NEOPIN Valuation Outlook: Exploring the Optimal Solution of DeFi + CeFi

Written by: @yelsanwong, @longyeyouxin

Adviser: @CryptoScott_ETH

TL;DR

• NEOPIN is a "licensed DeFi protocol" under South Korean gaming giant Neowiz, combining the advantages of both CeFi and DeFi. It aims to bridge traditional finance and DeFi protocols within a compliant framework.
• NEOPIN has been selected for the Abu Dhabi Investment Office's innovation program and is collaborating with local government agencies to develop a DeFi regulatory framework, making it a rare regulated DeFi service provider that actively embraces regulation for long-term development.
• NEOPIN is the only DeFi protocol that supports both Klaytn and Finschia networks, making it an obvious beneficiary of the Klaytn and Finschia merger event, and it may become a DeFi example of the "blockchain merger" concept in the future.
• NEOPIN offers RWA-based DeFi products, and entering the RWA market within a compliant framework helps to seamlessly enjoy the explosive growth of the RWA market.
• Through comparable analysis valuation, we expect the price of the $NPT token to reach $3.10 to $8.39 USD by the end of Q1 2025, indicating significant upside potential compared to its current token price.
• Backed by a giant, operating DeFi in compliance, and benefiting from the historic merger of two major public chains, NEOPIN has a great opportunity to gain more community trust in the upcoming wave of blockchain mergers; as a highly inclusive DeFi protocol, NEOPIN's efforts to bring real-world assets on-chain are also more likely to be recognized by users, with the potential to win the loyalty of a broad base of web2 and web3 users.

1. Project Overview

NEOPIN was established in 2021, and its self-introduction is "a one-stop, non-custodial licensed protocol for securely using cryptocurrencies within a regulatory framework, while combining the advantages of CeFi and DeFi. Based on stable security protocols and a regulated environment, NEOPIN aims to bridge traditional finance and DeFi protocols for users."

NEOPIN's parent company is the well-known South Korean gaming company Neowiz (which globally published the once-popular FPS game "Crossfire" in Asia). NEOPIN has currently been selected for the Abu Dhabi Investment Office (ADIO) innovation program, which operates the sovereign wealth fund of the United Arab Emirates, attracting direct and indirect investments. NEOPIN is collaborating with the UAE government to develop a DeFi regulatory framework and expand services based on this framework globally.

NEOPIN's official website states that its team members come from well-known companies in the web2 and web3 fields such as Binance, Samsung, Neowiz, and Coupang. According to LinkedIn, NEOPIN currently has no fewer than 30 employees, with most team members from South Korea, which is quite a considerable talent pool among web3 startups.

2. Business Model and Products

NEOPIN believes that CeFi, represented by centralized exchanges, has faced numerous issues due to unclear customer fund management and ethical concerns, leading to many victims. DeFi also faces a series of risks, including oracle risks and protocol flaws, resulting in significant disasters. Therefore, NEOPIN has proposed a new concept of "licensed DeFi."

The licensed DeFi protocol established by NEOPIN aims to provide a stable, secure, and compliant platform while maintaining high transparency, innovation, and flexibility.

In terms of regulatory compliance, NEOPIN has become the first DeFi protocol to collaborate with the Abu Dhabi Global Market (ADGM) to develop and integrate a regulatory framework.

Regarding the functionality of the DeFi protocol itself, the NEOPIN ecosystem connects various crypto-financial services such as P2E, S2E, M2E, and NFTs, allowing users and liquidity providers to benefit from the ecosystem token $NPT.

With NEOPIN's product updates, its crucial non-custodial wallet, NEOPIN Wallet, is hard to overlook.

Firstly, it is not just a simple cryptocurrency wallet; it represents a comprehensive blockchain ecosystem. This is reflected in its seamless experience for users, providing everything from basic wallet functions to advanced financial services. Its ecosystem design allows users to explore DeFi, NFTs, and other blockchain-based innovative products and services, extending beyond traditional asset management.

More importantly, the design of the NEOPIN App focuses on user experience, with an intuitive interface and streamlined operation process that makes managing crypto assets incredibly simple, even for cryptocurrency newcomers.

NEOPIN's compliance is also fully reflected in its wallet application, where users must undergo a simple KYC verification after creating or importing a wallet. Its efficient KYC process simplifies the user identity verification process. Through straightforward steps and clear guidance, users can quickly complete the verification and enjoy a broader range of services and functionalities.

