Sifchain Token Sale Updates
* Note: The official token sale start date is Friday, February 19, 5:00 AM GMT. The official token sale end date is Friday, February 26, 6:00 AM GMT. The official token sale page is https://purchase.sifchain.finance/ and it’s the only official page for registered participants to purchase eRowan. This announcement is effective February 17, 2021.
We’ve been overwhelmed by the tremendous interest in Sifchain’s upcoming token sale. Given the current level of interest, we anticipate making a few changes. Below, we discuss the new token sale structure. But first, please note the legalese at the end of this article. Note: This update is to be reflected in all Sifchain websites within 24 hours.
Model 1: The Hegic Model
Hegic launched its public token sale by having applicants submit their contributions to a smart contract and then dividing a fixed allocation of Hegic tokens equally on a per contribution dollar basis. If the Sifchain team did this and it received $50M in contributions (hypothetically speaking since we cannot confirm what people will or will not contribute in the public sale), the price per token for Rowan would be $50M / 70M Rowan = $0.71 per Rowan.
Nonetheless, we don’t want to use this model because it forces all token sale purchasers to pay the highest price that any purchaser is interested in paying. Nonetheless, this is a good place to anchor expectations about the demand for Rowan and thus its price.
Model 2: The Perp Model
Perpetual Protocol launched its token sale through a dutch auction in which the price started extremely high. If buyers bought, the price stayed as is. If they didn’t, the price was lowered until new buyers came in. This process repeated until the public sale ended.
This is another helpful way to assess demand and set price for a public token sale. The Sifchain team studied Perp’s launch in detail. Dutch auctions naturally end at a very low price absent any innate utility for the token. Indeed, Perp’s token price stayed well under its ICO price until it released its actual product and its token had utility value. We cannot use Perp’s model directly because Rowan’s token sale occurs alongside Sifchain’s BetaNet, giving it immediate utility.
Model 3: The TVL Model
With the utility gained from Sifchain’s BetaNet, Rowan is subject to a “deterministic pricing” model as coined by Thorchain. The model isn’t actually deterministic as market participants are able to exchange the token at whatever price they choose regardless of what the model says. However, it does contain incentives that rational profit-seeking agents are likely to use when deciding how to allocate their portfolio.
According to this model, the lower bound on Rowan’s market cap is three times the total value of external assets on Sifchain.
If the value of external assets on Sifchain is a modest $10M in total, the other side of Sifchain’s liquidity pools must have $10M total of Rowan so that the pools stay evenly weighted. This means Sifchain has a combined $20M in liquidity (or total value locked “TVL”).
As a result, Sifchain’s validators must be staking at least $20M in Rowan so that the network is secure and the cost of malicious activity (slashing) is not worth anything a validator can gain from fraud as per Tendermint’s Proof of Stake consensus algorithm. This means that for every $10M in external capital, we can expect $30M in Rowan’s total liquid market cap.
Here is a breakdown of how $10M in external capital would affect Rowan’s other metrics based on the above:
- External Capital in Liquidity Pool — $10M
- Value of all Rowan on Sifchain (liquidity pools + validators) — $30M
- Minimum Liquid Market Cap — $30M
- Minimum Fully Diluted Market Cap (Assumes 7% of all Rowan is liquid) — $30M / 7% = $428M
This sets a lower bound on Rowan’s price, but the price could be higher because the model does not include tokens stored outside of Sifchain (e.g. in a wallet, exchange, cold storage). Thorchain’s Rune currently trades at a 2.7x multiple of its deterministic price lower bound; if Rowan did the same, then with a $10M TVL, it would have a price of $1.28.
Further analysis on the TVL model can be found here from Gauntlet Network’s analysis of Thorchain. The model is also discussed in Sifchain’s token economics paper using different numerical examples.
It’s impossible to know what BetaNet’s TVL will be until it launches, but historical examples show that decentralized exchanges (DEX) of Sifchain’s caliber can quickly hit $10M. For example, Secret Network’s DEX hit $10M in one week, launching just earlier this month. Again, the TVL model is not truly deterministic but it does help purchasers understand how Rowan’s utility can influence its price.
Rowan Public Sale Structure
Rowan will be sold from a bonding curve with the following new formula:
Bo = Rowan currently in the sale pool
Ai = USDT sent by user
Ao = Rowan sent to user
Formula: Ao = Bo* (1-(2,625,000/(2,625,000+Ai))
It’s quite similar to the old formula except:
- There is no 1/10 exponent.
