1). Explain what is Token Redenomination in your personal opinion? What distinguishes it from currency or other assets redenominations?
Token redenomination is a process whereby a token’s value is being reduced so those small investors can purchase and invest in it without the reduction affecting the value of the said token. Redenomination could also be defined as a process of dividing a token into smaller pieces whereby increasing its supply and making it affordable to small investors in smaller quantities. This project of redenomination is created on current blockchains where small investors can get hold of them.
This token redenomination functions in boosting a project thereby increasing the number of investors. Once redenomination is considered by a developer, a note is sent to all its investors who are required to agree or reject the proposal and also state how the token will be divided. So unlike token redenomination where the developers get to sent letters to the investors or token holders to decide if redenomination will occur, Asset redenomination will require a poll where the shareholders will have to vote either for or against the redenomination.
All the processes of token redenomination, currency and assets redenomination don’t have much difference as they all are very similar which all function in the breaking down of token, asset or the currency with the only difference being the way there are individually implemented.
2). Mention the advantages and disadvantages of Token Redenomination
Advantages of token Redenomination
Increased Market Cap:
An increase in the market cap value of a currency increases its popularity thereby attracting more investors to invest in the token.Liquidity:
When a token is redenominated, the number of investors increases thereby increasing the rate at which the token is being traded that is increasing the buy and sell power of that token.
-Growth Project:
As more investors invest in the token due to redenomination, the process becomes more popular and also provides developers with more income to developed to modify and also accomplish other future projects.
- Investment Increase
When redenomination is done, it attracts more investors as it will lower the price of the token and smaller investors will be able to participate in the project thereby producing more profits for the developers.
Advantages of token Redenomination
Token redenomination is a stressful process making users to lost interest in it
Due to token redenomination some tokens are lost as a gas fee charge
3). Do all cryptocurrency projects need to do Token Redenomination? Explain in your personal opinion
Token redenomination has its advantages and disadvantages and even though it has some juicy and intriguing advantages, it’s disadvantages should also be taken into consideration to this effect I will think not all tokens need redenomination some have already gained their popularity and are well built and structured that will not be needing the project while those with difficulty and with very small investors should, in turn, apply the project of redenomination.
4). Choose a project that has or is currently doing Token Redenomination and show how to convert old tokens into new tokens. (Screenshot Required)
Sun token is an example of a token that has undergone the redenomination process. It was introduced by the Sun operating on the Tronx blockchain which is the liquidity platform. Its redenomination is at a ratio of 1:1000 increasing the sun token to 1000 times facilitating the growth of the ecosystem thereby giving it more value.
Below we will see the convention of Sunold to Sun.
We will open the site Justswap
When it’s open you connect it to your wallet since am using the chrome extension it was easy connecting
Then it’s gonna open up the homepage where you insert the tokens you want to swap
Then you continue by confirming your swap and entering the amount to be swap as seen below
Then you confirm the transaction.
5). Analyze whether the token from the project you chose in question number 4 is worth investing in. (Screenshot Required)
After the redenomination, there was a lot of improvement on the Sun token like making
- The coin stable
- It’s safe and has a low slippage.
- it’s has a liquidity mining of SUN-TRX LP, 3pool LP and SUN stake.
Sun has a market capitalisation of $141,232,785
With a volume of $13,936,649
with a circulating supply of 4.97B SUN
Sun Market Cap Screenshot from CoinMarketCap
The Sun has a high supply and with a high circulation thereby preventing and securing the token from a dump. The current price of Sunold CoinGecko on at the time of this post creation is $0.02739922. Due to the deep in BTC, the price of Sun has deep too but am increased in the market cap for Sun implying many people have acquired the token thereby indicating people’s interest in the token. With this increase in its market cap, more people will invest in the token so increasing the value of its profit.
Conclusion
I want to use this opportunity to thank prof @wahyunahrul for such a great lesson and also draw out so great advantages and progress ways of token redenomination.
With token redenomination meaning to reduce a token without devaluing it has a lot of advantages and a few effects too. This project is a great means of advertising and boosting a project’s performance and also inviting more investors to partake in the project. And also developers should be careful not to lose the tokens in the process of token redenomination. This process so carried out to break carriers of all investors trying to invest in a token.
Cc : @wahyunahrul