Tael(WABI): A calculation

To grasp the impact of mainstream adoption, let us start with making a forecast of consumers. There are currently 6184 consumers on the adoption page. Throughout the past two months, we have seen actual consumers grow from 1414 to 6184, meaning that consumer statistics so far doubled each month. Being a bit more conservative, we use a diminishing growth rate of 85% a month*. This way the projected growth in the months to come would create the following graph:

*The monthly growth rate diminishes as follows: 85%, 72% (85% * 85%), 61% (85% * 85% * 85%), … , 17%

After a year, there should be more than half a million mainstream users utilizing the Tael blockchain. Now, what would their expected price impact be on the exchange?

The Research Report on Chinese Consumer Cross-Border Purchasing Behaviour shows an average customer spends about $151 USD per month.

Looking at the products on the Techrock platform (Cosmetics, Supplements, Baby formula), it is not unlikely any such customer spends about 20% of this amount on these products. This would account for an average order of $30.20 USD, which is completely in line with the price of products on the platform.

For every order they make, customers are rewarded with 20% of the retail price in Taels as shown in earlier pilot phases. Effectively, this means that on average, every new customer represents a net buy of $6.04 Tael(WABI) on the exchange ($30.20 * 20%).

An interesting side note is that According to Loylogic research, 1 out of 3 people are never redeeming their points, meaning an average of $2.01 of tokens are “locked/burned” forever per consumer.

Customers receiving Taels have two options when it comes to using their Loyalty Points. They cannot sell them on an exchange (as explained in the official “Blockchains Explained” article), so they are left to either choose to hold their tokens for speculation, or use them on purchasing new products. When purchasing new products with Taels, they are (on average) basically selling and buying the same amount of Taels, meaning this has no further impact on the price.

Combining the calculated price per consumer with the expected consumer growth gives us the following graph displaying the Net buy pressure for Tael(WABI) on the exchange:

The graph shows us that within a year, $3.4 million USD in Taels are rewarded to customers and the exact same amount is bought off an exchange.

Important to note is that this is regardless of current and/or future Tael(WABI) prices, as this would only affect the number of tokens rewarded. A higher price on the exchange means less tokens are rewarded and vice versa, thus irrelevant for our calculation.

To assess what this net buy pressure means, we assume Binance will be used as intermediary. By taking a closer look at historic data we can analyze the impact of previous buying volumes on Binance.

This chart shows the historical impact of certain positive net buy pressures on the price of Tael(WABI).

The chart above tells us that several large net buy pressures have had different effects. As this impact is created by crypto investors, we can also see that the price usually deteriorates a bit after such an increase. Important to note is that this +$3.4 M buy pressure by mainstream users would not be temporary, as they are not able to sell their tokens on the exchange. Selecting several net buy moments in time, we can create the following table:

By extrapolating the historical effect of several net buy pressures, we can calculate an expected impact of +158% on the Tael price.

This price increase does not rely on current pricing and will be in effect over the duration of a year. In other words, this price effect will take place regardless of speculating behaviour. If such behaviour is positive, it will amplify the positive impact, if not, it will soften the negative impact.

The calculation so far only accounts for the direct impact of customer growth on the exchange. Techrock has stated it expects its biggest growth from merchants using marketing budget on Taels.

Is it realistic to grow to half a million customers?

Common sense tells us that scaling from 500 to 5,000 customers seems a lot easier than from 5,000 to 50,000 customers, although both cases represent the same multiple of 10. Even with such a large Chinese target market, it is not a walk in the park to grow to half a million customers.

Recent partnership announcements of Tael with giants like MUFG, Rakuten and Nestlé reassure us that any scaling issues can be resolved in the near future as all these companies have plenty of experience. Although not easy, they seem to team up with the right partners and growing to half a million customers seems well within reach.

Sensitivity analysis

There are several ways to interpret data and small adjustments can result in very different outcomes. Although most of the numbers used in this article are relying on research and facts, we were forced to make some assumptions. We chose a more conservative scenario, but do not want to withhold the outcomes of certain other scenarios:

This table shows a sensitivity analysis for different scenario’s on Taels’ consumer growth.

All in all, speculators still have the overhand on ALL token prices, and we don’t see that changing anytime soon. Surely, if a blockchain solution is seeing mainstream adoption by over half a million people, the crypto community would value this a lot, amplifying price effects beyond the mere mainstream users’ impact.