1)Explain what is Token Redenomination in your personal opinion? What distinguishes it from currency or other assets redenomination?
Token Redenomination is a situation where the owner or developer of a token decides to make simple a given token in order to increase the buying and or selling power of that particular token. This is done in most cases to enable smaller investors to easily partake in market activities which is what boosts the transaction power of that token in that market.
What distinguishes token redenomination from other assets redenomination or currency redenomination is that token redenomination is not initiated by any central bank or government as is the case with most currencies but it is initiated primarily by the owner or developer of that token.
2). Mention the advantages and disadvantages of Token Redenomination
Token redenomination is advantageous in that;
a. It gives more investors the opportunity to be part of the Market
Small investors are very much important in the growth of any token in a given market and the primary [purpose of carrying out a token redenomination is to enable and make easy for smaller investors to be part of the market. This helps the market to better trend and be more liquid.
b. It increases the token’s market capitalization. By Market capitalization, I mean the value index that investors in a given market use to determine how good and attractive a token or cryptocurrency is. This implies if the Tokens market capitalization is high, then one can conclude that the token is good and vice versa.
c. The redenomination of Tokens helps Project the growth of the Ecosystem. Redenomination of token attracts new investors who come in to increase the market capitalization of that token. When new investors join the system the project will always make new and better additions and modifications that go a long way to convince these investors and all of this brings growth generally to the ecosystem
Token redenomination is disadvantageous in that all trading and market activities which include trading, deposits, and withdrawals will be paused and suspended even 2 hours before the redenomination happens and for investors or traders with open orders, these orders might be canceled
3). Do all cryptocurrency projects need to do Token Redenomination? Explain in your personal opinion.
Personally, I think and suggest that all cryptocurrencies need to do redenomination seasonally because the different cryptocurrency projects are thriving towards a similar goal, and looking at the benefits of token redenomination we see that it helps the currency project better trend on the market which increases the token capitalization and generally makes it trend and more liquid so in my opinion, I will say that all cryptocurrencies need to do token redenomination otherwise cryptocurrencies and tokens who are redenominating their will eventually send them out of the market
4). Choose a project that has or is currently doing Token Redenomination and show how to convert old tokens into new tokens. (Screenshot Required)
For my project, I will love to choose the Sun token which is one of the redenomination tokens found on the Tron Blockchain.
The Sun token was invented by sin.io organization which runs the Tron Blockchain and which also serves as a platform for liquidity. Earlier this year in the months of June, the Organizations founder, Justin SunMade it known through a circular which he posted on his twitter account and also on the Tron foundation account which was aimed at creating awareness and getting members of the Tron community on the redenomination of the Sun token with a ratio of 1:100 which means that there will be an increase in the supply of SUN tokens that were originally 19,900,730 to 19,900,730,000. This was done to minimize the investment barriers of the Sun token and also facilitate the growth of the sun ecosystem which is one of the goals and advantages of Token redenomination.
He continued to make it known that the current capitalization of SUN tokens is still very low at $500 million when compared to its competitor Curve, which has a market capitalization of $5.8 billion and this caused the token to be undervalued. So, the token deserved more value than it had with the qualities of the ecosystem this token deserved a greater market cap
At the period when the sun token was redenominated, there were a number of changes that needed to be made to the Sun.io platform likes its name. It had to be changed from SUN to SUNOLD. Also, there had to be a change in the logo. Next, there will be a change in the contract address where the new SUN Token will be used, from TKkeiboTkxXKJpbmVFbv4a8ov5rAfRDMf9 to TSSMHYeV2uE9qYH95DqyoCuNCzEL1NvU3S. This and many other changes took place on the platform.
HOW TO CONVERT OLD TOKENS TO NEW ONES
The steps below will guide us on how to swap or convert old tokens to new ones
STEP 1
STEP 2
STEP 3
STEP 4
5). Analyze whether the token from the project you chose in question number 4 is worth investing in. (Screenshot Required)
6). Conclusion.
To conclude, Token redenomination if embraced by project developers will help them to boost and improve the quality of their projects and tokens. And as earlier stated it will not kick out small investors out of the market but will rather encourage them with their small capitals to join the market and all this is at the advantage and growth of the token. And investors too should be able to follow and monitor the progress of the projects often so as to keep themselves safe and free from scams and other schemes that are plaguing the crypto world today. Thanks for the lectures sir and thanks for reading my post