In a previous article I posted a basic explanation of the idea behind COEVAL, the embryonic token released by Monkey Capital less than a month ago, and its relationship to MNY, the token at the center of their upcoming ICO.
Since that post the price of COEVAL has risen sharply, thumbing its nose at the downturn that plagued almost every other cryptocurrency on the market, so I thought I would give it another go and see if I can clearly document how I understand what the Monkey white and yellow papers tell us about how they plan to operate so as to generate returns for token holders post-ICO.
First we have to admit it: ICOs are fun!
They are full of passion and excitement; generating strong opinions and equally strong words to express them. Organizers and participants alike gnaw their nails in anticipation for launch and then voyeuristically watch the millions build up on the ubiquitous javascript counter. Finally, at the conclusion, the demands for available markets and accusations of who is or is not a flipper usually begin to fly before the champagne cork hits the floor.
As volume increases and price stabilizes to slightly above ICO, a refractory period begins in the mind of the average investor. They begin to review why they bought a token to help fund this particular “world’s first completely decentralized and autonomous peer-to-peer widget network that runs completely on the blockchain.”
Was it inherent value within the system that they are bringing to market?
Was it pure speculation that the price would immediately fly into the Stratis-sphere?
Was it that they thought the ICO was going to sell out and they simply felt they would be left behind?
I have invested in ICOs for every one of these reasons. However, when it was over, I was left thinking “Uhh.. my reasons seemed clear when the ICO was plastered all over the discussion boards but now it’s gone and there are four new ones coming out next week…”
The Monkey Capital team, including CEO Daniel Harrison, seem to be very aware of this diluted long term value of tokens and have dedicated a lot of brainpower to overcoming it with something they have termed a “Dynamic Value Model.” This is a straightforward name for a bundle of not-so-straightforward concepts. I will reiterate my previous caveat that I will not be able to cover the entire concept fairly; I am only attempting to explain the broad strokes. They have updated their white paper and added a yellow paper, both located on their website which will go much farther in-depth.
Bring a dictionary.
In line with the embryo concept of COEVAL the Dynamic Value Model follows a family structure. There is a Parent to Child relationship of entities and investments that create a kind of avenue that constantly flows financial value back through the generations to all the way to COEVAL itself.
Already sounds obscure, doesn’t it?
Ok, let me try and break it down to its component parts:
Once the ICO is complete Monkey Capital will start a cooperative Parent relationship with existing companies that are invested in a diverse set of industries.
These companies will be provided capital to create and/or drive projects that generate revenue inside their portfolio. Now the reason I said “a cooperative Parent relationship” is because each investment portfolio is managed independently of Monkey Capital.
Each investment portfolio will create and offer out their own Child token that will be tradeable on the market and whose value is linked to the performance of that portfolio. That value comes to the token holders through dividends (paid in COEVAL, I might add). In addition to rewarding their own token holders the Children will split revenues generated by their investments with the Parent.
Here comes a clever bit:
All Parents know that each child is unique, no two alike.
The Children will generate different amounts of revenue than each other and they will generate different revenue from one year to another. So to deal with this the Parent will show Favoritism among its Children.
What that means in this context is that Monkey Capital, as the Parent, will manage the amount of revenues that are collected from each Child in order to smooth out the overall flow of value by taking more of a share from some portfolios and less from others. This will help stabilize all of the Parent and Child tokens on the volatile crypto market.
The Parent, Monkey Capital, will then distribute the revenue it has received amongst holders of its token MNY, again by purchasing COEVAL from the market to meet its needs.
There’s one more clever bit: Why in the world would Monkey Capital distribute the funds? Companies chew up dividends all the time by holding “client appreciation events” in exotic locations and switching out the company Ferraris so the executives don’t have to sit on scuffed leather. Well, the reason Monkey Capital is going to is because the people in charge of handing out the dividends get paid by how much they give out.
Let that one sink in.
They call it an “audit fee” but it’s essentially a commission based on how much COEVAL they can stuff into Waves wallets holding MNY. They want to earn a dollar for the soda machine? They better hand out $19 to the community first.
That’s the best I can do on the Dynamic Value Model; this post is already twice the the length of the last and I am just scratching the surface. If any of this sounds intriguing go take a look at the white paper then come over to the Slack channel and jump into the community discussion, ask questions, or better yet give ideas!
I’m not actually affiliated with Monkey Capital, only holding onto some COEVAL to see where this goes and enjoying myself doing so. If anything written here conflicts with the whitepaper then I am wrong and you should come tell me so I can fix it.