It is fun when people make bold claims. What is also interesting is to see how these unfold over time. Let's be honest, a lot do not age very well.
About three weeks ago, I posted xPOLYCUB Collateralization: Now We Will See It At $100. This was something that many scoffed at then and, quite frankly, doesn't look much better now, at least in terms of the price.
Without knowing exactly what the price was at that time, we can presume it has done nothing but go down. The price of POLYCUB collapsed, going from $1.30 to under 30 cents. In the investing world that is called "ouch".
So why am I now more convinced than ever in $100 xPOLYCUB?
In this article we will go through it.
The Design Is Going According To Plan
With Polycub, you have a platform going exactly according to plan. So far the team is right on with their assessment.
This might seem like an odd statement considering the price crash. Many will take that to mean it is something that was planned.
Well, nobody knows exactly how a market will react. However, when you have high emissions on a token, it is likely to fall. In DeFi, when the APY's start to decrease, people start to dump the token and bail. So the fact that POLYCUB dropped so much isn't completely surprising.
What we much focus upon is the fact that xPOLYCUB, while down a great deal, suffered a much smaller decline. That went from about $15.00 to just under $6.00. Sizeable move to the downside? Without a doubt. However, less than the 75+% reduction in POLYCUB.
The reason for this is the ratio. This is something we discussed regularly. Here is where the "always go up" aspect of the platform comes into the picture.
Here is where it sits right now:
When the platform went live, this sat at 1. That is a 20x in a little over 5 weeks. We now see this slowed to a snail's pace as the emission rate dropped along with the claim penalties.
The fact the ratio went up means that each xPOLYCUB is now representing more POLYCUB, although each of the latter is worth less. This makes the former decline in price, just not as much.
What is vital is what happens if the price of POLYCUB reverses and starts to head higher. Then both the ratio and USD price will be moving in the same direction.
But what could cause this?
Defi 2.0
As stated earlier, everything is going according to the design. One challenge is that what we are seeing is nothing more than a typical DeFi operation. Dozens (if not hundreds) of projects followed a similar path. They all ended up in the same situation: a near worthless token.
To avoid this, the team is incorporating what it is calling DeFi 2.0. Here we see optimization, bonding, more LPs, and lending entering the picture.
Much of this is designed to feed the Protocol. Through the bonding process, as an example, part of the asset in the liquidity pool will be "sold" to the Protocol, ensuring permanent liquidity. Also, the Protocol is also the recipient of the yield that is paid out on that share of the LP.
Another vital factor is the recent announcement of a pHBD vault being built on Polycub. This is going to provide liquidity for the recent increase of interest on HBD savings. More importantly, it joins the Hive and Polygon (and soon BSC) chains.
Here is where the Protocol is further enhanced by the fees generated from the swapping of tokens between pHBD and HBD. Each time this occurs, there is a .25% fee. This ends up going right back into the vault, generating more fees.
The point is that we are going to see buy side pressure of POLYCUB from the Protocol. Over the next couple months, this is going to happen. Right now, we are just seeing the result of market action absent this influence.
It is no surprise that some of us think the addition of pHBD to the vaults is going to separate Polycub from most of what is out there. This was an idea covered a week ago with How Much Will pHBD Help Polycub?.
We will have to see what the interest is when this pool opens up. However, if it starts out strong, this could be an indication that we are going to see a lot of fees generated from this vault. That is going to help feed the entire system.
So yes, I am not more convinced than ever we will, at some point, see $100 xPOLYCUB.
Hopefully in a year or two, this will age well.
What are your thoughts? Let us know in the comment section below.
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