Is Binance Finally Starting to Run Low on Walton?

How Demand for Guardian Masternodes is Affecting Binance’s Token Supply

This post builds upon the ideas raised by Mr. Laserman’s great article Guardian Masternode Token Lockup, so you may want to read that article first.

If you don’t want to read a lot, but like data, you can get the basic narrative from this spreadsheet: Transactions on Binance’s Walton Wallet.

You can watch the Binance Walton wallet balance here.

BACKGROUND

On November 27 Walton announced their Guardian Masternode program. (Guardian Masternode AMA)

Anyone with 5000+ Walton tokens in their wallet before 7:00 PM EST on Saturday, December 9 can run a Guardian Masternode. (Countdown timer)

can run a Guardian Masternode. (Countdown timer) No additional Guardian Masternodes will ever be created after this deadline.

Guardian Masternodes will receive higher mining rewards than standard masternodes.

WATCHING THE BINANCE WALLET

Mr. Laserman’s Helpful Analysis

On November 30, Mr. L posted his article “Guardian Masternode token lockup,” showing why the introduction of Guardian Masternodes would cause a rapid reduction in the number of tokens available for purchase, and thereforce likely cause a price increase.

Because Binance is the only major exchange that currently trades Walton, Mr. Lasermen pointed out that Binance represents “96% of all tokens kept on exchanges,” and showed the effect that the announcement had already on Binance’s supply of Walton tokens:

November 27th: One hour before the Guardian Masternode was announced, Binance had 3,760,193 WTC (15% of the circulating supply) in its wallet. November 30th: Binance had only 2,013,874 WTC (8% of the circulating supply) in its wallet. 44% of all liquid tradable WTC have been removed from the marketplace in 3 days.

Mr. L then speculated that if 50% of Binance’s remaining Walton tokens were withdrawn during the run-up to the Guardian deadline, that would leave only 1 million tokens for sale on Binance, or about 4% of the circulating supply.

This drastic reduction in available supply would then affect the price accordingly:

If demand remains constant, I would expect a 200–300% increase in price over the next 30 days as the market tries to find a new equilibrium. This would translate to a price in the range of $10.34 to $15.51. If demand increases, I would expect a 400% increase in price at a minimum. The upper bounds are impossible to predict if a FOMO event takes place. However, 1000% is entirely possible in that scenario. This would translate to a price in the range from $20.68 to $51.70.

How Things Have Played Out Since Then

As it turns out, despite his great insights, Mr. L drastically underestimated the rate at which Walton would be withdrawn from Binance.

On November 30, around 5:30 pm EST, he speculated that perhaps about 1 million WTC would be withdrawn over the next 10 days leading up to the deadline.

In fact, 1 million WTC had already been withdrawn from Binance by 8:30 pm the next day, just 27 hours later.

Plot Twist

But what Mr. Laserman didn’t count on was that Binance was going to “re-up” their Walton wallet, using customer deposits from other wallet addresses.

On December 1 at 5:00 am, Binance added another 1.2 million in WTC to their wallet address, bringing the balance up to 2.6 million.

And again, on December 2, Binance deposited an additional 1.1 million WTC to their wallet.

On this spreadsheet you can see all of deposits and withdrawals on Binance’s wallet address for Walton.

STUDYING THE RE-UPS

So, what can we learn about Binance’s token supply based on their patterns of refilling their Walton wallet?

Here are the re-ups before the Guardian Node Announcement:

August 25 — Wallet is created. First deposit batch adds 1.3 million WTC. September 4 — Wallet balance dwindles to 500k WTC. Binance adds 9 million WTC to the wallet. September 11—Binance adds another 7.4 million to the wallet, bringing the wallet to it’s highest balance so far, 14.1 million.

And here are the re-ups since the Walton Guardian Node Announcement on November 27.

December 1 — Binance deposits 1.2 million. Resulting balance = 2.6 million WTC December 2 — Binance deposits 1.1 million. Resulting balance = 2.8 million WTC December 5 — Binance deposits 1 million. Resulting balance: 2.1 million WTC December 8 — Binance starts another re-up. (As of 4 pm on Dec 8, the re-up is still ongoing, and the current balance is 2.7 million WTC.)

On this spreadsheet you can see the Binance wallet refills that have happened since the wallet was created on August 25.

Where Does Binance Get these Walton Tokens From?

It is likely that these re-ups are comprised of tokens that were deposited by customers.

The basic idea of the system would be that customers deposit Walton into a deposit address that is unique to their account, and the tokens remain in that wallet until Binance needs those tokens in its “Withdrawal Account.”

Then, when customers want to withdraw Walton from their Binance account, the tokens are sent to them from Binance’s Withdrawal Account.

Will Binance Ever Run out of Walton?

At first, it may seem like there is no way for us to know exactly how much Walton Binance has up its sleeve. In some sense that is true, but there are some solid clues that can give us a hint or two…

The re-up on December 1 for 1.2 million WTC only required two transactions:

- 647k WTC

- 575k WTC

The re-up on December 2 for 1.1 million WTC only required three transactions:

- 338k WTC

- 431k WTC

- 300k WTC

However, the re-up on December 5 was comprised of 45 transactions, ranging from 5k to 120k.

And today’s (Dec 8) re-up is comprised of hundreds of smaller transactions, starting at 30k, with each transaction amount getting smaller and smaller as time goes on. As of 4:00 pm, each deposit was just around 60 WTC… not 60 thousand Walton, just sixty WTC.

Our Hypothesis

Given the descending transaction size of the wallet refills, we believe that Binance’s system — in this case at least — has been to first use larger customer deposits when re-filling the Walton wallet, and to only use the smaller customer deposits as a last resort when no more larger customer deposits are available.

How Does this Relate to Guardian Masternodes?

There are about 26.5 hours left until the Guardian deadline, and about 2.65 million Walton on the Binance Wallet with what would appear to be the last of Binance’s small customer deposits being used to refill the wallet.

This means that the balances on Binance would be enough for about 530 more Guardian Masternodes, or about 20 nodes per hour for the next 26.5 hours.

How Many Nodes Have People Been Withdrawing?

In the most recent 26.5 hours that we have data for our on our Binance spreadsheet, about 1.3 million WTC were withdrawn, or about enough for 267 Guardian Masternodes.

And that was during Bitcoin’s crazy bull run in the past day.

So, it would take about 2x the withdrawal rate from that recent period to withdraw nearly all of Binance’s current Walton customer balances … IF, and this is the key “IF” … our hypothesis is correct that the increasingly small deposit size on Binance’s wallet is an indicator that they are running out of WTC to re-up with.

Should I Invest?

In short, if you’re thinking about whether to make a speculative investment based on this article, the key questions to ask yourself are:

Do you think that Binance’s re-upping trend, currently down to less than 60 WTC per transaction, is a strong indicator that they are running low on customer deposits to refill the wallet with? How much demand do you think there will be for Guardian Masternodes in the final 24 hours before the deadline?

We don’t have definitive answers to those questions, so you’ll have to think for yourself and make your own decision, but we hope the information provided here can be useful to you.

-The Chopin Steele Team