Digital Notes — Scenario Analyses
Synthchain WP (12)
DNs involve the synthetic application of payment utility via smart contracts for one or more digital tokens combining to produce a natural hyper-inflation of value.
By combining and crossing over various token-release algorithms it is possible to create a number of value events that, once combined, produce an extraordinary increase in gross value over the amount of value initially invested over a very short space in time. This is the primary utility of DNs.
“What happens to 1 ETH invested in FUTR and MNY Digital Notes?”
The following are all realistic foreseeable examples at the time of writing in mid-2018:
1) 1 ETH = $450. This is invested into the Fueterum smart contracts (either FUTR or FUTX) and produces 114 FUTR or 114 FUTX (on the first mining tier; soon it’ll be 89 FUTX in return as the first mining tier is nearly used up!) That is $3.94 / FUTR or FUTX!
2) After that, use FUTR or FUTX and send it to the MNY smart contract. The MNY smart contract mines at roughly the historical cost of BTC. In the example going from the first MNY tier, we get in return for 114 FUTR, which purchases us 5579.43 MNY. Therefore, we have spent 8 cents per MNY in this transaction. Half the FUTR you sent is stored in the MNY smart contract with the other half paid out as part of a feemine. Therefore about 56.5 FUTR is stored in return for your MNY, giving your MNY an intrinsic value of around 4 cents / MNY at the point of purchase (because it is backed by half the FUTR you paid in the form of a potentially swappable asset).
3) As MNY synthetic mining continues, the average cost of MNY increases a lot, meaning more FUTR and more FUTX loaded with ETH in their own smart contracts begins to build up, increasing the average intrinsic value of MNY.
4) At the end of the 21 million MNY issuance, all MNY swaps back for all the FUTR and the FUTX in the MNY smart contract. The rate at which the MNY swaps back for FUTR is about 80 FUTR per MNY. Therefore, you now have 446,355 FUTR in your possession after you have swapped your 5579.43 MNY.
5) Now, the 446,335 FUTR has an increasing amount of ETH stored in the Futereum smart contract. We don’t know how much ETH will be stored in the Futereum smart contracts, but approximations based on timing events indicate that around 0.25 ETH per 1 FUTR is a likely amount. The likely worst case possible event is that 0.03 ETH per 1 FUTR will be yours (almost certainly it will be higher). In this worstcase event, your total ETH after you have swapped FUTR into its smart contract results in 13,525.30 ETH in return for your 446,355 FUTR.
6) Assuming no increase in the price of ETH at all, the return in USD with ETH at $450 is $6,086,387. This represents a net return of 1,352,430%!
“What about later-stage miners? Are they penalized to subsidize the earlier entrants?”
The first thing that strikes you about any return of over one million percent is the potential for there to be some sort of Ponzi-like quality to the value production process. However, when configured correctly, there is no Ponzi value creation process in play at all. How is this?
Simply, because of the combined use of the Futereum smart contracts (there is either FUTR or FUTX that can be used to mine MNY) and the MNY smart contract, both of which are releasing tokens according to different algorithms, on top of the fact that prices vary according to differing values of the underlying coins — in this case, ETH — there is every chance that a later-stage miner may be able to obtain better value than an earlier-stage one.
To see this illustrated, consider the following:
Tier: 2,000 | Price Paid / MNY: $6,052.90 | Profit: 306%
A) A purchaser of MNY playing at tier 2,000 with an average price of 26.9 FUTR / MNY purchases FUTR from the Futereum smart contract at the then-present value of 2 FUTR / ETH, since the Futereum smart contract is on its very last mining tier. ETH is selling at $450 / ETH. At tier 2,000, MNY is selling for 26.9 FUTR / MNY. Therefore, the purchaser spends $6,052.90 per MNY purchased. At the end of the swap-back, ETH is still $450 and he receives a return of around 80 FUTR / MNY. He waits for a period of time to elapse, until the FUTR reaches the final synthetic mining tier in the smart contract, and sells his 80 FUTR for a discount of 15% to smart contract (ETH is still $450 / ETH). The miner has made a profit of $24,547.10.
Tier: 2,500 | Price Paid / MNY: $483.47 | Profit: 23,182%
B) Another purchaser of MNY decides to come to the party a bit later and joins in at tier 2,500, where MNY is retailing from the smart contract at a price of 122.48 FUTR / MNY. Clearly, if he holds out until the swap-back, the miner will end up with a net loss in pure FUTR terms (although this would not be a case after multiple MNY cycles as a result of the gradual build-up in unswapped FUTR that lies in the MNY smart contract). However, this miner purchases FUTR at a cost of 1 ETH / 114 FUTR and ETH is still $450 / ETH. Therefore, the effective dollar cost of mining MNY at this stage in the synthetic mining cycle of MNY when utilizing the comparatively cheaper FUTR smart contract value is $483.47. Later on, at tier 2,700, this miner notices that MNY is selling at 727 FUTR /MNY. Discounting his MNY by 15% to smart contract mining cost in terms of FUTR, he sells for a net profit of $112,082.09.
