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The Biggest Opportunity in Crypto: TRAC Token Price Analysis

The Biggest Opportunity in Crypto: TRAC Token Price Analysis

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by COINS NEWS 73 Views

The Biggest Opportunity in Crypto: TRAC Token Price Analysis

People.

This post is going to assume you are in the know about Origin Trail and the TRAC token. If you are not, there are many posts that explain why this is on the way to being huge. In short - It is a demand driven token with massive enterprise partnerships that I think it is potentially the biggest and most undervalued opportunity in crypto. The team has almost focused exclusively on B2B enterprise relationships, and trading activity has been minimal. We are at the calm before the storm, where hundreds of thousands of jobs are targeted to hit the network creating scarcity and activating a massive surge of adoption driven demand.

(edit: OriginTrailExplained.info read this if you are new to Origin Trail TRAC)

Disclaimer: “All models are wrong. Some are useful” or Don’t blow your lifesavings because of my stupid Reddit post…

TLDR: TRAC is about to BLOW

Go Get It: Kucoin, Uniswap, Bittrex

In this post, I’m going to attempt to model a future price per TRAC token. There’s been ongoing discussion in the community telegram, and I thought it would be worth laying out some of my thoughts in more detail to generate discussion all in one place.

In Feb, Alpha Sigma Capital released a report which on one hand was great! It was the first formally published analysis by a real VC firm with a vested stake in TRAC. Regardless of your thoughts on the report, the fact it was published is good news for OT. Short summary – TRAC is undervalued, significant growth is forecasted, largest barrier is the “fierce competition” in the space.

The component of the report that seemed to generate the most significant reaction from the community was the following table, outlining their forecasted price of the TRAC Token:

Source: https://docsend.com/view/vcav3pzz9etmndqw

Ok, but what does this table mean?

It means in 2024, Alpha Sigma Capital has forecasted a price ranging from $40.61 - $101.52 price per TRAC Token.

How was this calculated?

Some quick, simple math shows that they have basically multiplied $2 by the CAGR (Compounded Annual Growth Rate) in the respective column.

Ex. Using the first column, CAGR = 112.28%, EV/Sales = 25

Row #1: ASC Report

Is this an accurate or useful forecast?

  • Ziga (Founder) in recent office hours: “I think it’s FUD” https://www.youtube.com/watch?v=50A-1E2TyJU&t=4666s
  • My take – the CAGR does not encompass the team’s projected increase in network demand (Job Targets). I’m not sure how they came up with the CAGR, but it does not appear to be connected to the team’s reported growth targets. Alpha Sigma – Lets chat if you disagree.

An Alternative Take: Modelling TRAC Token Price using P/E Ratio:

Given general community + founder feelings this was not accurate or bullish enough, and the amount of discussion in the community telegram group about this topic, I’m going to lay out a different model forecasting future price using the P/E Ratio

First off: What is P/E? Price per Earnings – A common metric used to value a company by comparing its current share price relative to its earnings per share.

Is P/E an effective way of generating a price prediction for TRAC?

To be honest, I go back and forth on this and it also has come up a bunch in the Telegram… let’s go with a strong MAYBE. There are definitely reasons why it is, but I find the entire concept of measuring fair value in the crypto space to be pretty complicated for a number of reasons.

Back to TRAC - What is a fair P/E revenue multiple to apply in order to forecast token price?

I have no idea. Let’s use two of everyone’s favourite tech stocks as precedent:

  • Tesla: Last 12 Months p/e = 937, Dec 2016 -2020 Average = 147.6
  • Apple: Last 12 Months p/e = 33.1, Dec 2016 -2020 Average = 20.3

As you can see, there is a HUGE difference here, and generally speaking newer stocks in the tech space tend to trade at pretty massive P/E multiples due to the perceived likelihood they may experience explosive growth. Apple has an established history, and therefore trades at a much lower P/E multiple. For TRAC - I can’t say what is a fair multiple to apply, but I’ve laid a bunch out so you can make your own call.

So, using the following variables:

  • Jobs/Day = 100,000
  • Cost/Job = $2.50
  • (JD) Job Demand = Jobs/Day * Cost/Job
  • Circulating Supply = 500,000,000
  • F = Jobs/Day * 365 Days/Year * $2.50
  • Sf = Stake Factor (Estimated)
  • (TD) Total Demand = F + F*Sf

Here is what I believe 2023 could look like:

Jobs = 100k/Day

A couple of big numbers on the board eh?

Okay, but what if 100K Jobs a day is conservative? For fun, here it is with 250K Jobs/Day:

250K Jobs/Day

Yeah, but the team always is conservative in their goals, what if they do more? Or maybe a few years later we’ll have even more jobs? Fine.

500k/Day Jobs:

500K/Day Jobs

Okay, but what if this whole P/E multiple thing is ????????????? For fun, here’s what it would look like if there is 0 demand outside of job purchasing and therefore P/E = 1. This shows price in relation to growing # of Jobs:

Jobs/Day. No P/E Mutiple

As you can see, it will take significant growth in our jobs/day metric, but if that were to happen there are still some juicy #’s on the board.

