Eye on the Supply: Aion Facts versus Fiction

People are talking more about Aion, but not all of it is flattering — or true.

It is crucial to understand a cryptocurrency’s supply dynamics, and Aion’s can be hard to navigate for newcomers. This article addresses some of the most common questions and issues raised about Aion’s token supply and price performance.

As always, you should do your own research. This article is a summary of publicly-available information and the author recommends checking his sources for additional information and context:

Aion Supply Dynamics Overview

Aion minted about 466 million tokens in fall 2017 and has a 1% annual inflation rate for validator rewards (currently for proof-of-work mining on Aion’s main net launched in April 2018).

About 186 million tokens (40%) were reserved initially for the Aion project, Nuco Global (Aion’s parent company at the time), and early partners for their contributions to getting the project started. Aion held a private presale of 30 million Aion tokens to institutional and accredited investors for $0.50 per token ($15 million raised). Aion then held a public presale of another 9.5 million Aion tokens sold in tranches from $0.75–$1.00 per token ($8 million raised). In light of the amount raised and volatile market conditions, Aion canceled the planned public sale of the remaining tokens.

TRS Token Distribution (top side-by-side; bottom stacked). See also the chart in Messari’s asset profile, which also includes mining rewards.

In line with its token sale mechanics paper, Aion split the unsold tokens between two token release schedule (TRS) smart contracts. Anyone holding Aion had the option to lock their tokens in a smart contract by early December 2017 that would distribute those plus half of the unsold tokens pro rata monthly over a year ending November 2018 (over 90% of purchasers participated). The tokens reserved for the Aion project, Nuco Global, and early partners were locked in another smart contract with the other half of the unsold tokens to be distributed monthly over the course of three years ending November 2020.

In July 2018, to align the interests of Aion with token holders over shareholders, and after a vote by Nuco Global’s shareholders, Nuco Global was dissolved and Aion converted from a for-profit subsidiary company to an independent non-profit foundation. The Aion Foundation took ownership of all of Nuco Global’s assets (intellectual property, equipment, employees, offices, etc.) and Nuco Global’s share of Aion tokens was split among its former shareholders based on their ownership percentage.

Of the 466 million tokens originally minted, about 160 million were distributed to purchasers in the one-year TRS while 153 million will be distributed to the Aion Foundation, 61 million will be distributed to former Nuco Global shareholders, and 92 million will be distributed to early partners by the end of the three-year TRS.

This chart assumes no transfers of distributed tokens and does not include mining rewards. Actual percentage held will vary with transfers over time.

By the Numbers

  • Aion is Around ICO Price

Numerous cryptocurrency price websites list Aion’s ICO price as $1.00 per token. This seems to be based on the price for Aion’s planned public sale, but as noted above that was canceled.

The total amount raised ($23 million) divided by the total tokens sold at presale (39.5 million) gives an average price per token of about $0.58 for initial purchasers. Including the additional unsold tokens distributed via the one-year TRS (120 million), the average price per token was about $0.14, with some early institutional and accredited investors paying as low as about $0.12 per token.

  • Aion is About 93.5% from All-Time High Market Cap

CoinMarketCap.com (CMC) calculates a cryptocurrency’s price from a volume-weighted average of prices reported by exchanges. Exchange price and volume are based on filled orders. Market capitalization (market cap) is the price multiplied by the circulating supply.

According to CMC, Aion’s all-time high price was $11.51 on January 7, 2018, with a market cap of $623,940,583. At the time of this writing, Aion’s price is about $0.14 with a market cap of $40,556,582.

Looking at price, Aion is currently down about 99% from its all-time high. However, this ignores the circulating supply change over that period. On January 7, 2018 (at the peak of the last bull market), the Aion circulating supply was only about 61 million (the remainder were still locked up in the TRS contracts). At the time of writing, the circulating supply is about 292 million (an increase of 475%). Looking at market cap, Aion is down 93.5% from its all-time high; compare ETH (-89.5%), ARK (-93.6%), NEO (-95.3%), ADA (-95.6%), WAN (-96%), and ICON (-96.8%).

Price and market cap are manipulable, one-dimensional metrics and, to the extent they reflect a project’s fundamental value at all, only do so through the lens of trader sentiment. As this space has matured, several alternative measures of project value have been proposed. For example, the Ozargun Valuation Framework examines 86 sub-topics related to a project’s product, team, and community in addition to token performance (and ranks Aion #1). Sam Pajot-Phipps of Aion proposed the Network Steward Productivity Ratio which compares funds raised by a project with its output as another alternative.

  • Supply Increase Rate Halved Since November 2018

For most of 2018, circulating supply was increasing at a rate of 18.3 million tokens per month as both the one-year and three-year TRS contracts were active. Now that the one-year TRS is over, however, this is reduced to 8.5 million tokens monthly — a 54% decrease.

