WOO Tokenomics Broken Down
Tokenomics is usually a hot topic with many projects — and rightly so, as poor tokenomics can reduce the investment appeal in even some of the best projects.
WOO hasn’t been immune to criticism around its WOOnomics, but these arguments (IMHO) are flawed, and the position is rarely clearly understood. It is also worth noting that vesting is a good thing. If project owners get all of their tokens on day 1 it opens the door for rug pulls and can reduce the motivation to continue to deliver on the project.
Cutting to the chase, significant inflation is bad as more tokens on the open market generally means more selling pressure and a diluted holding for the investor. Is that the case with $WOO? Read the below and then decide for yourself.
At the time of writing, the circulating supply of $WOO is 1.07bn out of a total supply of 2.97bn (30m has been burned).
This implies that the circulating supply will triple from here which would dilute an investors holding significantly. That’s pretty bad right? Well, it might be if it was going to happen, but it isn’t.
Let’s start with the circulating supply.:
10% were sold in original sales, another 10% were sold to seed investors. The latter finishes vesting in October this year (approx. 45m left to vest) so this accounts for 555m circulating
WOO ventures are allocated 5% for investments into other projects that will benefit WOO network. Some of these funds have been used and are circulating.
Ecosystem rewards (staking) is paid out daily, with the base rate APR capped at an annual inflation rate of 1%
Over 410m (at the time of writing) of the above tokens are staked across WOO X and WOO Fi, so these are circulating but not “liquid”. Of course, tokens will be un-staked as price targets for individual holders are reached but with fewer WOO staked, the individuals staking base rate increases. Win/Win for diamond hands with a rising price!
See here for the staking reward calculation:
▶ How is the base rate calculated in the staking program? — WOO X
The largest change to the circulating supply by far was the reclassification of approx. 300m tokens from un-circulating to circulating when these were handed to the control of WOO DAO. This article isn’t the place to go into WOO DAO but these tokens will only ever be used for projects which directly add benefit to WOO network and token holders. The vast majority of this remains unallocated within the DAO treasury. Are these therefore really circulating in the truest sense of the word? I would argue that they are not. The DAO holdings are transparent and published here:
It is true to say that the seed investor vesting has added 255m to supply in the last 18 months but this ends in October, the vesting has been linear rather than cliff but the good news is that the selling pressure from this tranche is nearly complete. That sounds bullish to me. Tik, tok…
Investor funding was required so it was either the case that these tokens were immediately released or they vested. Same, same, but different.
So, circulating supply is (mainly): original sales, seed investors, DAO, ecosystem rewards and also some team vesting which is much smaller monthly amounts than seed investors and over a much longer time frame.
But what of the un-circulating supply? 1.9bn is a lot still to come right?
10% (300m) is an insurance fund — should never enter circulating supply.
17% (500m) is team vesting. 7% of which is unallocated for future team members yet to join.
The remainder, aside for some change, is ecosystem rewards. Staking is set at 1% inflation so is only adding $WOO 10m per year, it will take decades for staking to drain the allocation.
The huge factor here is the burns. The last 3 months have seen 15m removed from supply and once the seed investor vesting is complete the burns at this rate will be close (but not quite) keeping up with remaining inflation of team vesting and staking rewards. Once team vesting completes in a few years then it will be mega deflationary.
The project is still young and establishing itself and if you believe in the project then revenues will only grow from here increasing the rate of USD available to buy WOO for burning each month (50% of revenue). It is impossible to predict burn quantities with any accuracy as it depends on revenue numbers and token price but knowing that there is approx 1bn in the insurance fund and decades worth of staking rewards combined, it is sensible to predict that that we should never see more than 1.5–1.8bn circulating, maybe less. Even these sort of numbers won’t be reached for a few years.
Ironically, it is better for the burns for the token price to be low. More WOO can be bought with the USD revenue. But when revenue doubles or quadruples, how many months could be sustained at low token prices if 20m a month were being bought and burned…..?
I hope this helps you understand the WOOnomics better
TLDR — Bullish on WOO.
EDIT: 5th August.
As if to further highlight that the circulating supply is not always truly circulating, the day after I posted this blog, WOO decided to reclassify 50m WOO from the liquidity management wallet from un-circulating to circulating. From the outset 5% of supply was for liquidity management and this 50m forms part of that percentage. The reclassification doesn’t mean that these funds would have any impact on selling pressure and once again it highlights that there are grey areas on what is actually circulating.
