RSR Price to Earnings Ratio Musings
Part 2
A while back I put together an analysis of price to earnings ratio and projected RSR price accordingly. I revisited that to see what it looks like now and tried to revisit the other price to earnings of some other projects. Spoiler alert — isn’t not looking good for Stellar.
Notes and assumptions: Reserve revenue is calculated at 0.1% (tx fee) on transaction volume, which is currently at an estimated $3M per day (update). So roughly $1.095Bn in transactions * 0.1% = $1,095,000 revenue (3M * 365 days). I have estimated 75,000 users based on invites going out June / July and considerably more support staff plus longer hours. The current waiting list is larger than it has ever been so to expand to 500k users would only involve scaling limits on support staff. Price to earnings ratio is calculated by market cap divided by annual revenue All data on other blockchains / dapps is available from TokenTerminal.com
So if we take around 4173 from these as a target for a low estimate — this is considerably lower than the last average, so we’re being particularly pessimistic at this point.
This is RSR price to earnings ratio with current supply of 13Bn
If we increase the circulating supply to 50Bn (post mainnet), this is about as much as there will need to be for years. This is the varying P/E ratios projected use of RSV at certain volumes of users would generate
If we look at it the other way round and force the P/S to around 4173, this shows the reflected price of RSR
If we look at it the other way round and force the P/S to around 4173 as above, this shows the reflected price of RSR Using $3M per day which is 1.095Bn Tx volume per year (1.095Bn * 0.1% divided by 12 = 91,250)
This is the most conservative estimate available as it factors the whole 100Bn supply, even though that 100Bn will not be in circulation.
If we project forward to mainnet, we can assume a larger Tx volume . If we assume that the number of users will likely near 100k (March saw approx 25000 users remember). I’m going with $4.5M per day and $3.5M per day at weekends. Using $4.5M per day weekdays and $3.5M weekends = 1.4975Bn Tx volume per year (1.4975Bn * 0.1% divided by 12 = $124,791 per month)
This is what I would consider to be a very bearish forecast as the total supply will never be on the market, and token burn to stabilise RSV / arbitrage will happen as well. I would be tempted to use the 50Bn model.
End of year 1M users? Maybe with a following wind, but certainly 500k would be possible. I also expect the App will not be the only source of RSV use — Nevin has already alluded to this in his tweets, so I can see some sort of fintech partnership and a lot more RSV Tx than this as well.
