First up... #Ecomi (#omi) $omi mega thread. Part 1 of 3.

I studied the whitepaper, analysed the tokenomics and read the medium posts.

I watched every interview, read every tweet, and every reply.

And then... I sold all my $omi holdings.

Here's why...
1/n
2/n
Definitions:
Ecomi: The whole Ecomi and Veve ecosystem

Store: Ecomi’s store for buying new NFT’s

Drops: When Ecomi release new NFT’s

The Market: The secondary market, where users buy and sell second-hand NFT’s.
3/n
Gems: The in-app currency used to purchase NFT’s. 1 Gem = $1 USD. The moment a user deposits or spends say $100 to Ecomi, he / she will then have a 100 Gems
4/n
$omi: The underlying token and the reason it exists at all is so that all transactions within Ecomi are tracked on the blockchain.
5/n
From this point on we will refer to all transactions as being done in $omi, as gems are really just an abstraction of $omi.
6/n
Reserve Wallet: Total amount of $omi coins available to be bought by users (directly or indirectly) to then be used to purchase NFT’s. So, when a user deposits money and buys $omi, this $omi is deducted
from the Reserve Wallet and moved to The Vault.
7/n
How does the whole ecosystem work? Let’s look at an example:

Starting balances, decided by Ecomi team:

Reserve Wallet: 300 billion $omi
Vault: 40b $omi
Today’s $omi price, May 1st: $0.006
8/n
Let’s pretend many users all want to buy NFT’s today, and let’s generously assume they will spend $1 Billion Dollars.

Note: Ecomi anticipate that the amount of money spent in The Market (secondary
marketplace) will be double that spent in The Store (Drops).
9/n
Step 1: User deposits $1B in cash and initiates a conversion to gems

Step 2: Today’s $omi price is $0.006. Ecomi buy $1B worth of $omi. At $0.006 per $omi, they move 166b $omi from reserve to vault.

Balances are now:
Reserve: 134b
Vault: 206b
10/n
Step 3: As expected, the users spend a third of their money in the store, so they purchase $333m worth of new NFT’s.

Step 4: Ecomi now adjust the vault balance (user balances) to account for $333m spent.
So they deduct $333m worth of $omi (55b $omi) from the vault balance.
11/n
Balances are now:

Reserve: 134b
Vault: 151b
12/n
Step 5: Ecomi use 10% of that $333m, to buy more $omi from public exchanges, so they can top up the reserve balances (because they want to try and maintain 40% of total coin supply in the reserve at all times). This is called a buyback.
13/n
So, they buy $33m worth of $omi from the exchanges, at today’s price of $0.006 per $omi, so 5.5b $omi. They then add that 5.5b $omi to the reserve wallet.

Balances are now:
Reserve: 139.5b
Vault: 151b
14/n
Step 6: The users take their remaining $666m worth of $omi to the ‘market’ (the secondary
peer to peer marketplace).

Step 7: The users spend that $666m buying second hand NFT’s. The $666m worth of $omi
is removed from the vault (user balances) as it has now been spent.
15/n
Step 8: Ecomi use that $666m cash for further buybacks. So they purchase $666m worth of $omi from the exchanges, at today’s price of $0.006 per $omi, so 111B $omi. They put that 111B $omi back into the reserve wallet.
16/n
However, to stimulate the $omi coin, Ecomi recently announced that 2.5% of secondary market buyback gets burned. So really they put back in 97.5% into the reserve, so ~108B.

Balances are now:
Reserve: 247.5b
Vault: 40b
17/n
Note:
- The price of $omi on the exchanges should fluctuate from $0.006 with such a big purchase (166B $omi) but let’s ignore that for a minute.
18/n
- We have also ignored app fees, which are 30% off the top. So for users to spend $1B USD on NFT’s they actually need to pay ~$1.45B USD (see ‘App Fees’ section further down to understand why. Please correct me if I am mistaken).
19/n
So, after $1 billion turnover:
- Ecomi have earned $300m cash (or let’s say, 30% of cash deposits)
- Users have earned $666m worth of $omi (but it is stuck in Gems until Ecomi get their Money Transfer Licence, which currently has not expected date).
20/n
- 52.5B $omi has been burned forever (7%)
- Total $omi supply is now 697.5 $omi (although there is some distinction between circulating supply, reserves, supply that will enter the system later like employee grants vesting over time.
21/n
- Technically, the burned $omi has come off the ‘circulating supply’. But I don’t think that’s a great figure to use because at the very minimum the reserve wallet and the vault should be included in token supply figures, plus employee grants vesting.
22/n
*total supply explanation:
● VeVe Reserve: 300 bn
● VeVe Vault: 40 bn $omi
● Biz Dev: 20% or 150 billion $omi
● Team etc: 20% or 150 billion $omi
● Speculative investors pre-launch: ~ 110 billion $omi ($660m worth at a $0.006 price).
23/n
How does all of this affect the $omi token price?

