Token Redenomination - Crypto Academy / S4W3 - Homework Post for @wahyunahrul

25일 전

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1). Explain what is Token Redenomination in your personal opinion? What distinguishes it from currency or other assets redenominations?

We now live in the age of blockchain and we encounter a new token every day. While some of these token projects are bankrupting, some are successful and leaving others. It is possible that successful tokens will attract attention in the market and increase in value very quickly. If a token project is promising, if it is a highly innovative idea, the demand for this token will also increase. As the demand increases, the price will naturally increase.

With the increase in the price of the token, it will become more difficult to reach everyone. For example, even if small investors like me want to invest in this token, there is a possibility that they will not be able to buy because of the price. This is where Token Redenomination comes into play in order to increase the liquidity of this token and reach everyone.

Let's explain this through an example. X token is created on any blockchain. Assuming the price of this X token is $1,000, an investor will pay $10,000 for 10 tokens. After token redenomination takes place, the price of one of these X tokens will be $ 0.1. The 10 tokens owned by our investor increased to 100. In this case, our investor's total X token will be 100 x $ 0.1 = $10. In other words, with this Token Redenomination, our investor did not have any financial gain or loss. However, investors who do not have a budget of 1,000 USD for 1 Token can now invest 0.1 USD. Here, the name of the token can be changed, as in the DOT example, or a new name can be given to the token, as in the NPXS/PUNDIX example. By the way, it should be noted that this redenomination decision is proposed by token developers and submitted to investors for voting.

Redenomination is done not only in the crypto world but also in other assets. The most common one is in the currencies. I am a Turk and in 2005 6 zeros were removed from our country's currency. 1 Million Turkish Lira turned into 1 New Turkish Lira. After the conversion was completed, the expression "New" was removed. However, as in token redenomination here, the public was not asked after this idea emerged, and this decision was taken with the decision of the politicians.
There were many economic reasons for this. While people with good financial situations could easily buy products and services, those with low financial means had difficulties in this economy. With the redenomination made in money, the purchasing power has increased relatively. Maybe there is no investment in a coin or token like crypto here, but it is aimed to increase the participation of people with low budgets in the economy.

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2). Mention the advantages and disadvantages of Token Redenomination

Advantages

  • With Redonomition, the price of the token will decrease. This increases the likelihood that the token will reach more people. Especially small investors can own these tokens by paying a smaller amount instead of investing large amounts in this token.

  • With the increase of small investors, trading transactions will also increase. If only large investors dominated the market, there would be fewer trades. People may not be able to find a buyer at the price they want to sell the token, or vice versa, they may not be able to find a token at the price they want to buy. But with the increase of small investors, trading at any price will increase. This will increase the liquidity of the market.

  • Investors should definitely research the coins/tokens they will buy. The first thing they look at is the market value. After a token is redenominated, the number of investors interested in that token increases. As we mentioned in the previous article, small investors also invest more. This increases the activity of the token and gives people confidence. More people tend to buy this token. In other words, the market value increases, so the number of buyers also increases.

  • When a token is redenominated, it can give the impression that its project is successful and that the project will flourish. With redenomination, new additions can be made to the project and the scope of the project grows.

Disadvantages

The disadvantages of redenomination may be minor compared to its advantages.

  • First of all, we mentioned in the previous question that it is submitted to the investors for a vote for redenomination. There will be a vote of acceptance as well as a vote of rejection. Those who voted reject may not like this situation and may withdraw their investments.

  • Redenomination is not something everyone knows. For this reason, it may frighten investors who do not know about this subject and cause them to withdraw their investments.

  • After redenomination, people have to convert their tokens. Some platforms require a fee for this process. This will put the investor in unnecessary expense.

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3). Do all cryptocurrency projects need to do Token Redenomination? Explain in your personal opinion

I don't think all cryptos need redenomination. For example, if we give an example from Bitcoin, I can buy bitcoin even in very small amounts. Because there are enough digits for Bitcoin and I don't need to spend thousands of dollars to buy Bitcoin.
There are also many low-priced tokens on the market. Small investors' budgets will be enough to buy them.

4). Choose a project that has or is currently doing Token Redenomination and show how to convert old tokens into new tokens. (Screenshot Required)

For this question, I did some research on the internet and chose the PUNDIX token. I will answer more information about the token in the next question. Now let's take a look at the process of converting old tokens to new tokens.

The swap of PUNDI X started on March 30, 2021, and we need to visit their official site www.pundix.com for this swap.
At the top of the home page, it directs us to this swap process.

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Screenshot is taken from www.pundix.com./pundix

After clicking the swap now button, it redirects us to swap.pundix.com/. Here, on the right side of the page, there is a section called link your wallet. I already had a Trust wallet. So I tied it with this wallet. Other options are available as can be seen from the photo.