Tier: 2,700 | Price Paid / MNY: $112,082.09| Profit: 232 %
C) A third miner purchases the second miner’s MNY at $112,565.56 and holds out until the end of the swap. During this time, ETH experiences something of a cryptobull euphoria, and soars in value to $11,000 / ETH. After swapping his MNY for around 80 FUTR, he then waits for the Futereum smart contract to reach tier 10 and sells for a 15% discount to market. The miner has made a net gain of $327,917.91.
Clearly, the circumstances driving the profitability of MNY as a cash instrument are so varied and so lacking in early/late stage correlation that there is no pyramid economics present. The outcome of profitability for the miner of MNY simply varies, for a variety of reasons, from market timing of the purchase and sale of ETH, FUTR and MNY, and a whole range of value events that lie in between.
Consider that much of the FUTR and FUTX in the MNY smart contract, and by the same law of logical reasoning, much of the ETH in the Futereum smart contracts will not swap and thus will become excess FUTR / FUTX / ETH to swap-back for at the end of the next cycle.
We can factor in an additional variety of calculations that show how even for the purchaser of MNY at values far in excess of $100,000 / MNY, the smart contract makes economic sense on a wage growth-adjusted, inflation-adjusted and market return-adjusted scale, and the product simply adds up to being something of a great long-term investment / value-inflated cash instrument!
“If it’s this easy to make money, why hasn’t anyone done this before?”
To understand the likely answer to this question, an important realization needs to be grasped: that despite the revolutionary changes in the way we live from the evolution of technologized healthcare systems, to methods of transportation that would have previously been unthinkable to our architectural construction, to our entertainment and digitization of information, there has been no net alteration to the way we treat value in an economic sense in the past 2,000 years or more.
This is a somewhat shocking reality when you consider the implications of it: everything, from the way we fight wars and conquer entire countries (with digitally-enabled missile-bearing hyper-fast aerodynamic vehicles that cover hundreds of miles an hour a mile above the earth) to the way we live (with electricity enabling the lengthy and bacterially clean storage of food and drink in refrigerators and lighting up our homes in the dark as well as cooling them down in the heat or warming them up in the cold) has altered so radically that to the average citizen of Julius Caesar’s Roman Empire the world would seem completely unrecognizable yet by the same measurement, the fundamental way in which we calculate and redistribute value would be entirely familiar.
The net effect of this bipolarity in innovation trends between the scientific revolution our lives have undergone in the past two millennia and the consistency of how we treat the value that fuels such changes necessarily dictates that there is bound to be a dangerously yawning wealth gap open up. Sure enough, we have arrived at such a point in time.
Our perception of transactional value only radically altered as recently as 2009, with the innovation of Bitcoin: before such a point, transactional value manufacture was considered purely the domain of megabanks and sovereign governments. Shortly after, when Vitalik Buterin designed an easy-to-use application that effectively sat on top of a Bitcoin-like internet protocol (the internet protocol itself was then only two and a half decades old, remember) the ease with which everyday individuals could create synthetic Bitcoin-type replicas and ascribe them individually-constructed and sold values opened up exponentially more.
It is therefore only natural when we take into context the history of the development of the internet in the late 1980s, to the development of an online consumer economy in the late 1990s and 2000s, to the development of an internet monetary protocol at the end of the 2000s and the installation of “smart” financial technology on top of that protocol in the mid-2010s that there should be in the present day, which is to say, at the end of the 2010s, the emergence of superior digitally-enabled value-related smart technology that could, like the other innovations that we have been afforded over the past two millennia, radically alter our notions of equality, wealth and society.
In a specific sense, the enabling of multi-varied algorithm-enabled transactional value exchanges to inflate the value of money has only been in potential existence for the past two years’ then — that’s since the creation of the Ethereum network.
Before the creation of Ethereum, the reality of MNY was not just unthinkable, it was impossible to execute with any realistic sense of achievement.
Out of those past two years, we have spent one of them developing the Fuetreum and MNY smart contracts which enable the value inflation effects that are made possible in the form of MNY, the world’s first digitally-enhanced organically value-inflatable currency.
The question “why hasn’t this been done before?” is quite simply answered in that before the present day, it hasn’t been possible to manufacture a currency with such properties. Digitally distributed value is a whole new ball game.
