Timothy Enneking
Dec 26, 2019 · 7 min read

RNDR Pricing Tokenomics — A Perfect Storm

RNDR Pricing Tokenomics[1]

How would you react to a genuine utility token with the following characteristics?

1) Tokenizes a profitable business in existence for six years

2) Has a price floor ensured by the same business

3) Has no price ceiling

4) Has a major new development and expansion which should be finalized in Q1 2020

5) Is in a market which is exploding

6) Is backed by major Silicon Valley and Hollywood players

A rhetorical question, obviously…

The utility token in question is RNDR, a fascinating project built on an existing, profitable business which has multiple near- and mid-term goals, the first several of which it has already achieved.

At a high level, RNDR facilitates a peer-to-peer network and marketplace between consumers of rendering power (movie studies, animators, engineers, architects, etc.) and providers of rendering services (both raw rendering power and rendering design and related skills). As there is a public record (the blockchain) of the work done, there is a significant collateral advantage of providing traceability with respect to intellectual property and other rights.

1) Tokenizes a profitable business in existence for six years

Most importantly in this regard is the fact that this is not a new business. OTOY, which has been in the cloud rendering business for over 10 years and is far and away the leader in the field, has been running a business similar to the RNDR model for over six years. (It also has several leading lights of the technology field (e.g., Eric Schmidt) and Hollywood (e.g., J.J. Abrams) as investors and advisors. See here: https://home.otoy.com/the-company/ and here: https://rendertoken.com/). Consumers purchase “render credits” and use those credits to purchase rendering services.

From one perspective, therefore, RNDR is “simply” tokenizing an existing business. (In this regard, note that the founder of OTOY, Jules Urbach has a patent on token-based billing for rendering services[2]: This is a very serious effort.) This not only means that the risk profile of the business (and the token) is far lower than is normally the case, but also simplifies many key aspects of RNDR tokenomics. Further, RNDR has been running an extensive beta test using RNDR tokens (but without a marketplace and there is no trading on an official, i.e., RNDR-sponsored, exchange). Thus, the transitional issues between the “credits” system and the tokenized system have had plenty of time to be ironed out. (Importantly, “render credits” will continue to exist. Now, however, the purchase of a render credit now results in the withdrawal of RNDR tokens from the “Render Reserve” (basically, a pool of 35% of RNDR tokens which are reserved for network development support), so the two systems have effectively been combined and both type of purchases will drive RNDR pricing.)

The purpose of this article is to discuss the “external” or “pricing” tokenomics of the RNDR token. The “internal” tokenomics, or the details of how the token is used to purchase rendering services, have been thoroughly addressed elsewhere.[3]

2) Has a price floor ensured by the same business

Perhaps the single largest and most unique distinguishing factor of RNDR pricing tokenomics is a de facto price floor. OTOY has stated that it will provide $0.25 worth of rendering services for one RNDR. (For those of you with a more technical bent, this amount of render services is defined as 256 seconds of rendering at 256 OctaneBench™. OctaneBench™ is OTOY’s proprietary rendering metric.) As far as I am aware, this is unique in the crypto space. In fact, the RNDR project is one which truly blurs the line between the “crypto” and “fiat” worlds, building on the strengths of each.

3) Has no price ceiling

In contrast, there is no limit with respect to maximum price. Rendering services will effectively be priced in fiat, with the RNDR exchange rate calculated using an average of RNDR prices over the prior three days calculated at UTC (a proxy for closing prices in the fiat world). This means that, given the inevitable price inflation with growing demand for services and fixed supply, the price of RNDR tokens should steadily and continuously increase and the number of RNDR tokens to purchase a fixed quantity of rendering services will fall in exact correspondence (but with a small time lag due to the three-day average). (In this regard, the total theoretical supply of RNDR tokens was significantly reduced from over 2 billion (231) to just over 500 million (229), materially improving this dynamic.[4] Approximately 20% of the theoretical total token supply has been sold to early adopters or earned during the extensive beta test OTOY conducted this year.)

4) Has a major new development and expansion which should be finalized in Q1 2020

In addition to “simply” tokenizing an existing business, the RNDR roadmap calls, in the very near future (probably Q1 2020), for the ability for anyone with a GPU and an internet connection to sell idle cycle time to provide rendering services and earn RNDR tokens. This is potentially game-changing since the average computer user uses less than 10% (and often much less than that) of GPU power, other than when he or she runs a graphics-intensive process (gaming, design, CAD/CAM, video work/play, etc.). And, let’s face it, a computer is off or completely idle probably 16 hours each day because the user is simply not in front of it. (As a reference for usage when there is an active, non-graphics-intensive user, I have Task Manager up in Windows 10 as I write this, with the GPU column highlighted. Using a word processor with another half dozen applications open (including Outlook and about 15 windows in Chrome), my GPU usage has fluctuated between 1 and 5%, and is usually at 3%. There have also been two, very brief “spikes” up to 10% and 12%.)

