QKL123 Research Report | DPOS algorithm's leading coin grapefruit, will the market surpass Ethereum?

Abstract: At present, the activity of the secondary market of grapefruit is obviously warming up, and the risk of its price being overestimated by the market is not great. In the coming period, the growth trend of market demand for grapefruit is likely to be higher than that of Ethereum, but it may be lower than Ida. Compared with Ethereum and Ida, the early inflation risk of grapefruit is lower, but the subsequent inflation risk is higher. Since the grapefruit project is still in a rapid development stage, the risk of overvaluation of prices will change greatly with the development of the project itself and its competitors.

The EOSIO project (Pomelo, EOS) was launched on the main online line in June 2018 and is dedicated to providing infrastructure for decentralized applications (DApp). The EOSIO project was incubated by Block.One, and project CTO Daniel Larimer was the founder of both BitShares and Steem projects and the inventor of the dPoS consensus mechanism. At present, the DApp platform project is increasingly competitive. In the top ten market capitalization projects, in addition to the Ethereum project (Ethereum, ETH), there is also a clear competitive relationship between Cardano (ADA) and EOSIO. IOHK, founded by former executives (Charles Hoskinson & Jeremy Wood), is responsible for technology development and was launched in September 2017.

Price trend of grapefruit, Ida and Ethereum (from the beginning of August 2015 to the end of March 2019)

Source: CoinMetrics, QKL123

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On April 17, 2019, the market value of grapefruit was 4.957 billion US dollars, while the circulation market value of Aidaco was 2.153 billion US dollars, accounting for 28.14% and 12.22% of the market value of Ethereum respectively. From July 2017 to March 2019, the open market price of grapefruit rose from about 0.1 US dollars to about 5 US dollars. During this period, the price has nearly 50 times, and the open market price of Ethereum has dropped from about 250 US dollars to about 150 US dollars. The price has decreased by 40% during the period. Among them, the highest price of grapefruit had reached the historical peak of 21.64 US dollars (April 2018), and then fell sharply, and the current drop is 80%.

Return on investment of Ethereum, Grapefruit and Ida (April 17, 2019)

Source: Messari, QKL123

During the recent bear market, the return on investment (ROI) of grapefruit was -33.09%, while the ERO and ROA ROI were -68.25% and -65.14%, respectively. Comparing the return on investment of grapefruit and Idaco in the past three months, grapefruit ROI was the highest (+125.25%), followed by Ida (+86.92%), and Ethereum was the worst (+33.32%). It is worth noting that in the past three months, whether it is price increase or price decline, the return on investment of grapefruit is better than Ethereum.

What are the price risks of grapefruit in the future? The following is a comparison of the historical indicators of Ethereum, Grapefruit and Idaco from the three aspects of supply, demand and valuation, mainly summing up the risk of the price of grapefruit from the economic and technical level.

First, reflect two key indicators of the grapefruit market supply: market supply and inflation rate.

Issuance strategy of Ethereum, Grapefruit and Idaco and corresponding inflation rate (April 17, 2019)

Source: Messari, QKL123

Similar to the distribution mechanism of Ethereum, there is no limit to the maximum supply of grapefruit, and there is an initial distribution. There are 1 billion pieces of grapefruit for initial distribution, of which 900 million are publicly sold and 100 million are allocated to the founding company Block.One (currently locked). According to the current design, the annual inflation rate of grapefruit is up to 5%, of which 1% is a reward for block producers and 4% is a proposal award.

Issuance curve of Ethereum, grapefruit and Ida (theoretical value)

Source: Messari, QKL123

At present, the market circulation of grapefruit is 906,245,118. It is estimated that by 2050, the market circulation of grapefruit will reach 1,730,198,437, and the expected circulation increase is as high as 90.92%, while the annual circulation of Ethereum and Idaco increases by 17.38% and 62.13%. In 2019, the annual inflation rate of grapefruit is expected to be 2.22%, lower than Ethereum (4.90%) and Ida (2.71%), but the inflation rate will be different due to the increase of the proposal bonus, which is related to Ida. The distribution model is similar. Compared with Ethereum, the development process of grapefruit and Idaco is relatively short. If the risk of selling in the previous project side (high proportion of holdings) is superimposed, it will bring certain inflation risks. Moreover, it is estimated that by 2050, the annual inflation rate of grapefruit will be 2.67%, which will be significantly higher than that of Ethereum (0.24%) and Ida (0.36%).

Second, two key indicators reflecting the demand of the grapefruit market: the number of transactions on the chain (Transactions) and the number of active addresses on the chain (Active Addresses). The number of actual transactions and the number of active addresses in the chain can reflect the strength of market demand.

At present, unlike Ethereum's function in the network (which will be converted to PoS in the future), although grapefruit can also be used as a payment medium, it is not used as a fuel for blockchain network systems (Gas). There are two main differences: It is used as a user vote (super node election, proposal referendum, etc.), and second, as a stock pledge (Staking) to obtain network resources (RAM, CPU and other resources). Compared with Ethereum, the Token design of Yuzu makes the DApp user transaction cost zero, which reduces the entry threshold of DApp users to a certain extent, but passes some of the cost to the DApp developer.

