Introduction
Hello to everyone,
Our topic in this post is Token Redenomination. The professor explained this to us in a nice and detailed way in his lecture. In this post, I have an assignment that I prepared in line with the professor's directions. Let's start.
Question 1
Explain what is Token Redenomination in your personal opinion? What distinguishes it from currency or other assets redenominations?
Before we talk about Token Redenomination, we must make sure that we know correctly what the concept of Token means.
Token is a cryptocurrency created to represent the performance of any blockchain project. The token allows us to get preliminary information about how good or how bad a project is. It is possible to arrive at a rough definition of the higher the token value, the better the project, or the lower the worse the project. However, this does not apply to all tokens, and it should not be forgotten.
As we mentioned before, the value and working logic of a token allows us to determine the size or success of the platform that controls that token. When a project starts to grow, the token price automatically rises. Most of the time, this rise is not a permanent rise, but when there is a permanent rise, it seems good for this project, but it is not always so. It is not possible for everyone to have access to a token whose price is too high, and small investors cannot access these tokens. For this reason, an inflation occurs on the market of this token and the liquidity ratio on the market decreases. As a result, it is possible for large investors to dominate the price. To avoid this situation, Token developers decide to rename the Token, which is called Token Redenomination.
Token Redenomination is the process of making an adjustment to the Token price. In this way, small and normal investors on the market have access to the token. In this way, they regulate the inflation on the market and increase the liquidity of the market. In addition, while this process is taking place, they also include innovations on the project.
Question 2
Mention the advantages and disadvantages of Token Redenomination
Token Redenomination has many advantages and disadvantages. We will cover many of these in this section.
- As we said before, the most important advantage is that small investors have access to the token, so they can invest.
- Provides a significant increase in buying and selling of the token on the market. In this way, we can perform faster and healthier transactions when buying and selling.
- Significantly increases the liquidity ratio of the token on the market. The more traders can invest, the more it increases.
- Generally, this transaction takes place with a zeroing on the price. In this way, the token price will decrease and the amount of tokens will increase. This attracts more investors and leads to an increase in the number of investors.
- In general, this is a transaction performed by projects with very high prices. This is an indication to us that the project is working well.
- While Token Redenomination is taking place, project owners generally do not only change the price, but also innovations on the project. For this reason, it causes a good project to grow more and increase the interest on it.
- Due to the lack of information, many traders do not view this transaction positively and the investor may lose.
- Since this transaction is voted on by a letter presented to the investors, investors who do not want this transaction may abandon their investments.
- Many new investors may be afraid to invest because they do not have enough knowledge about this transaction.
- Sometimes the name of the token changes during this process. Therefore, investors who do not follow the news may be unaware of this innovation.
Question 3
Do all cryptocurrency projects need to do Token Redenomination? Explain in your personal opinion
Not every cryptocurrency project needs to do this. This is generally good for cryptocurrency projects where the price is too high, liquidity is low, and the number of buy/sell transactions is low. E.g; Despite the high price of Bitcoin, the buying and selling process is very easy and has a high liquidity market. In this way, every investor has the opportunity to invest in a very easy way.
This process can also be bad for a well-known asset, so most cryptocurrency projects don't prefer it.
Question 4
Choose a project that has or is currently doing Token Redenomination and show how to convert old tokens into new tokens. (Screenshot Required)
In this section, I will provide information about the Token Redenomination process of the PUNDI X token.
PUNDI X token will be redenomination from NPXS to PUNDI X. It is a blockchain token that uses the Ethereum Network. The redenomination process started on March 30, 2021. Every 1000 NPXS will be 1 PUNDI X when this operation is performed.
There are three ways to do this.
1. Manual Swap on PUNDI X official site
- First, we visit the PUNDI X platform.
- We press the "Swap Now" button, which I showed with the box in the screenshot above.
- It then directs us to the platform where we will perform the exchange.
- After that, wallet linking options appear. I click this option because I have the Matemask wallet.
- Our Wallet connects correctly after giving the required Matemask approvals.
- Then we are greeted by a screen as in the screenshot below.
- I can't trade because I don't have enough NPXS. However, in this section, we enter the amount of NPXS to be traded, and then below we are shown the amount of PUNDIX we will receive. After confirming the transaction, the swap is done.
- ETH gas fee is charged as this transaction takes place on the Ethereum network. This can be somewhat costly.
2. Automatic Barter with XWallet Owners
- XWallet owners do not need to take any action. The swap will take place automatically.
- Since this process is automatic, you do not need to pay any gas fees.
3. Automatic Clearing on Supporting Exchanges
- Transactions will take place automatically on supporting exchanges. Users do not need to do anything.
- You will not pay any gas fee as this will be done automatically.
Question 5
Analyze whether the token from the project you chose in question number 4 is worth investing in. (Screenshot Required)
PUNDI X is a very beautiful project and its goals are further from today. PUNDIX does good work on the daily use of cryptocurrencies. These are steps to improve the ability of blockchain users to pay with cryptocurrency when they go to any cafe or store.
Headquartered in Singapore, it has shipped the XPOS solution and devices to over 25 markets, including the United States, Spain, Argentina, Korea, Australia, Colombia, Spain, and Taiwan.
In short, the goal of PUNDI X is to make cryptocurrency spending as easy as a credit card. Therefore, it is a beautiful and promising project.
At the same time, the PUNDIX coin has fluctuations just like many other coin prices. Therefore, traders can also use it to make a profit in their trades.
Market data as you can see in the screenshot above:
Current Price = 1.27 USD
Volume (24H) = $27,824,969
Market Cap = $328,615,813 USD
Circulating Supply = 258.491,637, 23 PUNDIX
- As we can see in the screenshot above, the price chart has fluctuations and is suitable for trading. There are good ups and downs.
- We see on the chart that the price is at a low level momentarily. I think the project is a good one and I have no doubt that its price will rise considerably in the future.
Conclusion
In this lesson, I think that I have shared something that can benefit even those who have no knowledge of Token Redenomination. I have tried to convey to you what this process is for, its advantages and disadvantages as much as I can. In this course, I both researched and learned while researching, so thank you professor @wahyunahrul for this nice lecture.
Thank you to everyone who read my post. I wish you all a healthy and beautiful day.