xPOLYCUB is going to be rather rate. When we look at the scarcity of Bitcoin, based upon the deflationary model, we can see how much different this truly is.
With Bitcoin, there is a cap of 21 million. For POLYCUB, for our purposes we are putting a "cap" of 7.241 on it. This isn't completely accurate since there will always be a "printing" of POLYCUB. However, the emission rate gets so small it is almost non-existent.
Since xPOLYCUB is based upon POLYCUB, the less being produced, the greater the reduction of xPOLYCUB. This is something we discussed in the past.
The reason for this is because the PC/xPC ratio simply keeps increasing. This means the number of POLYCUB represented by each xPOLYCUB keeps growing. We will show the numbers in a moment.
Ultimately, this means the amount of xPOLYCUB we can effective see produced keeps getting reduced. This, too, is deflationary.
Under 200,000 xPOLYCUB Left
How many xPOLYCUB we end up with is unknown. Nevertheless, we can monitor the top cap to see how things are progressing. It is no surprise we are starting to drop where scarcity is setting in.
As this is being written, here is the number of xPOLYCUB that are in existence.
In a vacuum, this does not mean much. To provide the contract, we were at 166,469 on March 28th. Hence, in 4 days, we saw an increase of just over 12,000. That is roughly 3,000 xPOLYCUB per day.
We can see there is 3.4 million POLYCUB locked in the contract. In looking at the POLYCUB contract on Polygonscan, we can see there is a total distribution of 4.8 million. This means that 70.83% of POLYCUB is in the xPOLYCUB contract.
Then we look at the POLYCUB/xPOLYCUB ratio. This is what we see at the moment.
If we divide the presumed distribution of POLYCUB of 7.241 million by the ratio, we get 377,534 xPOLYCUB as the effective cap.
That means were are under 200,000 xPOLYCUB left to be created.
250K xPOLYCUB
The 377K is the potential xPOLYCUB that can be created. This is not what will end up happening.
My guess is we end up around 250K xPOLYCUB when the emission rate gets so slow that it means little. Up to that point, more POLYCUB will find its way into the contract, driving the ratio even higher. As that hits new levels, it pulls the amount of xPC that can exist down.
For example, if the ratio were to hit 30 over by July, then we would see an effective cap on xPOLYCUB of 241K. That means we are looking at another 65K or so being created.
How scarce a resource is that?
Of course, this is only part of the story. We are still in Phase 1 of this plan. What we are witnessing is "DeFi 1.0". This model isn't unique.
What comes next is the game changer. With some of the newer rollouts that are on tap, Bonding, Lending, and weighted rewards, we will see how things change. All of this is designed to produce demand and buy side pressure for POLYCUB. A fair portion of that will keep being fed into the xPOLYCUB contract.
So we know what is going to happen to the PC/xPC ratio. We also have a good idea based upon the road map what will happen to demand for POLYCUB. That just leaves this variable:
If the demand for POLYCUB increases yet the emissions is decreasing to a negligible level, then we can only see one thing happen: price in USD goes up.
This means, since xPOLYCUB is representing a certain amount of POLYCUB (as show by the ratio), we will see the price of xPOLYCUB in USD move in the same direction. The prices are obviously liked together once the distribution of new POLYCUB slows.
Therefore, we have under 200,000 xPOLYCUB that is left to be created. However, we can realistically state that figure is closer to 65,000.
That is all the xPOLYCUB that will be produced. Let that sink in for a moment.
Things are going to get really interesting over the next few months.
All screenshots pulled from Polycub.com.
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