Yeah, but some of these massive numbers imply a total Marketcap in the TRILLIONS! That can’t be right! BTC only just crossed 1 Trillion!?!?

Consider this. If TRAC is able to achieve meaningful adoption, it will be built into the operating structure of massive businesses, guaranteeing consistent demand and likely increasing the average amount of time data is stored on the ODN. This is a HUGE factor in driving scarcity. Imagine medical records are stored on the ODN… What’s the average job length? Potentially decades… or at least intended to be decades and broken up into 5-year jobs, repurchased at the time of expiry or something. I’m not saying this WILL cross the trillion marketcap, I’m just saying that there are forces at play in driving demand + scarcity that I suspect are considerably more significant than BTC. Not a fair comparison. Imagine if companies like SCAN and ORACLE have ODN permanently embedded in the backend of their supply chain solutions. All of a sudden OT is not selling anything. The big boys are integrating ODN with existing clients to make their current solutions more effective. An analogy to consider is Amazon Web Services (AWS). It is estimated their cloud storage solution has a 31% Marketshare. Its MASSIVE. And how many businesses can you name that use AWS? Probably not many. It runs the backend. It powers the machine. It supports businesses to do what they do best (as ODN will in a different way). It is the infrastructure.

Time to come clean. I have made the following assumptions when mapping the above tables out:

  1. We have hit the 2023 target of 100k Jobs/Day
  2. All jobs are created equal and cost $2.50 USD
  3. Circulating Supply = 500,000,000 TRAC
  4. Total Demand = F + F*Sf
    1. This is true and outlined here: https://medium.com/origintrail/origintrail-a-look-into-network-mechanisms-incentives-and-market-forces-e99938b8687c
  5. F = # of Jobs (100k) * $2.50
    1. F Actually = S x N x M x D x V x (2N x Pw + (N-3) x Pr)
    2. I have tried, and I have absolutely 0 confidence in my ability to estimate any of the factors that contribute to F, so for the sake of this simplified forecast, I’m assuming all jobs are created equal in value. I also believe the full formula will on average increase total demand.

Flaws in this model:

  1. It does not include the amount of time each job will remove TRAC from the circulating supply… (Bullish)
  2. It does not include the amount of TRAC removed from circulating supply that is required to set up each node… (Bullish)
  3. It assumes all jobs are equal and cost $2.50
    1. Based on OT’s published, and 3rd party verified Token Demand Model (https://origintrail.io/token-demand-model) I do not believe that all jobs will be an equal rate. I think they have used the $2.50 number as a means to illustrate how the fixed fiat cost will interact with the TRAC token, but based on their published model, I am concluding that jobs will vary in cost based on their scope. I believe means of calculating job cost in fiat will be fixed but jobs will range in actual price based on their magnitude. Ex. A 5-year job with 3mb of data is going to cost more than a 1-year job with 1 mb of data. The means of calculating each price is fixed, but cost output will vary based in the variables of each job.
  4. It assumes adoption happens as targeted… Sorry folks, realistically this is still in the proof of concept/pilot phase (although there many, many positive leading indicators of the potential success)
  5. Feel free to point any others out.

Final thoughts – From this model it appears future token price will likely be in the range of $0.18 – $3,650.

Jokes aside, this is some bullish shit right here. Triple Rocketship stuff…. ????????????

Boarding is ending soon (March 18th), T1 Exchange(s) likely coming in the near future and most importantly economies of scale will be unlocked, and the network should soon begin to be flooded by incoming jobs.

If you really want to get in the weeds of a much better (but way more technical) TD demand model – play with this: https://origintrail.io/token-demand-model.

The point of this post was to try simplifying and to generate some community discussion. I am sure if this was ever read by the TRAC team, they would not find it to be accurate as the ODN is very complex, and this intentionally leaves out variables that I am not capable of estimating with a reasonable degree of confidence. Nevertheless, I do hope that this may help community members wrap their brains around the potential range of prices possible in the various situations I’ve laid out. I understand that the team is not able to comment on token price, but I believe the complexity of the ODN economics is one of the reasons they’ve been hesitant to directly answer questions like:

  • “What will the returns be for participating in the liquidity pool?”
  • “What sort of returns can I expect from running a node? Or staking?”

The answer – It depends too much on a vast number of moving variables and will be different based on different situations. There is no one size fits all number. I’m not sure if the team is even able to estimate some of the inputs to the variables, they’ve defined… They’ve set up the system, and realistically, network usage is going to vary based on the companies, governments and other stakeholders they onboard. I believe they’ve set the model up so it can serve the needs of many vastly different stakeholders, but practically speaking, we won’t have an understanding of what average usage looks like until there is significant adoption. It also seems like ODN to some degree is set up to function as a free market for node runners etc., and therefore the dynamics of the free market apply and will change over time. There will be periods where returns are higher and periods where returns are lower.

Anyways, that’s my 2 TRAC.

Thoughts? Smart people – rip this apart. Or add to it! Really curious to read the discussion.

submitted by /u/JonnyRoscoe
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