Outcome Trading’s Tokenomics are modeled on
Binance’s in an effort to provide value to token owners.
Executive Summary
Outcome Trading’s OTCM token emulates Binance’s successful BNB token model to deliver value for token owners. Key features include substantial trading fee discounts (up to 100%), a transparent token burn mechanism funded by 20% of trading fees, and strong utility to drive economic value. By linking token performance to platform growth, OTCM aims to replicate some of BNB’s impressive success, which has delivered an astonishing 6,800x return since inception.
Utilities
In determining what utilities the Outcome Trading token (OTCM) should possess, we aimed for a token model that included the following:
- Sharing the value of the platform with token owners,
- Creation of real utility,
- A link between price and real economic value,
- An increase in token scarcity over time,
- Influence over the platform through governance.
To achieve all these goals, we created a model similar to that of the Binance Token (BNB).
BNB
BNB is described in the Binance corporate literature as having multiple utilities. Some are significant and some are just a bit silly. When a platform user pays Binance commissions with BNB, he receives a discount on those fees. Ownership of the token is also required to access certain benefits, such as airdrops. Finally, the centralized, corporate entity of Binance has pledged to burn a number of tokens each quarter, with the number of tokens burned determined by a complex formula. The token burn is meant to continue until the number of tokens has been reduced by 50%. Other uses, such as paying participating hotels with the token seem like add-ons that are probably used quite rarely.
Whatever one thinks of this token utility design, the BNB token has performed well for owners, outperforming Bitcoin since inception, and peaking vs. Bitcoin roughly five years after its creation.
From release to today, BNB has given its owners a return of more than 6,800x. The token began trading at $0.1058 in July of 2017 according to CoinMarketCap. It exceed $1 in price a few months later, and now trades for over $700.
OTCM Token
The Outcome Trading token (OTCM) has comparable utilities. The most obvious similarities are discounts on platform fees and the burning of tokens. Whereas BNB must be spent on the platform to provide fees, OTCM can just be owned to receive fee discounts. Additionally, the token discounts on Outcome Trading are significantly higher. The first ownership tier, Basic Access, provides a 50% discount. The Pro Access tier provides a discount of 83%. Top Tier Access will provide fee free trading. As to token burn, the Outcome Trading model is more transparent. 20% of trading fees will be used to purchase and burn OTCM tokens.
Future Token Price
Obviously, we cannot predict OTCM’s future performance. But sharing a common utility model with BNB leads us to expect the price of the OTCM token to increase well as platform use grows, just as happened on Binance.
Comparison Chart
Long Term Economic Value as the Platform Matures
To generate a long term estimate of token value, one should focus on two factors – the value of access to the platform and the number of tokens required for each access tier. The value of the token, for any individual user, should equal how much value they receive from their access tier discount divided by the number of tokens needed to reach that access tier.
To illustrate this, imagine a trader who trades once a month. This trader generates Outcomes with 20x “effective” leverage. The notional value of his typical trade is $100,000 U.S., but his collateral is only $5,000 U.S. As a Basic Access trader, he needs to own 10,000 OTCM now, but we expect this to decline as the number of users on the platform increases. He receives a 50% discount on fees. Further, he employs a 20% hurdle rate in modeling volatile assets.
In the table below, we show what the token’s economic value is to the trader when trading commences, and after the Outcome Trading ecosystem has grown to 100K and 1M users.
Additionally, we’ve modeled value for this hypothetical user versus the total number of users on the platform. We’ve modeled between 10,000 and 1,000,000 users, but it should be recognized that Binance has between 40 million and 200 million users, depending on the source.
Please note that the token’s value varies from one user to another. Someone who trades far more frequently and/or in much larger amounts will perceive greater value and probably purchase more tokens. Someone who trades extremely rarely may buy none.
Price v. Value
And, most importantly, token price is not that same as value. The price may be higher than value at first, as traders speculate on future value. It may drop occasionally as cryptocurrency prices in general rise and fall.
This article represents an attempt to estimate how users may value the token in the future, but we cannot really know the future path of price.
Financial Risk
The contents on this site are for informational purposes only and do not constitute financial, accounting, or legal advice. The opinions expressed are subject to change at any time without notice and should not be taken as specific recommendations for any individual or entity. Any information or data presented is general in nature and does not address the circumstances of any particular person or entity.
Investments in tokens involve risk, and past performance is no guarantee of future results. Any prices or benchmarks are referenced for comparison only.