3. Project Highlights

What distinguishes NEOPIN from other DeFi protocols in the market? Why is NEOPIN likely to foster extremely high user loyalty? We believe NEOPIN's standout highlights include at least the following three points:

3.1 NEOPIN is the first DeFi protocol to benefit from the "blockchain merger" concept

To understand this, one must first grasp the following background information:

On February 15 this year, the Klaytn public chain and the Finschia public chain agreed to merge to build Asia's largest Web3 ecosystem, Project Dragon, covering over 250 million Asian wallet users.

Both Klaytn and Finschia have strong backgrounds: Klaytn is a public chain developed by Ground X, a subsidiary of South Korean internet giant Kakao.

Kakao Talk is the most popular instant messaging tool among South Koreans (equivalent to WeChat in Korea); Finschia is a public chain developed by Line Tech Plus, a subsidiary of Japanese internet giant Line. Line Messenger is the most popular instant messaging tool among Japanese people (equivalent to WeChat in Japan).

The merger of the public chains under Korea's version of WeChat and Japan's version of WeChat could become a landmark event in the blockchain industry, potentially triggering a "blockchain merger" craze in the future.

It is important to note that in the world of Web3, blockchain "forks" are very common, while blockchain "mergers" are extremely rare. The hard forks of BCH and BSV in 2017-2018 led to a "forking wave" in the blockchain industry, with many project parties forcibly creating "community conflicts" and generating numerous forked coins (such as Bitcoin Gold BTG, Bitcoin Diamond BCD, etc.). However, it has been proven that these forked coins have largely faded into obscurity.

In contrast, blockchain "mergers" are rarely proposed or realized. However, an obvious truth is that relentless fragmentation will only make the blockchain world increasingly fragmented, with various factions operating independently, and project parties redundantly reinventing the wheel on different public chains, issuing various tokens, resulting in an already small web3 world becoming extremely fragmented.

The concept of blockchain mergers is different: the merger of public chains signifies the condensation of community will and the establishment of a higher-level consensus. Additionally, from the perspective of traditional finance, "forking" is akin to "spinning off," while "merging" is akin to "mergers and acquisitions," and in traditional financial markets, the latter occurs far more frequently than the former. Spinning off typically only brings temporary speculation, while mergers and acquisitions are crucial means for companies to grow and strengthen.

Therefore, we firmly believe that the numerous blockchain "forks" that have occurred are merely interludes in the development of the web3 world; in the long run, blockchain "mergers" represent the progress and future of the web3 world.

So, what is the relationship between this merger and NEOPIN?

------ Because NEOPIN is the only DeFi protocol and governance committee member that supports both Klaytn and Finschia networks.

To assist with this historic blockchain merger, NEOPIN has already done a lot of preparatory work (for example, NEOPIN launched the first cross-chain bridge between Klaytn and Finschia, supporting bidirectional cross-chain transactions).

In such a complex and large-scale merger project, users using on-chain protocols or holding on-chain assets will inevitably encounter many unprecedented issues, and NEOPIN, as the only DeFi protocol supporting both Klaytn and Finschia networks, will be closely watched by the market, with each new feature it launches expected to become an important example of how DeFi protocols can respond to blockchain mergers.

If NEOPIN performs excellently in this merger, then in future blockchain mergers, NEOPIN, as the first mover in this space, will certainly have the opportunity to play a greater role.

3.2 NEOPIN actively embraces regulation and is one of the first protocols to propose "licensed DeFi"

In recent years, as the crypto market continues to expand, regulatory agencies in various countries have intensified their investigations and oversight of web3 projects. More and more projects are being brought under regulatory frameworks, which has become an inevitable trend. Issues such as insufficient transparency, vulnerability to hacking, and compliance risks are significant problems that limit the long-term development of DeFi projects.

As one of the first protocols to propose "licensed DeFi," NEOPIN's choice to actively embrace regulation is a bold and forward-looking move.

Proactively choosing to collaborate with regulatory agencies in the early stages of the project is beneficial for building a cryptocurrency usage platform that complies with regulatory frameworks while fully leveraging the advantages of DeFi and CeFi. Its collaboration with the UAE government to develop a DeFi regulatory framework and expand services based on this framework globally also places it in a favorable competitive position, while later entrants may have to accept the same regulatory framework, posing no threat to pioneers like NEOPIN.

Before using NEOPIN's services, users are required to undergo KYC verification, which also helps prevent illegal funds from flowing into the DeFi protocol, sparing users unnecessary troubles.

The birth of Web3 is not meant to create a lawless land; its ultimate goal is to drive innovation in traditional fields in a different way. For long-term development, DeFi protocols involving large capital flows and high risks must integrate into existing regulatory frameworks. Therefore, for a DeFi project, only by achieving compliant development can it lay the foundation for long-term healthy growth.

