The AO token economics model is released. How to maximize the efficiency of obtaining AO tokens?

Reviewer: Kyle

Arweave officially released the AO Token Economics at 23:00 on June 13th, Beijing time, and analyzed the current existing information. Let’s talk about how to obtain AO tokens from the perspective of maximizing efficiency. This article is only for cryptocurrency economics analysis and does not make any investment advice!

Interpretation of AO Token Economics Model

According to AO Token Economics, AO is a 100% fair launch token that follows the Bitcoin economic model. Like Bitcoin, the total supply of AO The amount is 21 million tokens, similar to the 4-year halving cycle. AO is distributed every 5 minutes, and the monthly distribution amount is 1.425% of the remaining supply. But unlike Bitcoin, although AO is halved every 4 years, it will not suddenly have a "halving event". As we all know, Bitcoin will be halved every 210,000 blocks (an average of one block every 10 minutes). , approximately four years is a dimension, but the halving of AO tokens is a relatively smooth process. The issuance of tokens reduces the supply on a monthly basis, although this will not have much impact on the efficiency of obtaining AO. , but the acquisition of early AO still cannot be ignored. The earlier, the greater the benefits.

At the same time, officials have always mentioned that AO tokens are 100% fair launch tokens. At present, the official understanding of "100% fair launch" is that AO tokens can only Obtained by holding specific assets (currently $AR, $AOCRED, $stETH), even if the official does not reserve shares for its own team, investment institutions, ecological community projects, etc., in this regard, it is different from many crypto projects on the market Compared with the above, it highlights the overall structure of the project, and also declares that the acquisition of AO depends entirely on the amount of funds and the type of token assets held. All we have to do is to seek funds to obtain AO tokens with a limited amount of funds. Efficiency maximization approach.

AO token acquisition is currently divided into two phases. The first phase ends on June 18, and the second phase starts at the same time. The acquisition of the first phase was only known to everyone when Token Economics was announced on June 13, but it is also reasonable. It will start from February 27, 2024 (the day when the AO public testnet is launched) to June 100% of the AO tokens minted on the 18th will be distributed to $AR token holders based on their respective balances held every 5 minutes. As of June 13, 2024, each $AR can obtain approximately 0.016 AO tokens. A total of more than 1 million coins will be issued in the entire first phase.

Maximizing the acquisition of AO token strategy

The circulation volume in the first stage only accounts for about 5%. The second stage is the highlight. What we need to focus on is how to maximize the gain in the second stage. to obtain AO tokens. 33.3% of AO tokens will be distributed to AR token holders, 66.6% of AO will be used to pledge other assets in AO (currently only stETH), and AOCRED will be exchanged for AO at a ratio of 1000:1 ( This part of AO will be provided from AO tokens generated from AR held by Forward Research).

After the launch of the second phase, each AR can obtain 0.016 AO in the first year, and the number of AO tokens obtained by depositing other qualified cross-chain assets (non-AR assets) into the AO network is determined by the cross-chain The transaction volume of an asset is determined by multiplying its annual staking yield and the ratio of the total cross-chain assets. Currently, stETH is the only qualified cross-chain asset, so 66.6% of AO is used to distribute to other assets pledged to AO. All will be given to the stETH capital pool, so you can simply understand that the exact number of AO tokens received by pledging stETH depends on the ratio of the value of your pledged stETH to the total asset value of the capital pool.

If the assets you pledge account for 0.01% of the total assets of the fund pool, you can get 210 AO after pledging for one year. The current pool is more than 20 million US dollars (you can see it here). If you wait until the second phase is opened, The TVL of the capital pool is US$1 billion and remains constant within a year. If you pledge stETH worth US$1,000, you can get 2.1 AO after one year; if the market value of AR is US$2 billion and remains constant within a year, if your wallet Holding $1,000 of AR, you can get 0.485 AO after one year. It seems that staking stETH is more cost-effective. This is indeed the case at present. However, the market value of the stETH capital pool and AR cannot remain unchanged within a year, and it still needs to be adjusted at all times. Calculated by the ratio of TVL and AR market value of other asset pools (USD-based calculation):

• When the TVL / AR market value of the fund pool ≈ 2, pledging other assets of the same value is equivalent to holding AR of the same value. The AO obtained is approximate;
• When the capital pool TVL / AR market value > 2, holding AR of the same value will obtain more AO than pledging other assets of the same value;
• When the capital pool TVL / When the market value of AR is

Note that the AO tokens minted after the launch of the second phase will need to wait until 2025 It will be unlocked on February 8, when the circulation rate will be 15%, and the total circulation will be approximately more than 3 million units.

In addition, we can also calculate the risk and cost of obtaining AO, which also greatly affects the price of subsequent AO. AR holders only need to hold it, and stETH is obtained by staking ETH on Lido. The current APR (annualized rate of return) of stETH is 3.3%. Since staking stETH on AO requires this part of the annualized income interest to be equal to It is given to the AO project party, and this part of the income is originally the vested interest of stETH holders, so the APR of stETH can be regarded as the cost of stETH pledgers. If the TVL of the fund pool reaches 1 billion, then the cost of stETH pledgers to obtain AO is $15.7, but this is the calculation result when controlling variables. The specific calculation formula is (only considering the current situation where stETH is the only cross-chain asset):

For short-term investors, both pledging stETH and holding AR require bearing the risk of currency price decline. Of course, many CEXs provide 0-leverage currency borrowing services, and the borrowing interest rate is usually not higher than 1%. However, considering the long return period for obtaining AO incentives, please weigh it yourself before making a decision. At the same time, the current cost of exchanging AOCRED for AO is about US$50-60 per AO (please make sure to exchange AOCRED for AO before June 27, 2024, and it will be invalid if it is overdue). It also needs to wait until February 8, 2025 to unlock it, so The price of 1000*AOCRED can be regarded as the AO futures price. However, after the release of the AO test network, the market value of AR has increased by far more than 1 billion, and the total circulation will only be more than 3 million. The AO currency price also has a lot of room for imagination. .

For long-term investors, taking time to eliminate the risk of market fluctuations can not only obtain dividends from the increase in principal, but also continue to enjoy AO interest (including AO growth dividends).

summary

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