“It’s the economy, stupid”
James Carville 1992
PYR’s tokenomics are a bit the same as some games, easy to start, yet hard to master. I’m in no way a master, but I will share my thoughts and learn along the way. This is my first note on the NFT distribution, but maybe I do some other aspect of Pyr’s tokenomics as well.
As most of the people reading this will be involved in PYR and Vulcan Forged already, I’m not going to explain all the basics. There is enough information that can be found on discord and various well written articles.
To be clear, I hold a fair amount of PYR but I’m not affiliated with the project. This post is my own opinion and observation.
What is Vulcan Forged:
Vulcan Forged is an BlockChain Gaming Eco-System, with both own developed games as thirth party games. The eco-system consists of a few key elements:
- Development Fund for thirth party developers. Maybe to-be discussed in a later note.
- Anvil, an NFT creator so games can be launched with tremendous ease.
- The marketplace, where NFT’s (non-fungible tokens) can be sold and bought using Vulcan Forged native Token, PYR.
Next to the above aspects of the Eco-system, Vulcan Forged has growing amount of own-developed games.
My reason to hold PYR:
In my opinion as a PYR holder it is key to realize you are holding a coin that is targeted to be an eco-system coin, so you should measure the success of Vulcan Forged by the growth of the eco-system. Of course projects can change their direction over time, but if they do as a holder you should re-evaluate if the new direction fits your vision. If I didn’t think Vulcan Forged could be a huge success as an eco-system I would not have PYR.
NFT’s distribution:
All hail the mighty Vulcan, as his anvil is the only one to create NFT’s. This is really important to realize, the NFT’s sold at the marketplace are created by Vulcan[1].
So far the only NFT’s Vulcan Forged has sold directly for money are the NFT’s from the landsale, some RektCity and Coddle-Pets NFT’s. But the biggest amount of NFT’s in the eco-system have been given away.
With each created and distributed NFT the amount of value in the ecosystem goes up. The total amount of value in USD in the ecosystem can be calculated like this:
(The sum of all circulating nft’s times average price per NFT in USD) + Circulating supply of PYR times USD per PYR
As you can imagine the total value increases when somebody sells a NFT but doesn’t transfer the money out of the eco-system. If not a lot of people sell a NFT but the demand of a NFT is high than the price of that NFT goes up. This increasing the total amount of value in the eco-system as a price is met at some (higher) point.
Recently there were some comments about the distribution of free NFT’s which were immediately flipped. Basically the people receiving a free NFT have three choices:
1. HODL and utilize the NFT
2. Sell and HODL Pyr
3. Sell and sell the gained PYR
The most wanted outcome is obviously 1. However also 2 and 3 are beneficial, as this is basically transferring PYR from weak hands to strong hands. Strong hands are basically soft-locking the circulating supply because they don’t want to sell at a certain price point. The less PYR is circulating to easier the price goes up, because less buyers are needed to push the price up.
With the above explanation option 2 doesn’t need further elaboration. But why is option 3 beneficial? At option 3 the following things happen:
- A seller sells a NFT at the marketplace. A 12% fee is incurred. Moving 12% to the strongest hand currently in the ECO-system, Vulcan himself. This is very positive
- A buyer buys a NFT at the marketplace. This lowers the PYR balance of the buyer. Obviously this is somebody involved in the ECO-system. So he will be inclined to buy more PYR because of more bargains on the marketplace needing PYR, or because of utilization of the bought NFT, or because of the expectation he bought the dip. This is very positive, as every NFT sale in the long run increases the price of PYR.
- The seller of the NFT also sells his PYR. This lowers the price of PYR, and is decreasing the amount of value in the eco-system. Negative of course, however the following also applies.
- A buyer is found and accepts the price of PYR the seller proposed. This is somebody who is either in need of PYR because of NFT utilization or a holder of PYR who thinks he bought at a good price. So this is distributing PYR from a weak hand to a strong hand and basically creating support at a certain price point.
Key considerations
From a economy point of view the NFT distribution is key to get a better distribution of PYR and the give-aways of NFT’s are a fantastic way to create a really solid foundation under the price of Pyr. Next to this from a marketing point of view there are numerous reasons to embrace NFT give-aways. I won’t go into much detail about that, as I’m sure anybody can imagine.
And most important NFT’s increase the engagements of the community, because you actually get something.
The most important part is to incentivize participants in the ECO-system to choose 1 (hodl and utilize) over 2 (sell NFT and hodl PYR) over 3 (sell NFT and PYR).
The thing the team is certainly doing is creating NFT’s and finding projects that can create NFT’s that people are willing to use. So that’s very good. The adjustment of making it impossible to sell a certain NFT via the marketplace before it is ‘watered’ with lava is also good. As this forces sellers to utilize something in the eco-system, creating play-to-earn.
If somebody still decides to sell his NFT it is not a ‘bad’ thing as explained before, because the transaction and the market place fee still cause the move of PYR to a stronger hand. Maybe Vulcan can even introduce a burn of PYR with every transaction as this causes that everybody in the eco-system benefits except the one who is also withdrawing from the eco-system to buy something else.
To summarize: I love valuable NFT’s
[1] Of course not Vulcan the god as he is just imagination, but Vulcan Forged the project.
