How to understand that friend.tech TVL is stable now but Key price is declining?
Original Author: 0x Loki, New Fire Technology
1. First, it is necessary to understand that under the pure speculative assumption, the purchase of a Key immediately incurs a loss of 22% in book value (10% is just a distraction), and a loss of 70%+ according to EV (22% is only a second distraction);
2. After understanding the first step, it can be calculated that the Key price does not need to rise to a very high level in order to extend the EV breakeven period indefinitely. At this time, the entire FT market will become a repeated game of "guess the average 2/3". The speculative threshold for the Key price corresponding to market equilibrium point keeps decreasing, which means that funds are flowing towards Keys with lower prices, and the market with lower market value has already been monopolized by bots;
3. The breakthrough lies in providing utility and reducing the ranking of some Keys in potential liquidation, thereby increasing the EV of other Keys, until the possibility of Ponzi disappointment is eliminated. Unfortunately, bots and the 5% FT handling fee are killing this market, eliminating the possibility of breakthrough;
4. How to understand the difference between EV and book value:
Zhang San, Li Si, and Wang Wu pooled money to buy a cow, a duck, and an egg
It was agreed that the person who exits first takes the cow, the second person takes the duck, and the last person takes the egg
Zhang San/Li Si/Wang Wu all think they have the right to claim ownership of a cow
But in fact, their claims are equal
There are 6 possible results. They each 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 the six outcomes are equal
Therefore, what Zhang San truly owns is: 2/6 * cow + 2/6 * egg + 2/6 * duck
That is, 1/3 cow, 1/3 duck, 1/3 egg
At this time, Zhao Liu joins this game and he needs to provide a house
When he joins, the house is divided into four parts, and Zhang San, Li Si and Wang Wu each get 1/4
This is why from the perspective of EV, buying leads to an immediate loss of 70%+