In other words, at the same time that a massive rendering power shortage exists, there is also massive underutilization of GPU cycles. RNDR will address both issues — and let normal computer generate earnings by selling idle GPU time.

5) Is in a market which is exploding

So why is any foregoing important? For many reasons, not the least of which is a global shortage of GPU power due to skyrocketing demand. 2019 Global Insights, Inc. that the 3D rendering market alone will quadruple to $6 Billion over the next five years.[5] (A fascinating and very detailed study of 3D rendering demand growth has been published by the same company.[6] In sum, it is easier to list industries in which rendering demand will not skyrocket than it is to list those in which it will.) The established market simply cannot keep up — and certainly cannot provide surge capacity which the global pool of GPUs can. (A very rough estimate of the current number of active GPUs is 1 billion[7], but the truth is no one knows for sure — except that it’s a huge number.) Since there is no sunk cost for selling GPU cycles (the computer has already been purchased and presumably wasn’t purchased for the sole purpose of selling idle GPU cycles, although a very small cost for electricity and internet access should be counted), this is a critical rendering resource which literally cannot be matched by any company or group of companies. The transition from 2D to 3D rendering, higher frame rates and resolutions, new and far larger numbers of devices, and other developments such as VR/AR, have driven, and will continue for the foreseeable future to drive, the demand for rendering power to new heights, while the growth in supply is simply not keeping up.

Demand is so high that RNDR has developed three pricing tiers, depending on whether the consumer prioritizes speed (fastest and most expensive) or cost (slowest and least expensive). These levels are explained in great detail in the soon-to-be-released RNDR User Manual, as well as on the OTOY website.[8] The dynamic calculations behind the pricing are explained in depth in the medium post referenced above.

6) Is backed by major Silicon Valley and Hollywood players

A token which has a floor price, but no ceiling. A token which already has a strong user base, which is built on an established business, and which has a near-term milestone that will increase users exponentially. A token with its origins in Hollywood, which is used by Bad Robot and other studios to produce major, feature-length films (Star Wars, anyone?) and which is backed by numerous Silicon Valley and Hollywood figures. A token in a business sector which has experienced prolonged, high-double-digit growth for over a decade, which growth is far more likely to further accelerate for the foreseeable future than decline.

Finally, a token which has flown under the radar since initial token sales about two years ago (at just under $0.20 for most buyers) and which is about to be officially launched on several exchanges for the first time. Marketing of that launch has just barely begun; the launch on Probit and Stex is scheduled for December 30.

The launch price will probably be around $0.50. Some initial volatility, which always accompanies such a launch, is to be expected and then a stable price at, or more likely just above, the launch price. Thereafter, as use and knowledge of the token spreads, I would expect a fairly rapid, but steady, move up to somewhere near $1, although that is likely not the peak by any means. Once the GPU cycle sale functionality is enabled, that price could conceivably further increase significantly in the fairly short term.

[1] By Timothy Enneking, Managing Director of Digital Capital Management. Mr. Enneking is an advisor to RNDR and also owns RNDR tokens. All of the information which is cited in the article is publicly available.

[2] https://patents.google.com/patent/US9197642B1/en

[3] https://medium.com/render-token/rndr-tokenomics-update-multi-tier-pricing-mtp-338d5dea1d29

[4] https://medium.com/render-token/rndr-new-changes-to-the-token-structure-of-the-rndr-network-116f1e3fef08)

[5] https://www.prnewswire.com/news-releases/3d-rendering-market-to-surpass-usd-6-bn-by-2025-global-market-insights-inc-300884592.html and https://www.easyrender.com/3d-rendering/north-american-3d-rendering-is-expected-to-achieve-amazing-growth-until-2025

[6] https://www.gminsights.com/industry-analysis/3d-rendering-market?utm_source=prnewswire.com&utm_medium=referral&utm_campaign=Paid_prnewswire

[7] https://stackoverflow.com/questions/6579113/how-many-gpus-are-out-there

[8] https://help.otoy.com/hc/en-us/articles/360029516612-Using-the-RNDR-Network-Artist-Side-

Timothy Enneking

Written by

Timothy is the founder and the principal of Digital Capital Management, LLC (“DCM”).

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