You have to understand the tokenomics of whatever you are invested in otherwise you have no clue and are gambling.
Today the COTI team released some stats over DJED's Reserve coin SHEN and I think many are missing the point of where the value lies. It is easy to dissect a project saying you are disappointed with the returns if you are ignorant to where and how profits will be made. I was chuckling to myself reading the comments as there are so many simpletons around who should not even be in crypto.
SHEN is different to most other coins as the value is driven and derived by other means and I will explain how that works. Shen being the reserve plays an important role in providing capital for DJED and is the over collaterized part of the stable coin.
4 DJED is required to mint 1 SHEN and can be rise up to as much as 8 DJED before no more SHEN can be minted. The smart contract controls this and why it can never do a death spiral no matter how bad things become as DJED will always be $1.
Many were complaining about the APR being earned by SHEN investors which is averaging at around 4.3% APR. There have been liquidity pools offering between 9 and 10% over and above the 4.3% so we are now talking 13-14% as an APR. This however is pocket change of you understand where the true value lies.
Those that minted DJED did so when ADA was at under 40 c so we will use the 40c for making calculations easier making it easier to understand. I DJED is 2.5 ADA as that is $1 value. Below are the live figures so 1 DJED is actually 2.43 ADA and 1 SHEN is 1.13 ADA.
So where is the value? The reserve is where the value lies which currently and look at the figures in the table below.
At the current prices the 3 112 644 DJED minted would redeem 7 563 724 ADA but that changes as ADA rises. ADA at $1 would be a 1/1 swap redemption leaving the extra ADA it cost to mint as profit for the SHEN holders. Over 4.4 million ADA now moves over to the SHEN holders pushing the price of SHEN up. This would equate to a rough 400% windfall if you could sell as selling and minting is governed by the smart contract. Under a 400% reserve no SHEN can be burned for ADA. The 4.3% you are now earning via rewards is on a 4 x valuation from when you first started and why complaining about disappointment is a joke after only 3 months.
I never got involved with DJED and SHEN as my involvement is with COTI as a 0.5% service fee is what I receive for being invested in the COTI treasury. How come I know more than the DJED and SHEN holders which I find rather scary as again no homework has been done and why many remain so ignorant.