Daily chain transactions of Ethereum, Grapefruit and Idaco (from the beginning of August 2015 to the end of March 2019)

Source: CoinMetrics, QKL123

After the main online line of grapefruit in June 2018, the number of transactions on the daily chain rose linearly, increasing from 215,778 to more than 800,000 in one month. However, due to problems such as the security breach of smart contracts, the number of transactions subsequently fell sharply. It did not return to around 800,000 until December 2018, but it has recently dropped significantly. At present, with the rebound of grapefruit prices, the number of transactions in the daily chain of grapefruit has also increased slightly, but the fluctuations are relatively intense and the overall trend is declining, which is significantly different from the recent performance of Ethereum and Idaco: Ethereum Network Daily The number of transactions on the chain has been relatively stable recently, while the number of transactions on the daily chain of AID has a significant growth trend.

Daily active addresses on the chain of Ethereum, Grapefruit and Idaco (from the beginning of August 2015 to the end of March 2019)

Source: CoinMetrics, QKL123

From June 2018 to March 2019, the number of active addresses in the daily chain of grapefruit increased from 20,000 to 80,000, and the number of active addresses has increased by about 4 times, which is similar to the growth rate of AID in the same period (about 2,000 to 8,000). Both left and right) are significantly better than the performance of Ethereum (about 300,000 or so to around 200,000). Recently, the number of active addresses in the daily chain of grapefruit, Ethereum and Idaco has increased significantly, but there is still a big gap between the active address of the grapefruit chain and Ethereum. In the future, although the number of transactions in the daily chain of grapefruit has a downward trend, the growth rate of active addresses in the daily chain is likely to be faster than that of Ethereum.

3. Three relative indicators for judging the price of grapefruit: the ratio of market capitalization to transaction volume (Market capitalization/Transaction Volume, abbreviated MtV or NVT), the ratio of market capitalization to network value (Market capitalization/Network Valuation, abbreviated MnV), The ratio of market capitalization to Market capitalization/Exchange Volume (MeV).

MtV, market value/chain transaction amount, the inverse of analog currency circulation speed (1/V=M / QP), can be understood as the speed or usage rate of Token in the chain. In general, the lower the Token relative usage rate (the greater the MtV deviation from the general level), the greater the likelihood that the market value will be overestimated.

MnV, market value/network value, that is, the ratio of the market value of the Token project to its network value, can be compared to the traditional financial indicator PB. In general, the higher the relative value, the greater the likelihood that the market value will be overestimated. The network value adopts Zipf's Law, and its calculation formula is N*ln(N), where N is the number of active addresses on the chain.

MeV, market value / market transaction amount, that is, the reciprocal of the turnover rate, the turnover rate can be understood as the speed of Token in the secondary market. In general, the higher the circulation rate of Token in the secondary market (the lower the MeV is relative to the general level), the higher the activity in the secondary market and the greater the possibility that the market value is overvalued.

Daily market value/chain trading volume of Ethereum, Grapefruit and Idaco (from the beginning of August 2015 to the end of March 2019)

Source: CoinMetrics, QKL123

During the period from July 2018 to March 2019, the grapefruit MtV was maintained between 60 and 100 for most of the time, higher than the MtV range of the Ethereum (40-80), and also higher than the MtV range of the Adaco (10-20). ). Recently, the MtV of grapefruit is between 40 and 60, which is close to the range of MtV in Ethereum, but significantly higher than the MtV range of Ida. At present, the grapefruit MtV is slightly higher than the Ethereum MtV, but the relative historical performance, the risk of the grapefruit price being overestimated by the market is not large.

Daily Market Value/Network Value of Ethereum, Grapefruit and Idaco (from the beginning of August 2015 to the end of March 2019)

Source: CoinMetrics, QKL123

The grapefruit MnV rose from around 1,000 in August 2018 to a peak of 8,000 in September 2018, and then gradually fell back to the nearest 1,000. At present, the MnV of Ethereum and Idaco are between 20,000 and 30,000, and the comparability of citron MnV is poor. The main reason may be that the Token design of the grapefruit-free DApp user transaction fee will significantly reduce the transaction cost of the user. Combined with the above analysis, compared with the Ethereum price, the current risk of the grapefruit price being overestimated by the market is small.

Daily Market Value/Market Trading Volume of Ethereum, Grapefruit and Idaco (from the beginning of August 2015 to the end of March 2019)

Source: CoinMetrics, QKL123

In the past three years, the MeW value of Ethereum has been decreasing year by year, from 40-120 in 2016 to 20-100 in 2017, and then from 20-40 in 2018 to 0-20 in 2018. There is also a trend of continued decline, which indicates that the trading activity of the secondary market of DApp platform projects continues to increase. In the past year, the grapefruit MeV has dropped rapidly from the 40-60 range to about 3 in the beginning of 2019, which is very close to the Ethereum MeV. At present, the grapefruit and Ethereum MeV are significantly higher than the Idaco, and the secondary market trading activity of the grapefruit is getting hotter, which is related to the overall market recovery.

Finally, summarize the price risk of grapefruit .

At present, the activity of the grapefruit secondary market is getting hotter than Ida, but compared to Ethereum, the risk of being overvalued by the market is not high. In the coming period, the market demand growth trend of grapefruit is likely to be higher than that of Ethereum, but it may be lower than Ida. In the long run, compared with Ethereum and Ida, the risk of inflation in the early stage of grapefruit is lower, and the risk of inflation in the subsequent grapefruit is higher. It should be emphasized that since grapefruit and similar projects are still in a rapid development stage, their price risks will change greatly with the development of the project itself and competitors.

This paper mainly analyzes Token price risk from the perspective of indicators or technology, and does not act as investment advice.

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