Also, because the number of tokens distributed per month remains constant while the total circulating supply increases each month, the rate of circulating supply increase goes down each month. For example, when the March 2019 distribution is made, the circulating supply will increase from about 292 million to 301 million (a 2.9% increase). When the April 2019 distribution is made, the circulating supply will increase from about 301 million to 309 million (a 2.8% increase). By the last distribution in November 2020, the circulating supply will increase from about 469 million to 478 million (a 1.8% increase).

Alex McDougall of Bicameral Ventures explained that, while circulating supply increase rate is a factor to consider, it’s a “known known” short-term factor secondary to the potential for mass adoption of the technology in the long term. Supply is only one part of price discovery — demand is the other.

  • Purchasers Are the Largest Group of Supply Holders
From the Aion Foundation’s 1/31/2019 report

The breakdown of TRS distributions through February 2019 is about 55% to purchasers, 23% to the Aion Foundation, 9% to former Nuco Global shareholders, and 14% to early partners. Actual holdings skew even more in favor of purchasers as tokens held by the Aion Foundation, former Nuco Global shareholders, and early partners are transferred.

The Aion Foundation has already provided two reports detailing its AION holdings and distributions, and still holds about 72% of the total distributed at the time of this writing. None of its distributions went directly to an exchange — ever. The vast majority of transfers from the Aion Foundation have been reinvested in the ecosystem through grants, bounties, and technical development.

From the Aion Foundation’s 1/31/2019 report

The Aion Foundation does not control tokens distributed to the former Nuco Global shareholders or early partners, however — like any other holder, their choice to buy, sell, or hold is completely their own. Some of their tokens made their way to Binance, but there is no way of knowing who made transfers or why. Some could be cashing out; some could be trading; and some could be investing (>$20 million) in or building the next viral dApp on Aion. In any event, even if all of the tokens distributed to former Nuco Global shareholders and early partners are being sold on exchanges monthly (they are not), this would only account for about 0.8% of the total monthly exchange volume over the last 30 days and even less if over-the-counter trading is considered.

  • Aion Has Ample Runway
From the Aion Foundation’s 1/31/2019 report

As of December 31, 2018, Aion’s Fiat, BTC, and ETH treasury totaled $9,555,088. Aion’s total expenditures in Q4 2018 were $2,193,923 with expenditures in December 2018 down to $665,676. This alone gives Aion enough runway to continue operations for about 14 months, subject to the price of BTC and ETH and assuming expenditures are not reduced even further.

Importantly, this does not include the 147,731,207 locked and unlocked AION owned by the Foundation. At current prices, that’s another $20 million or so, which would be another two years of funding. The team has stated that they are working on strategies to secure additional funding as well, including possible venture capital funding and holding equity in partner projects.

What the FUD?

Now more than ever, cryptocurrency purchasers need to do their own research and come to their own conclusions before investing significant resources in a blockchain project. Taking the word of a stranger on social media (including the author) is not (and never was) a substitute for due diligence.

Many folks have seen the value of their cryptocurrency holdings drop significantly over the past year. The proliferation of blockchain projects in late 2017 and early 2018 on the heels of the ICO craze (many of which were duds) combined with the current scarcity of capital has made competition among blockchain project communities especially fierce. Being on the defensive for a project while taking losses takes an emotional toll. Even established projects like Ethereum are suffering from in-fighting and community breakdown.

Image from http://rkvc.net/self-defeat-dont-worst-enemy-just-let-go/

If you find yourself reacting emotionally to a project’s price performance, the catharsis of griping about it may give you some temporary release. In the end, however, you are not helping yourself or the project. Apply that energy to learning about the project, bounty hunting, or building a dApp. Be an ambassador for the project and the technology.

If the goals of blockchain projects are realized and this technology achieves mass adoption, cryptocurrency markets dictated by traders and speculators will eventually give way to markets driven by organic demand from users.

99% of the market hasn’t shown up yet.

In the meantime, folks need to separate the signals from the noise.

If you’d like to learn more about Aion, check out the Aion Telegram Bot and the Aion Newswire. If you prefer something more “long-form”, check out the Aion Info Hub.

Stay tuned to Aion’s Twitter, Blog, YouTube, Reddit, and Forum to keep track of the project as it develops.

None of the above is offered as legal or financial advice. While the author is an attorney, he is not your attorney, and you should always consult with someone one-on-one regarding the particulars of your situation before making any significant legal or financial decisions.

This article contains forward-looking statements that address future events and conditions which have not yet occurred, inherently involve known and unknown risks and uncertainties, and are subject to factors outside of the author’s control. Actual events and conditions may differ materially from those expressed herein. Past performance does not imply or guarantee future results. Do not rely on any statement herein as a guarantee that any future events or conditions will exist or the performance of any investment will be impacted thereby in any way.

The author holds Aion and Ether. The author does not work for the Aion Foundation and was not compensated for creating this work.