Editorial / Opinion

A take on the ESSENCE price!

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This is an article in our “Opinion” series. Here we write more freely our opinionated thoughts and ideas and would love for you to comment your thoughts about the article itself or your own ideas and debate the thoughts in the article! 

what COULD be a reasonable essence price?

the launch of essence = usd?!

Let’s discuss a hot topic! “What is the probable price that essence will reach?”

First, THIS IS NOT FINANCIAL ADVICE.
You are responsible for doing your research. This is my interpretation of the data using my own skill set and knowledge of financial markets. We will discuss the model, my background, what assumptions the model makes, and what it tells me from my interpretations. 

Who am I? I am Money_Matters, a dedicated E2Economist team member serving an economist role. I have been E2 since December 2020. This is my first article for the E2Economist. In E1 life, I hold a Master of Business Administration and a Master of Finance degree and work in the finance industry. The name is a play on words; I like to learn about all matters dealing with money and finance, hence, Money_Matters.

I used excel to input our assumptions from the draft paper and directly from Shane. This helps us figure out the circulating supply side of the equation. The market capitalization side of the equation comes purely from the market capitalization of other projects in the metaverse (to be explained later). Let’s start with supply assumptions on the day of launch:

1) As of Feb 12th, Essence supply is 112 million (from draft paper)
2) Daily essence claim is 83,333 (E2E estimate)
3) Launch date is 11/24/2022 (pure guess, and who doesn’t like Thanksgiving)
4) 5,000,000,000 supply at launch (draft paper)
5) Team gets 25% (from the draft, but will change) and vests over 36 months
6) E2 as a company gets 24% (from the draft)
7) 51% of the supply is for gameplay (draft paper)
8) Team members sell 15% of the vesting amount monthly (guess)
9) E2 sells 5% of the amount to raise capital (guess)
10) Players spend 10% of essence monthly (guess)

All those assumptions lead to calculating a circulating supply at the launch of 174,370,275. The specifics of how I did this will remain confidential. But you can figure most of it out by reading E2E articles. If there is significant interest, I can go a bit deeper into it. 

Next is the demand side of the equation – I am using CoinGecko data on the market cap pulled from this website: https://www.coingecko.com/en/categories/metaverse.

The model data updates in real-time and is filtered through several equations. My theory is that the market capitalization of E2 will reflect the market capitalization of other metaverse projects. Meaning, that when E2 launches, it will reach a market capitalization within a close range of other metaverse projects. 

We have a way to interpret this in statistics, mean and standard deviation. The mean is just the average of the data set. The standard deviation is the measure of the dispersion of that data set. Why are standard deviation and the mean important? In this case, they tell us the likely range that the E2 market cap will be based on today’s market cap values for other metaverse projects AND what probability they have of reaching that value. 

Due to the central limit theorem, we know that 99.7% of the likely outcomes for the E2 market cap should be within three standard deviations of the mean. Therefore, if we assume that E2 should be one standard deviation above the mean, we think that E2 will be greater than 84.2% of the other metaverse projects in terms of market cap. If we believe it will be two standard deviations above, it would be greater than 97.8% of projects. 

A 1-standard deviation is a good spot to use for the target price for the following reasons: 1) the total amount of money that has already been invested in E2, about $71,694,788, the number of users on the platform, the years of development in the project, advertising efforts, and comparing it to other projects.

I compared two methods: 1) using the market cap of the top 25 projects and 2) using the market cap of all projects showing on CoinGecko. We can get a mean and standard deviation for both methods. The table below shows the mean and standard deviation for both. Using the data as of 1:08 AM EST, the 1-standard deviation above the mean for all projects for metaverse on CoinGecko shows a value of 441,975,090. Using the top 25 projects gets 900,651,662. 

Once the white paper is out, I will go further into the data and exclude any outliers, but for now, I am just using the average of both methods to get 671,313,376. Now that we have a supply of 174,370,275 and a market cap of 671,313,376, we can get the price!

Again, it’s essential to know WHAT your model is measuring. Mine is calculating the essence price; assuming all assumptions above are met:

the essence price TODAY will be 3.85! 

But the launch is not today, and several things could happen between now and that date. However, if E2 works diligently to clarify the project to outside investors, work on the project, and make the proper steps, we should see a favorable outcome. What are the proper steps? We are working on that information, too 😉

COULD THE PRICE OF ESSENCE FIND STABILITY AROUND 3.85?!

WHAT DO YOU THINK ?!

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2 comments

Earth2Explorer4Life 2022-08-17 at 12:53

I think you’ll end up not far from the mark, I think Essence claimed per month should include an increasing monthly variable for new users and old users only starting to collect for the first time. Maybe 1-2% gain a month?

I was guessing total supply by now might be nearing 200 million and I thought maybe 250 million in supply by whitepaper, I don’t think we’ll be waiting too much longer for an answer 🙂

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CJVE - The Mandalorian 2022-08-20 at 06:47

100% ! The whitepaper will drop like a bomb! Super exciting!

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