Considering buybacks are essential purchases from the supply of $omi on exchanges, could we then consider that the $omi market cap is essentially a forecast of total expected buybacks?
24/n
That makes it more like a tech stock with a multi-year valuation multiple, which you can then decide is a good investment or not.
25/n
If we agree that a user will spend 33% of their money in the store (of which 10% goes to buybacks, so 3.3% of total spend) and spend 67% of their money in The Market (of which 100% goes to buybacks), then we could create a formula as follows:
26/n
Let’s consider some examples, and let’s assume the average user lifetime spend is after app
fees have been deducted:
27/n
Wait . What is User Lifetime Spend?
User Lifetime Spend is the total amount of money a user will spend in the app over
the course of time that they use the app.
28/n
So for example, if you log into Veve every week for a year, and you buy five NFT’s at $100 each, and then you get tired of Veve and delete the app, your stats would be:
User Lifetime Spend: $500
User Lifetime Length: 12 months
29/n
When an app has thousands of users, they continually add up all this data and then average it out so they know how much revenue each additional user they attract to the app will generate for them, on average.
30/n
Let’s look at some example forecasts:
E.g.1: If an average user lifetime spend is $1000 then, using the formula above, the total buybacks per user would amount to $703 ($33 + $670).
31/n
E.g.2: If an average user lifetime spend is $1000 then, using the formula above, the total buybacks per user would amount to $1406.
32/n
E.g.3: If an average user lifetime spend is $5000 then, using the formula above, the total
buybacks per user would amount to $3515.
33/n
Current situation as of early May, with normal inferance of market cap, coin price, user numbers:
250k users (paying and non-paying)
40,000 paying users
Coin price today May 3rd: 0.006
34/n
Circulating Supply Market Cap: $1.035B USD
Circ Supply: 170B
Total supply: 750B (100B has been burned already, but keep it at 750 for argument’s sake)
Fully diluted market cap: $4.5B USD
35/n
So, how many paying users would Ecomi need in order to create buybacks totalling the
current Market Caps?
If Average User Lifetime Value is $1000:
1) Circulating Supply Market Cap: requires ~1M paying users
2) Fully Diluted Market Cap: requires ~4.5M paying users
36/n
If Average User Lifetime Value is $2000:
3) Circulating Supply Market Cap: requires ~500,000 paying users
4) Fully Diluted Market Cap: requires ~2.25M paying users
37/n
If Average User Lifetime Value is $5000:
5) Circulating Supply Market Cap: requires ~200,000 paying users
6) Fully Diluted Market Cap: requires ~1M paying users
38/n
What does it mean for the $omi investor?
It means you need to decide how many paying users you think Ecomi will get, and what their average user lifetime value will be. Because this determines the amount of buybacks, which essentially is the real use-case demand for $omi.
39/n
Maybe we can use some kind of comparative industry, for example Pokemon Go data:
- Approximately 70M users per month (for the past 24 months). Note these are total users, both paying and non-paying. Let’s assume a high percentage are paying users, say 20%.
40/n
(pokemon cont...)
- $1B total user spend in 2020 (and close to that in previous years)
- Valuation: ~5B USD (note, this is a 5x valuation multiple, decided by the industry).
- Similar 55/45% male to female user ratio
41/n
(pokemon cont...)
- Approximately 18 months user lifetime length
- Average User Lifetime Value: ~$250.
- Or, if 20% are paying users then a paying user lifetime value would be $1250.
- Disclaimer: I got these figures from google searches, so take them with a pinch of salt.
42/n
So, back to the Current Ecomi Situation:
If the current price of the $omi coin is $0.006 and the non-diluted market cap is $1.035B
USD, then it would suggest:
Ecomi need approximately 1.5M paying users at an average user lifetime value of $1000.
43/n
Ecomi currently have 40,000 paying users. Meaning the non-diluted current market cap is a
258x multiple on current revenue and the diluted market cap is a ~1100x multiple.
44/n
Ecomi need approximately 750K paying users at an average user lifetime value of $2000.

