Why is $PUNK so worthy?
I know it’s hard to imagine how big this number is. What’s surprising is that the total value of the global top 100 assets (GOLD, APPLE, Microsoft, Aramco, Amazon, Google, Silver, Bitcoin, etc.) all added up is only about $47 trillion in 2021 even though the values have risen significantly over two years.
Pension & Annuity is the largest financial instrument and an essential safeguard that most people sign up for and deposit each month to maintain a stable retirement life.
However, existing pensions are owned by the government and megacorps, so there are many structural defects such as inflation, opaque management, and intergenerational unfairness problems.
On the other hand, PUNK, the governance token of Punk Protocol, is fully decentralized because it is distributed very fairly to the community. It’s the world’s first decentralized pension & annuity protocol, fully owned and operated by the holders and the community!
The first thing you need to know is the value of decentralization and governance if you want to understand the value of PUNK tokens. (We think the most important thing to understand about the value of PUNK tokens is the value of decentralization and governance.) Of course, ordinary people who are not Crypto OG may not know. So I want to tell you an instance. The UNI token is a pure governance token of Uniswap, a Fully Diluted Market Cap of $43B.
Then how about PUNK, a governance token that can exert various influences on the world’s first DeFi annuity; the largest financial instrument in the existing finance market? Also, there are many advantages rather than investing directly. Such as,
- Continuous Compounding Effect
- Increasing Profit with Economies of scale (ex. CRV Staking)
- Saving Gas Costs
- Flexible Response to Investment Strategies.
Some Punker said Punk’s Saver is like Yearn + 401k, and I’m really proud that you have noted Punk‘s great potential!🦾 But there’s not just one reason why punk tokens are valuable.
We initially set 20% of earnings generated by the Saver as the Buyback Rate. As I will explain in more detail below, the total supply of punk is strictly limited to 21 million and has a halving cycle every four years, just like Bitcoin. (=Available supply decreasing)
This means that the PUNK price will have the potential of rising continually when TVL or ROI grows.
Let’s suppose, for example, Punk Protocol occupies 1% of the existing pension market and adds up 20% compounded annually, which is a very conservative return in the DeFi market. The operating investment will be around $500B, and the earning will be $100B in that year. According to the 20% Buyback Rate, $20B will be used to buy back PUNK tokens every year and be burned. Buyback of this size exceeds all the shares the S&P 500 are buying back every quarter. You can check the remarkable references of the buyback model in the current stock market or buyback token models like BNB.
All valuation methodologies used in the existing financial institutions are a prediction of future cash flow and discount. That’s why old finance guys mainly criticize Bitcoin. Because it generates no cash flow, some aggressive people express it Ponzi Scheme. (Of course, we don’t think so.)
But Punk Protocol has freedom from this kind of criticism. We modeled smart contract strategies that let you invest in various DeFi protocols such as Compound, Aave, Uniswap, Curve, and Sushi for creating periodic cash flows with a compounding effect and using some of them for buyback and burn. It will allow the traditional guys to measure the value of PUNK tokens in a way they are familiar with.
Source: Token Terminal
They can apply PSR to PUNK, which is often used to evaluate DeFi tokens these days and evaluate technology companies.
=Market Cap / TVL * APY * Buyback Rate
Let’s suppose 10x, even if the current PSR ratio of DeFi tokens is much higher, as you can see above. (10x usually applied in technology-emphasizing sectors such as IT or Bio) If Punk Protocol occupies 1% of the pension market and generates 20% profit, PUNK can be valued at $9,523 per single token. (But PSR doesn’t involve a discounted model, we think it will be higher.)
The limited supply of 21 million and the 4yr halving is very symbolic for cryptocurrency scenes.
As everyone knows, Bitcoin has a total maximum supply of 21 million and a halving cycle of nearly every 4 years. It is the first cryptocurrency to enable anyone to store and transfer value without any physical limitation. And it gained its recognition as a financial network and ranked Top 8 among all assets at the fastest speed in the world.
We thought that the key structure that boosted the value of Bitcoin was the limited supply and the halving cycle. In the same manner, the only structure that can increase the value of PUNK token is like the one used in Bitcoin. Since Punk’s first and main product is the annuity, we need a long-term incentive-provoking structure according to game theory and behavioral economics.
If the price of tokens continues to fall or incentives do not follow after four years like other DeFi protocols, few people will join the Saver for a long time, right? So, just like Bitcoin, we minted 21 million tokens with a halving cycle of every four years to reduce available supply continually but always remains as a wellspring. This cannot be changed even by governance.