We believe that proactively accepting regulation in the early stages of the project and operating in compliance with the law is more conducive to the project's survival in the face of increasingly stringent regulations in the future. A good reputation can also help attract more new users who are just entering web3, and attracting a large number of new users who have not yet engaged with web3 is a necessary condition for the entire industry to grow.

3.3 NEOPIN enters the RWA field, and a compliant framework helps to facilitate this

On March 28 this year, NEOPIN officially announced the launch of RWA-based DeFi products, entering the RWA market.

The RWA (Real World Assets) market is an important link between the on-chain world and the off-chain world. In recent years, the TVL in the RWA field has achieved multiple growth each year, representing a golden track with highly certain growth.

Top global institutions such as BCG predict that the RWA market will develop into a massive market worth trillions or even tens of trillions of dollars in the coming years. ONDO Finance, which also operates in the RWA space within a compliant framework, has seen its governance token $ONDO grow over 300% in the past three months.

NEOPIN's NEOPIN BDLP is a multi-yield liquidity mining protocol based on RWA, allowing users to deposit DAI, USDT, or USDC, while NEOPIN provides generous yields using sDAI and USDe (currently with annual yields between 13%-30%).

To provide each user with the best asset management ratio, NEOPIN has even developed a proprietary AI algorithm to help users decide how to allocate different assets based on their preferences and on-chain data, thereby efficiently investing in complex DeFi derivatives.

In this process, NEOPIN simplifies the investment process, allowing users to easily explore and invest in various DeFi without needing to navigate multiple protocols, thus lowering the user entry barrier.

In the future, compliant RWA products will serve as a bridge between the web2 world and the web3 world. Only compliant RWA platforms can allow more web3 beginners to access quality real-world assets. Currently, pioneers in the RWA field have the opportunity to establish first-mover advantages from both the product and user sides and succeed in future competition.

4. Token Economics

4.1 Token Issuance

The total issuance of NEOPIN's ecosystem token $NPT is 1 billion, with approximately 86.64 million currently in circulation, resulting in a circulation rate of less than 10%. The distribution ratio of $NPT is as follows:

• Ecosystem (50%): including liquidity pools (29.75%), staking rewards (13.23%), service rewards (7.02%)
• Partners (18%): for establishing new partnerships and developing new services
• Team Operations (15%): to incentivize the project team and allocate based on contributions to the ecosystem
• Reserve Fund (10%): to develop the ecosystem beyond the designed allocation
• Marketing (5%): for promotional marketing and increasing the number of ecosystem participants
• Investors (2%): allocated to early investors

The specific token unlocking times will vary based on the type of allocation.

4.2 Token Utility

The NPT token plays a core role in the NEOPIN ecosystem, connecting various crypto-financial services, including P2E (Play to Earn), S2E (Stake to Earn), M2E (Move to Earn), and NFTs (non-fungible tokens), allowing users and liquidity providers to benefit from NPT.

The NPT economic system aims to reward users based on their contributions to the NEOPIN ecosystem, creating a user-centric ecosystem by establishing a sustainable token economy and distributing most rewards to users.

The specific utilities of $NPT are as follows:

• Liquidity provision and trading fee rewards: Users can deposit virtual assets or NPT into liquidity pools, generating exchange trading fees on NEOPIN, contributing to the growth of the NEOPIN ecosystem and the value of NPT.
• Staking and locking rewards: NPT offers staking and locking products, rewarding users in proportion to the amount delegated to staking products, aimed at rewarding contributions to the ecosystem.
• Liquidity mining: Provides liquidity mining rewards based on the interest rates of liquidity pools and fees generated from swap transactions, incentivizing liquidity providers.
• Event and service participation rewards: Users can earn rewards by participating in events promoting NEOPIN services, encouraging active use of the ecosystem.
• Auto buyback and supply deflation (AutoRM): The NPT economic system adopts an auto buyback and supply deflation strategy, supporting the stability of NPT's value and the sustainable development of the ecosystem through market buybacks and profit buybacks.
• Ecosystem service support: Supports various services such as cross-chain swaps, NFT markets, P2E, S2E, etc., encouraging user participation through this circular structure and collecting rewards through diversified services to help maintain ecosystem stability.

Source: Vision Paper

The design of the NPT token economic system encourages spontaneous user participation and adjusts reward ratios based on their contributions to the ecosystem. Through a stable NPT cycle and reward mechanism, NEOPIN aims to maintain the stability of the ecosystem and liquidity pools while expanding the use cases of NPT through measures such as supporting multi-chain products, expanding X2E services, and creating initial liquidity pools, ensuring the long-term sustainability of the ecosystem.

