How to understand that the current Friend.tech TVL is stable, but the Key price is declining?
Unfortunately, the Bot and 5% FT fees are killing this market, eliminating the possibility of a breakthrough.Written by: 0xLoki
First, it is necessary to understand that under pure speculative assumptions, a single purchase of Key results in an immediate loss of 22% based on book value (10% is just a smokescreen), and an immediate loss of 70%+ based on EV (22% is just a second layer of smokescreen);
After understanding the first step, calculating further will reveal that the Key price does not need to rise to a very high position to infinitely extend the EV payback period. At this point, the entire FT market will turn into a repeated game of "guess the average 2/3," where the speculative threshold for Key prices corresponding to the market equilibrium point continuously declines. This means that at this stage, funds are flowing towards Keys at lower prices, while the lower market capitalization has already been monopolized by Bots;
The breakthrough lies in providing utility, reducing the positional ranking of certain Keys in potential liquidation, thereby increasing the EV of other Keys, until escaping the Ponzi. Unfortunately, Bots and the 5% FT fee are killing this market, eliminating the possibility of a breakthrough.
How to understand the difference between EV and book value:
Zhang San, Li Si, and Wang Wu pooled funds to buy a cow, a duck, and an egg.
They agreed that the first person to exit would take the cow, the second would take the duck, and the last person would take the egg.
Zhang San, Li Si, and Wang Wu all believe they have a claim to the cow.
But in fact, their claims are all equal.
In the end, there are 6 possible outcomes, where they take:
1) Cow, Duck, Egg 2) Cow, Egg, Duck 3) Egg, Duck, Cow 4) Egg, Cow, Duck 5) Duck, Cow, Egg 6) Duck, Egg, Cow
The probabilities of these six outcomes are equal.
Therefore, what Zhang San truly owns = 2/6 * Cow + 2/6 * Egg + 2/6 * Duck
That is, 1/3 of a cow, 1/3 of a duck, and 1/3 of an egg.
At this point, Zhao Liu joins the game, and he needs to provide a house.
When he joins, the house is divided into four parts, with Zhang San, Li Si, and Wang Wu each receiving 1/4.
This is why, from an EV perspective, buying results in an immediate loss of 70%+.
