From Filecoin, look at the pros and cons of locked positions

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Editor’s note: This article is from), Author:, then summer, Odaily Daily Planet authorized release.

Written in the previous words: “Locking” is a magical existence in the field of digital asset investment. The various lock-up rules and unlocking methods are dazzling and become a unique landscape. The article aims to explore the logic, motives, pros and cons of locking the warehouse.

01

Filecoin is a popular hot chicken in the current market, so use it to start the article. Filecoin’s lock-up rules are considered complex among many projects in the industry, and have relatively good exploration value.

Let me briefly describe the core lock-up rules: (1) Early investors have different token cost discounts, and the linear release cycle includes 6 months, 1 year, 2 years, and 3 years. (2) The three official parts hold a total of 400 million tokens (20% of the total), and 182,500 tokens are linearly unlocked and released every day. The cycle is 6 years. The official verbal promise will not be sold early. (3) Miners unlocked from 21,000 to 50,000 in the first 30 days, which are mainly divided into the premise space race and mining block rewards. The mining rewards of the space race are released linearly in 6 months, and the mainnet is online. The subsequent mining rewards are also released in 180 antennas. At the same time, for miners, Filecoin’s economic model stipulates that miners need to use pre-mortgage to mine, that is, miners need tokens to mortgage before encapsulating sectors to ensure that miners can complete the committed life cycle of the sector.

Then, there is implicit participation in a multi-party interest game: Institutional and individual investors, of course, hope that the token will rise after it goes online. The higher the better, this is its biggest and most direct source of profit. For miners, due to the pre-mortgage, even at the current computing power, miners need to mortgage about 135,000 tokens per day to allow the mining machine to run the package sector normally. At the current price of 45 usdt, that is 6.07 million usdt funds. Demand (in order to simplify the model here, the tokens released by miners are not considered), and the mining rewards obtained will be released linearly for 180 days. Therefore, miners of course hope that the lower the price, the better, and then hoard the tokens needed for future mining mortgages. As for the secondary market of the project, the miner who is currently the largest potential buyer is unwilling to buy due to the high price, and even shut down the mining machine to compete with the official to fight for a proposal that is beneficial to him; At the same time, investors and project parties, as the largest supply side, are constantly unlocking them every day at a rate of 530,000. The serious imbalance between supply and demand in the secondary market makes FIL prices go higher and lower, not surprising.

02

The concept of “lock-up period” is very common in the stock market. It is mainly aimed at corporate executives and institutions to prevent corporate executives or institutions from cashing out at the beginning of the market, which will seriously affect the stock price. In the long term, it also allows corporate executives to lock in During the period, the interests of individuals and corporate shareholders shall be kept in line with consideration.

03

The characteristics of the stock market and the current digital asset field determine that when the two also face a lock-up period, the outcome is completely different. Stocks (mainly common stocks here) correspond to the dividend rights and ownership of companies, while most listed companies are relatively mature, have stable cash flow income, and mature valuation models. So, during the stock lock-up period, whether the corresponding institution or individual investor is, there is a relatively bottom line, because even if the company is scattered on the spot, a corresponding proportion of assets can still be allocated. In the current digital asset investment field, apart from exchanges, there is almost no mature cash flow income, and there is no market-recognized valuation model. If the project is dissolved on the spot and the holders of the token during the lock-up period, the gross will not be divided. To one.

To put it bluntly, the current blockchain projects are almost all experimental products, and the future is uncertain, and the tokens issued by the experimental products without cash flow and no valuable assets are used in the secondary market. The “lock-up period” gameplay is unfair and unobjective. As the name goes, restricting early selling pressure in the secondary market is beneficial to all stakeholders. In reality, most of the time, it has become the lock-up period, that is, the high price point.

From the perspective of supply and demand, this is easy to understand. In the experimental stage, there is no cash flow and no application scenarios. Token is just a speculative tool. When the price is most advantageous, it should be when the liquidity is small. Therefore, going online has become the curse of many projects. In the end, it must be a good project from a hundred to get out of the curse. It has moved from experimental products to relatively mature experimental products, such as ETH.

04

To sum up from the pits that I have stepped on in my own primary market investment experience in the past few years, I will try to participate in projects that do not have complicated lock-up rules or even lock-up rules. The simple logic is that for an experimental product, lock-up is of course beneficial to the project party itself without any harm, but for investors, the disadvantages far outweigh the advantages. For an experimental product, the corresponding price must of course be freely set in the secondary market. As the experiment progresses, let the price continuously reflect the effectiveness of the experiment. The lock-up obviously made this pricing mechanism lose its due effectiveness, turning short pain into long pain, and even, in the end, it became a stubborn disease of poor medical treatment and gave up.

Just like when I participated in Polkadot’s investment at the beginning, a big basis is that for such a highly valued project, almost all investors’ tokens are not locked. After going online, let the market quickly repricing and re-distribution of chips, without long-term continuous selling pressure release. It seems simple, but in fact it is a manifestation of the project’s great wisdom and cleverness.

Finally, regarding the lock-up behavior in the field of digital asset investment, the summary is: this is an experimental product, don’t lock the position, let those who want to go, keep those who want to stay, and let the market set the price. This is a long-term view for project parties and investors. All are beneficial and fair. As for investors, it is better to be more expensive than to buy a bargaining chip with strict lock-up conditions. After all, it is not impossible to return to zero.