Gnosis is 100% in super bubble territory
The market value, relative to what they have created thus far, is in the stratosphere.
In a prior post, I stated that we are not in a systemic crypto bubble. However, there are certain coins that are truly, without a doubt, in a bubble. Gnosis is a prime example.
Part of the problem is that there is not clear transparency on the total number of coins issued. See here for an excellent article on this problem.
As of today, 5/21/17, www.coinMarketCap.com shows Gnosis’s market cap at $226 million at a token price of $204. But this is based on the circulating 1.1 million Gnosis tokens. This number represents largely what they issued in their jet fueled ICO earlier this month. However, the total number of Gnosis tokens in existence is 10 million. Thus, with 1.1 million circulating, there are 8.9 million tokens still not factored into the market cap value of $226 million.
The traditional way to calculate market value is (price x number of coins). So the market cap for Gnosis should be $204 x 10 million = $2.04 Billion … yes, billion!
WTF!
How is it that coinMarketCap.com shows such a huge discrepancy? According to Vitalik Buterin, the justification for using circulating coins versus total coins to calculate market value is that back in 2013, Ripple had briefly surpassed Bitcoin in market cap after having only issued 10% of their total supply. People complained and thus, the market cap calculation changed to use circulating supply instead of total supply to present a “more fair” representation of market value. Unfortunately, as seen here, it can result in a massive skew on market value.
It is very possible that many people buying up Gnosis tokens are simply caught up with crypto coin fever and thinking that the Gnosis market value is only slightly higher than Augur.
Here is a plain look at the current state of Gnosis.
Circulating tokens = 1.1 million.
Total tokens = 10 million.
Market value = $2.04 billion.
Profit = $0
Application status = alpha desktop and mobile clients in mid 2018. Alpha is the precursor to beta. Thus, according to their own roadmap, there will not be a live product until 2019 at the earliest.
Let me ask the community, has anyone seen a working demo of Gnosis? It is doubtful that Gnosis even has a full working demo at this point, yet people are blindly paying through the nose to get Gnosis tokens.
Competition
Is Gnosis the only prediction market play on the horizon? The answer is a resounding no.
Augur is developing a highly similar service. Augur has 11 million total coins which are all accounted for at CoinMarketCap.com. Augur’s market cap is $192 million.
Aeternity appears to be pivoting and will enter the prediction market game as well.
And this is just the beginning. Does anyone really think that the betting arena will be limited to these three players?
So with strong competition for similar services, how is it that Gnosis is valued 10 times higher than Augur? If you glance at coinMarketCap.coin, they appear similar in market value. But in reality, that is not the case because coinMarketCap uses Gnosis’ circulating token supply of 1.1 million instead of 10 million.
Both Gnosis and Augur are still early in development. As such, there is absolutely no way to give Gnosis such a huge edge. If anyone can make a case for Gnosis to be value 10 times higher than Augur right now, I welcome your comments below.
As for now, IMO, Gnosis and Augur should trade near par with each other. Even if you could argue an edge for Gnosis, because it is still early stage, perhaps a 2-3 times multiple is reasonable. Therefore, a generous premium price on the Gnosis token is $50.
It is with great irony that Gnosis used the Dutch auction for their ICO. Because it is without a doubt that they have rebirthed the Dutch tulip mania from centuries ago in the modern era.
Disclosure: I do not own Augur, Aeternity, nor Gnosis tokens.