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Screenshot is taken from swap.pundix.com/pundix

After connecting the wallet, you can convert the NPXS in your account to PUNDI X here. ETH is paid as a fee for this transaction. At the end of this process, 1000 NPXS is converted to 1 PUNDIX. I could not perform this conversion because I do not have NPXS in my account.

Another way to convert NPXS to Pundi X is to convert using F(x) Wallet. It can be said that it is more advantageous because no fee is paid here. First of all, I downloaded the application from the Play Store, as I am an Android user. After downloading I created a new account.

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Screenshot is taken from swap.pundix.com/pundix

In addition, this swap is done automatically for NPXS owners in F(x) Wallet. Fees are not paid for automatic transactions, but since I do not have NPXS available, it was not possible for me to show this transaction.

Another way to convert NPXS to Pundi X is to convert using F(x) Wallet. It can be said that it is more advantageous because no fee is paid here. First of all, I downloaded the application from the Play Store, as I am an Android user.

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Screenshot is taken from F (x) Wallet App

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Screenshot is taken from F (x) Wallet App


After creating a new wallet, I clicked the round button at the bottom middle of the homepage.

Screenshot_20210922_152505_com.pundix.functionx.jpg

Screenshot is taken from F (x) Wallet App

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Screenshot is taken from F (x) Wallet App


After clicking on the swap option, it asks us the token units we want to convert. I chose NXPS as the token I want to convert and PUNDIX as the token I want to obtain. Here we also need to specify the quantities. I wanted to convert 1000 NXPS. Since the redenomination of this token is 1/1000, we receive 1 PUNDIX token at the end of this conversion.

Since I do not have ETH or NPX in my account, I could not completely perform this conversion. If I had the relevant token in my account, we would approve it here and complete our transaction.

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5). Analyze whether the token from the project you chose in question number 5 is worth investing in. (Screenshot Required)

Screenshot is taken from pundix.com

First of all, I must admit that I did not know much about PUNDIX token. With this assignment, I researched this coin and I will share my ideas with you accordingly. Usually, the purpose of a blockchain was for banking or digital contract transactions. But Pundi X project is quite different from other projects. The purpose of this token is to integrate cryptocurrencies into our daily lives. And this is to develop pos devices that accept payments as Pundi X. In this way, you can buy a sweater you like by paying cryptocurrency. First of all, the project differs from other token projects as an idea and it is a very creative idea. It is also obvious that after the necessary infrastructure is established, it will be in great demand.

It is also the first in its field, just like BTC and ETH. Being the first is a great advantage. In this way, investors who hear this idea can also invest while this project is developing. If this idea has been tried before, its recognition will increase and investors will turn to the first tried project.

Another positive aspect of this token is that it has performed redenomination. We mentioned the advantages of Redomination in the previous question. In this case, it doesn't seem like a bad idea to invest in a redenomination token.

One of the first places I check when researching a token is Coin Market Cap. For this reason, I went to this site and examined the data about the Pundi X token.

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Screenshot is taken from coinmarketcap.com

Here, we get data such as that the token is in the 232nd place in the token ranking, the token price is $1.29, and the market cap is $335,239,831.

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Screenshot is taken from coinmarketcap.com

When the 1-year price chart of the PUNDIX token is analyzed, it is seen that it has been at the lowest price levels recently. With a more detailed technical analysis, these levels can be bought.

But the persistence of this decline is also alarming. For this reason, it will make more sense to invest for a while after examining it for a while and when it starts to rise.

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6). Conclusion.

As a result, redenomination is an indication that a token project is growing. I am not saying that every redenomination project is absolutely right and a project that should be invested in. Of course, the projects should be examined in every aspect before the investment is made, but we should not ignore that the developers are developing and growing the project with redenomination.

In addition, small investors who want to invest in the project with redenomination will now be able to make their investments. Thus, both the liquidity of the token will increase and its market cap will grow.

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Regards, Özge

CC:@wahyunahrul

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Hi @ozenozge, Thanks for taking my class.
Based on the homework that you have made, here are the details of the assessment you get:

Assessment AspectScore
Token Redenomination Explanation1/1
Pros and Cons of Token Redenomination1/1
Explanation of whether all cryptocurrencies require redenomination0.5/1
Explanation of how to redenomination a token1.5/1.5
Analyze a token0.7/1.5
Conclusion1/1
Procedures and structure of writing0.8/1
Follows Rules and Guidelines0.8/1
Provides additional information/effort1/1
Total8.3/10

My Reviews and Suggestions:

  • You have completed the task well.

  • Your explanation in question number 3 is still too shallow. And our ability to buy crypto that already has a high price has nothing to do with token redenomination.

  • In your PundiX token analysis you show some data, but I don't see you explaining whether PundiX is a good place to invest. Then on the last chart I also saw that the price of PundiX tends to decrease but you explained that PundiX is still good to buy, this is somewhat inversely.

  • Your writing structure can still be improved.

  • Bold some letters that you think need to be highlighted.

Thank you!