Ecomi currently have 40,000 paying users. Meaning the non-diluted current market cap is a 129x multiple on current revenue and the diluted market cap is a ~650x multiple.
45/n
Ecomi need approximately 300k paying users at an average user lifetime value of $5000.

Ecomi currently have 40,000 paying users. Meaning the non-diluted current market cap is a 52x multiple on current revenue and the diluted market cap is a ~220x multiple .
46/n
Remember, Ecomi is going to definitely increase user numbers from its current 40k paying users. Nobody knows by how much, but it seems reasonable to think they could get to 1M paying users at some stage in next 1-5 years.
47/n
Why are we talking about non-diluted and diluted market cap?

It’s important to consider not just how many tokens are available to buy right now, but also how many will be available to buy in the future.
48/n
But what about THE BURN?
Considering they need $1B in revenue to create a burn of 50B $omi tokens, I think the burn is basically irrelevant to the price in the short and medium term. Perhaps it becomes relevant after 3+ years.
49/n
Also, as the price of $omi increases, the burn amount decreases, so the more sales Ecomi make, the less amount of $omi gets burned.
50/n
Why is that? Well, if you think about it, if Ecomi need to spend one dollar on buybacks of $omi coin then if $omi is only 1 cent they will be able to buy 100 $omi, but if $omi is 10 cents each they will only be able to buy 10 $omi with their dollar.
51/n
What that really means is that the more popular omi becomes, the slower the value of the omi token will increase.
52/n
If the buybacks are done at certain stages, say monthly, then we will probably see short term pumps, the whales selling into it, and the unsavvy investor buying into it
unwittingly thinking it’s a rocketship.
53/n
Then when buying pressure dries up the price will fall.
Basically the price rises because the total supply hasn’t yet been updated between $omi being removed from the vault, bought back on the exchanges, and replenishing the reserve wallet.
54/n
So what value should $Omi be?
Giving a 10x multiple from now, meaning they will have 400,000 paying users, at $1K each, market cap would be $280m.
If the non-diluted supply is say 150B then $omi = $0.0018
If the diluted supply is say 600B then $omi = $0.00045
55/n
Giving a 100x multiple from now, meaning they will have 4,000,000 paying users eventually, at $1K each lifetime value, market cap would be $2.8 Billion.

If the non-diluted supply is say 150B then $omi = $0.018
If the diluted supply is say 600B then $omi = $0.0045
56/n
I will give Ecomi the benefit of the doubt and assume they get to 1M paying users some time in next two years. That means they will have 1,000,000 paying users eventually, at $1K each lifetime value, market cap would be $700m.
57/n
If the non-diluted supply is say 150B then the $omi coin would be worth: $0.0046
If the diluted supply is say 600B then the $omi could would be worth: $0.0011
58/n
Hypothetically let’s assume Ecomi manually burn a load of omi, down to a total supply of 100B $omi, then that would mean each $omi would be worth: $0.007, based on getting 1M users with an average user lifetime value of $1,000.
59/n
Note: Don’t forget, the $omi price is also heavily driven by the hype-train. This type of hype growth is usually either naive or cynical. So beware of pumps when nothing else (like fundamentals or growth expectations), have really changed. Beware of shills too.
60/n
A note on App Fees (Please correct me if I'm wrong):
This is beyond somewhat Ecomi’s control but worth noting. The app fees are excessive at 30%. What’s important to note is that a 30% app fee does not mean a user pays a 30% fee, it actually means they pay a 45% fee.
61/n
Why 45%? Because before you buy an NFT you have to buy gems in order to purchase the NFT. So, if you want to purchase 100 gems (value of $100) then you will end up paying ~$145. You pay it when you purchase gems.
62/n
So if you want to buy an NFT for $100 it will really cost you ~$145. Because the money that goes into your account is really two thirds of the amount you deposit.
63/n
So what?
Well it means if we need Users to spend $1B in Veve, we really need them to spend ~$1.45B overall.
64/n
A call for your feedback:
Could you help me with my analysis? Could you find all the errors, bad assumptions,
wrong calculations, poor forecasting and help me improve my deep dive?
65/n
This is not financial advice, just the understanding and interpretation by a crypto fan just like you. Always do your own research, and be careful out there.
65/n
I hope you found this thread helpful, informative or that it saves or makes you money. If you are so inclined, I would always welcome tips / donations if you'd like to show appreciation. Please see my profile for wallet addresses. Thanks for reading.

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