5. Project Valuation

Comparable analysis is a commonly used valuation method that involves comparing with similar companies in the same industry. The basic assumption is that similar companies should have similar valuation multiples. When conducting comparable analysis, it is crucial to select companies that are as similar as possible in terms of industry, business model, risk profile, and market dynamics.

By ensuring comparability in these aspects, the influence of external factors is minimized, allowing us to focus on the intrinsic value drivers of the analyzed company. Considering NEOPIN's business diversity and the development prospects of leading public chain projects, we conducted comparable valuation analysis with projects primarily focused on DEX, Staking, Bridge, and RWA.

In conducting our project's comparable analysis valuation, we particularly noted that there is more than a tenfold gap between the fully diluted valuation (FDV) and the current market capitalization (Market Cap).

This significant difference may lead to inevitable biases when valuing using FDV. Therefore, in our valuation model, we chose to use the current market capitalization rather than FDV for analysis. At the same time, considering the importance of FDV data, we only predict the price of the $NPT token at the end of 2024 based on existing data in a certain context.

Ultimately, we will summarize the valuation results of NEOPIN's DEX, Staking, Bridge, and RWA businesses, weighting them at 40%, 30%, 20%, and 10% respectively for the overall project valuation.

5.1 Comparable Analysis Valuation

5.1.1 DEX

In the DEX projects, we selected SushiSwap, Osmosis, and QuickSwap for comparable analysis. Ultimately, combining three different assumptions, the valuation range for NEOPIN is as follows:

By conducting comparable analysis valuation of NEOPIN with the above DEX projects, we believe the price of the NPT token will reach $1.78 to $4.54 USD by the end of 2024.

5.1.2 Staking

In the Staking projects, we selected Stride, BENQI, and Ankr for comparable analysis. Ultimately, combining three different assumptions, the valuation range for NEOPIN is as follows:

By conducting comparable analysis valuation of NEOPIN with the above Staking projects, we believe the price of the NPT token will reach $3.45 to $5.47 USD by the end of 2024.

5.1.3 Bridge

In the Bridge projects, we selected Synapse, Across, and Connext Network for comparable analysis. Ultimately, combining three different assumptions, the valuation range for NEOPIN is as follows:

By conducting comparable analysis valuation of NEOPIN with the above Bridge projects, we believe the price of the NPT token will reach $1.36 to $2.41 USD by the end of 2024.

5.1.4 RWA

In the RWA projects, we selected Synthetix, Ondo Finance, and Ribbon Finance for comparable analysis. Ultimately, combining three different assumptions, the valuation range for NEOPIN is as follows:

By conducting comparable analysis valuation of NEOPIN with the above RWA projects, we believe the price of the NPT token will reach $10.77 to $44.49 USD by the end of 2024.

5.2 Valuation Results

The following are the final valuation results, and the details can be found in the valuation model.

The above chart shows the project valuation and token price based on the circulating market cap assumptions of DeFi projects and total locked value (TVL). By integrating the valuation results of DEX, Stake, Bridge, and RWA, we weight them at 40%, 30%, 20%, and 10% respectively for the final valuation, resulting in an estimated market cap for NEOPIN ranging from $268 million to $727 million by the end of 2024, with the price of $NPT ranging from $3.10 to $8.39 USD.

6. Conclusion

In summary, NEOPIN's main highlights include:

• The project is backed by South Korean gaming giant Neowiz, with a strong and considerable team background, indicating a strong willingness to actively build.
• NEOPIN is the first DeFi protocol to benefit from the "blockchain merger" concept. If it plays an important role in the Klaytn and Finschia merger, it has a great opportunity to gain more community trust in the future wave of blockchain mergers.
• NEOPIN actively embraces regulation and is one of the first protocols to propose "licensed DeFi." As a highly inclusive DeFi protocol built on a compliant framework, the project's long-term development outlook is optimistic.
• NEOPIN's entry into the RWA field within a compliant framework makes its efforts to bring real-world assets on-chain more likely to be recognized by web2 and web3 users, positioning it as an important bridge between the web2 world and the web3 world.
• Through comparable analysis valuation, we expect the price of the $NPT token to reach $3.10 to $8.39 USD by the end of 2024, indicating significant upside potential compared to its current token price.

Therefore, we can fully open our imagination:

As a web3 user utilizing multiple public chains, if in the future wave of blockchain mergers, one can use the same DeFi protocol to seamlessly connect and transition between various public chains; or as a former web2 user, if in the process of trying to use web3 protocols to purchase various RWA assets, one finds they can use the same company's website or app (without worrying about legal compliance issues). It is easy to imagine how high user loyalty to this protocol will be.

References [1] https://www.techflowpost.com/article/detail_16316.html [2] https://docs.neopin.io/