, currency prices are often inflated at the opening, so more caution is required. Launchpool has a small number of openings and peaks that have been set until now, while Launchpad has basically never been completely set.