- The old variable, Bi, is fixed to 2,625,000.
With our new bonding curve, no more than 2% of the pool can be purchased in any single transaction at any time. Purchasers can make multiple transactions that exceed 2%, however, they cannot buy more than 2% in a single transaction.
The bonding curve will still start at 8,750,000 Rowan and increase by 364,000 Rowan every hour for seven days. As Rowan is added to the bonding curve, the price will fall and as tokens are purchased from the bonding curve, the price will rise.
As an example, let’s say that Alice wants to spend 1,000 USDT to purchase Rowan during the sale. Let’s assume we’re at the very beginning of the sale, and that the variables are the following:
Bo = 8,750,000 Rowan
Ai = 1,000 USDT
This means that Alice will receive the following amount of Rowan, assuming no other user purchases before her:
Ao = 8,750,000 * (1 — ((2,625,000 / (2,625,000 + 1,000))
Ao = 3332.06 Rowan
Dividing her 1,000 USDT contribution by this number, we see that she paid just over 0.3001 USDT per eRowan. Alice’s purchase has removed Rowan from the pool while adding USDT, thereby driving up the spot price of Rowan. However, we must keep in mind that additional Rowan will be added to the pool as the sale progresses, driving down the spot price of Rowan.
Rowan’s price at the end of the 7 day public token sale will end higher or lower than its starting price of $0.30 depending on how much demand is committed. If demand is strong as suggested by the pledged commitments and TVL model above, Rowan’s price will rise substantially above $0.30 and reward early buyers. If demand is weak, the price will fall and reward late buyers who can then hold and wait for further product developments and community growth to raise the price after the token sale ends.
Conclusion
We included the disclaimer at the end of this blog post to underscore that all financial projections are speculative and anything can happen in a token sale. We’ve provided this information and updated public sale structure in order to help Rowan purchasers navigate the public sale but it’s still up to each individual to make their own decisions based on their own preferences.
We’re also delaying the public sale start date until 3 February 2021 to give investors more time to digest this structure and to learn about Sifchain’s value proposition. BetaNet will launch on 3 February 2021 too. We hope the additional time and information will lead to prosperous decisions by everyone in the Sifchain community. We look forward to a post-launch world in which all Rowan holders can make decisions about the future of Sifchain together in SifDAO!
Please Note: The Token Sale Registration/KYC ends on January 29th, 12 AM GMT. Please be sure to submit your registration before that date if you wish to participate.
Legal Information
Nothing in this post shall constitute or be construed as an offer to sell or the solicitation of an offer to purchase any securities. Nothing in this post shall be construed as investment advice, strategy, or investment recommendations by Sifchain or any of its affiliates. This post is for informational purposes only.
The Rowan token and Sifchain protocol are in development. If you are a U.S. person, U.S. entity, or from a country in the U.S. sanctions OFAC list, you are hereby prohibited from participating in the token sale and from accessing our platform or services. You are also advised to only trust official Sifchain sources regarding development.
This communication contains forward-looking statements that are based on Sifchain’s beliefs and assumptions based on information currently available to Sifchain. In some cases, you can identify forward-looking statements by the following words: “will,” “expect,” “would,” “intend,” “believe,” or other comparable terminology. These statements involve risks, uncertainties, assumptions, and other factors that may cause actual results or performance to be materially different. Sifchain cannot assure you that the forward-looking statements will prove to be accurate. These forward-looking statements speak only as of the date hereof. We disclaim any obligation to update these forward-looking statements.
Any financial assessment that may be included herein have been compiled by Sifchain and are based on assumptions supplied by Sifchain which have not been verified by any outside accountants. Therefore, any financial projections are limited, presenting in the form of forecast information the assumptions of Sifchain, and do not include any evaluation of the support for the assumptions underlying the forecast. The financial projections are based upon information available to Sifchain as of the date of the particular compilation, are subject to material uncertainties, and should not be viewed as a prediction or an assurance of actual future performance; hence, no investment decision should be made based solely on any projections included herein. Any financial projections contained herein will depend upon future events, many of which will be beyond Sifchain’s control and, accordingly, no assurance can be given that Sifchain’s assumptions will prove true, that its projected results will be achieved, or that variations between the projections and actual future results will not be material.
This blog post does not guarantee anyone the right to participate in the token sale. Any sale of tokens to you shall be governed exclusively by the terms and conditions of the definitive documents governing such token sale. All participants will be required to comply with all applicable law, including the completion of KYC/AML verification, in order to participate.
