So bear with me here. I am a big fan of the Hi Dollars project and I myself have invested a decent amount of money into their tokens. But as I read and understand more about the project and the token itself, I am starting to be a bit concerned about its tokenomics. Yes the project does make sense and I see great potential but as an investor, I can see that the tokenomics isn’t that great. Don’t go bashing me – I am just stating what I feel. I have put in money into the project and surely would like it to go to the moon and become rich from this. But sadly unless there are quite a lot of changes to how they plan to grow their token, I don’t see that happening. Of course I could be wrong and it will grow like 100x in a few years time. But…
Lets start with the most obvious – the supply of the Hi Dollars token. First of all there is no maximum limit in the number of tokens to be minted. It will end when they reach about 1 billion users. They are estimating it to be in 4 years time to reach that number of users. I guess they are trying to incentivize users to get their rewards and become interested in the project. Yes it makes sense that the more users join the network, the bigger the project will be. And with more users, there will be more demand for the token. I understand that. But now just think about for a second. Hi Dollar rewards members by giving out daily rewards – at the moment 1 Hi Dollar daily plus whatever referral the user has. So in order to continuously give members that 1 Hi Dollar, it is possible to have what like 100 over billion Hi Dollars minted. Furthermore we are not including those tokens purchased directly from the developers. And those “2.67” minted for other purposes and functions. This could potentially have like 1 trillion Hi Dollars created, possibly even more??? And at the time of writing, the price of Hi Dollars is USD 0.76. So if the the price does not change, it would mean a marketcap of about 760 billion US dollars.
For those who think that this can be done, I think we need to look at the big picture here. BTC (Bitcoin) currently has a marketcap of 951 billion US dollars. While Ethereum has a marketcap of 460 billion US dollars. So this would mean that if the price of Hi Dollars remain the same, they will in the future have a marketcap of more than Ethereum. We can be optimistic – sure thing. But unless you believe in fairies or the Loch Ness monster, this isn’t going to happen and definitely not in 4 years time. And we are talking about investing in something “new”. It is very much a new project. So early investors would expect the price of the Hi Dollar token to go up. There is certainly no point investing in a project and not getting any returns right? So if you invest 10K into Hi Dollars in the early stages of the project, you should expect “perhaps, maybe, hopefully” a 2 to 3 times return. So lets say the future price of Hi Dollars will rise to 2.28 USD per token. That would mean a marketcap of 2.28 Trillion USD dollars. I don’t know about you but I seriously doubt that even the most optimistic Hi moon-boy could see that possibility. I know there is talk about burning the tokens for members who did not pass KYC or somehow left the project. Sure this will help improve the supply issue. But at the same time, this will reduce the demand and the popularity of the project too. And dare I say we are seeing inflated number of members as well? Or perhaps profit buyback and burn schemes which Sean had suggested. Again this is a maybe. And will take really impact the price so much, assuming that they do really make some profit? And with so much tokens in circulation, will investors see this as actual deflationary?
Yes I do know that the daily rewards are locked for a year. And members can purchase directly from Hi but these are discounted if they are being released over a span of 1 or 4 years. These will surely help keeping Hi Dollars away from the usual dump and pump cycles (as a good portion are still being locked). And we are seeing that on launch. There was no drastic drop in price at launch which just happened a few weeks ago. This is surely a good thing. But still the outlook for Hi Dollars does not look that attractive right? Membership benefits looks good from what little they have shown to us. But still seems quite insignificant if you ask me.
Now lets talk about the project itself. Basically what the Hi project would like to accomplish – it is supposed to be a “not for profit” digital bank. So it is some sort of a defi project. Again this is nothing new in the crypto space. You basically put in cryptocurrency into a platform, you either get interest or you can get loans from it. We are seeing plenty of such projects out there (AAVE is one such popular protocol for this), some of which are already very well known with lots of users. Way more than than the Hi Project. And their interest rate is not that attractive either. You will need to pump in a lot of fund to get that 20% rate. Furthermore quite a good number of the “members” are there because of the daily rewards anyway. These might add to the number of users but they really don’t add that much value to the project in all reality. Referrals is nothing special too. It has been done to death in the crypto world. It is also a double edge sword. Just check out their Telegram group where the majority of the questions are “members” asking when or how they can draw out their Hi Dollar rewards. Most of them don’t even know what they are getting into. They only know “free magic internet money”. Admittedly the developers are supposed to develop their own blockchain technology (hiP). And if this really pans out, there might be something for the Hi project. But do we really see anything that revolutionary about their blockchain technology? Or can their blockchain solve problems which other blockchains cannot? How about their smart contract implementations? Will it be something different or unique about their smart contracts? Or is “Onchain account recovery” that important in the grand scheme of things? Maybe. Remains to be seen. Please check out their whitepaper. It is indeed a very interesting read.
Next would be about their ecosystem based on their blockchain. Again, building an ecosystem with thousands of dapps is nothing special. Most layer 1 blockchains will need to have an ecosystem in order to drive demand for their native token/coin. Hi project is competing with big names like Ethereum, Binance Smart Chain, Cardano, Polkadot and many more. And these are major powerhouses in this arena. Just look at the number of dapps in the Ethereum ecosystem. The sheer number of projects available on Ethereum is just mind boggling. Can hiP really beat these projects? The hi project main aim seems to be providing defi services. And they want to compete with other layer 1 solutions? A bit too ambitious if you ask me. Not that there is anything wrong with being ambitious. But sometimes they might bite off more than they can chew. And can they handle 1 billion members? Quite often than not, their Telegram or Whatsapp daily rewards bots will not work either. And this is with just 1.2 million users.
I am certainly not dissing this project. Okay, maybe a little. But I am actually a big fan and hope to see great things come out of it. However I just don’t see how is that good a value for investors, especially for those early investors who are supposed to be getting a “discount”. I also don’t see how the long term price of Hi Dollars will remain so high. As they mint more, the supply can easily outstrip demand and speculation. The Hi team had claimed that they are looking at the amount minted weekly and they could potentially change as they see fit. But from the numbers alone, I don’t see them doing it at all. During the past week and correct me if I am wrong, I see the number of tokens minted at 80 million or so? That is definitely bad news for people like us, who pumped in money at the early stages of the project. There have been some argument that as like 9% of all tokens minted are reserved for the team, that would incentivize the Hi team to push up the price of the Hi Dollar token. This might be true. Perhaps. But I guess the same could be said for the team to be incentivize to increase the minted supply as well.