FUND MATH
The multiplier model within the Wastebin NFT collection is designed to reward holders based on two key criteria: the diversity of their collection and the duration of their holding. Here’s a brief explanation of how these multipliers work:
Collection Diversity Multiplier:
Holders are rewarded for collecting a variety of Wastebin NFTs, with specific thresholds set to trigger increased multipliers.
Achieving collections with 5, 15, or all 30 unique types of Wastebin contents boosts the holder's multiplier to 2x, 4x, and 8x, respectively.
This encourages holders to seek out and acquire a wide range of NFTs within the collection, enhancing the collectability and engagement with the project.
Holding Duration Multiplier:
This multiplier rewards the longevity of holding an NFT, promoting long-term investment in the collection.
Holders who retain their NFTs for 3 months receive a 1.5x multiplier, and this increases to 2x for those holding for 6 months or more.
The intent is to incentivize stability and reduce quick flips, fostering a committed and dedicated community around the Wastebin collection.
The cumulative effect of these multipliers directly influences the share of the community fund each holder receives upon distribution.
To conduct simulations within the scope of this section, we utilize the following simplified parameters:
Big Whales: 10 entities, each possessing 100 NFTs. They receive multipliers of 2x for holding and 8x for having a diverse collection, cumulatively resulting in a 16x total bonus. Their collective base contribution is 1,000 NFTs.
Whales: 30 entities, each holding 50 NFTs. Similar to Big Whales, they benefit from a 2x holding multiplier and an 8x collection multiplier, combining for a 16x total multiplier effect. Their total contribution amounts to 1,500 NFTs.
Dolphins: 100 entities, each with 20 NFTs. They are granted a 1.5x multiplier for holding duration and a 4x multiplier for collection diversity, leading to a total multiplier of 6x. The aggregate contribution from Dolphins is 2,000 NFTs.
Tunas: 200 entities, each possessing 10 NFTs. These holders receive a 1.5x holding multiplier and a 2x collection multiplier, totaling a 3x multiplier. Tunas contribute a combined total of 2,000 NFTs.
Crabs: 300 entities, each with 5 NFTs. They also enjoy a 1.5x holding multiplier and a 2x collection multiplier, which equals a 3x overall multiplier. Crabs' collective contribution is 1,500 NFTs.
Small Fish: 3,000 entities, each holding a single NFT. They do not receive any multipliers, maintaining their base contribution at 3,000 NFTs.
Adjusting for the distribution of the fund based on the multipliers for each group, the effective multiplier for each unit of initial investment is as follows:
Big Whale: 2.69x
Whale: 2.69x
Dolphin: 1.01x
Tuna: 0.5x
Crab: 0.5x
Small Fish: 0.17x
These corrected multipliers indicate the relative increase/decrease in the value of each initial investment unit after the fund's distribution, considering the specific multipliers for holding and collection completeness.
Now let's add further assumptions:
Mint price: 0,25 $SOL
Additional mint fees (on-chain cost + platform fee): 0,034 $SOL
500 free mints (giveaways and team mints)
80% of mint funds go to treasury
Royalties: 5%
That means that from 0,284 $SOL of initial investment (for 1 nft), 0,19 $SOL goes to the fund. So effectively ~67% of initial investment goes to the fund (including additional fees and free mints). Fund size after mint: 1900 $SOL We also would like to reach a goal of at least 100 000 $SOL of turnover in 1 year time. That would give additional 3000 $SOL to the treasury.
Considering upcoming bull market we can make additional assumptions (minimal goals):
ROI for initial mint funds in treasury: 4x
ROI for funds from royalties: 2x
So expected treasury size before distribution will be:
1900 x 4 + 3000 x 2 = 13600 $SOL
If our collection and portfolio will be successful those numbers can be much higher.
But let's keep our former assumptions. We get 13600/1900 ~= 7,15x With those assumptions we get ROI:
Big Whale: 19.23x
Whale: 19.23x
Dolphin: 7.22x
Tuna: 3.575x
Crab: 3.575x
Small Fish: 1.21x
Given the structured approach to the fund distribution and the projections for fund growth based on the Wastebin NFT collection's parameters, we can speculate on how these dynamics might directly influence NFT prices if they were connected to each holder's share of the fund.
The multiplier model is pivotal, enhancing the returns for holders based on their engagement with the collection. This engagement is quantified through the diversity of their collection and the duration of their holdings, with significant bonuses rewarding those who invest deeply in both aspects. This results in a stratified return on investment (ROI) across different holder categories, from Big Whales to Small Fish, with ROI ranging impressively from 19.23x for Big Whales to 1.21x for Small Fish under the projected fund growth scenarios.
This tiered ROI has the potential to directly influence NFT prices in several ways:
Price Floor Establishment: The expectation of a fund return can establish a baseline price floor for NFTs. Holders may be less inclined to sell below this floor, knowing the potential fund distribution they are entitled to, which can stabilize or increase NFT prices.
Increased Demand for Completing Collections: The high ROI for holders with diverse collections could increase demand for NFTs that are missing from collections, driving up prices for specific NFTs that are less common or needed to achieve higher multipliers.
Long-Term Holding Incentives: As holding duration positively impacts fund share, there may be reduced selling pressure in the short term, decreasing supply on the market and potentially elevating prices due to scarcity.
Market Perception and Speculation: The success of the collection and the projected ROI from the fund can attract speculative interest, further driving up prices as investors seek to capitalize on the expected returns.
Price Variability Based on Holder Category: The significant difference in ROI between categories could lead to a wide range of asking prices on the secondary market, reflecting the varied expectations of return among holders. This variability could create a dynamic market with opportunities for strategic buying and selling.
In summary, the direct connection between NFT prices and each holder's share of the community fund, as influenced by the multiplier model and fund growth assumptions, suggests a market that values long-term investment and active participation in the collection. If the Wastebin NFT collection and its associated portfolio perform as expected, or better, in the forthcoming bull market, the strategic structuring of the fund distribution could not only support the sustained relevance of the collection but also foster a vibrant secondary market characterized by strategic investment behavior and a robust valuation model.
Incorporating these financial dynamics into the Wastebin NFT project reveals a multifaceted strategy that not only rewards holders based on their engagement and investment in the collection but also fosters a self-sustaining ecosystem where the relevance of the collection and its turnover are intrinsically linked to the growth of the community fund.
The multiplier model, by incentivizing diversity in collections and rewarding long-term holding, naturally encourages holders to deepen their investment in the Wastebin collection. This engagement directly contributes to the collection's relevance in the broader NFT space, as active and committed participants are more likely to promote, discuss, and engage with the collection across various platforms. Such vibrant community activity not only enhances the collection's visibility but also its desirability, potentially attracting new investors and increasing demand.
Moreover, the anticipated ROI from both the initial mint funds and subsequent turnovers, as projected in our simulations, sets a compelling narrative for potential growth. For instance, with a conservative estimation leading to a 7.15x ROI for the community fund, the direct financial benefits to holders are clear. However, this financial growth mechanism is poised to create additional benefits that extend beyond mere ROI figures.
Additional Benefit: Enhanced Collection Turnover and Fund Growth
The structured financial incentives, particularly for those deeply invested in the collection (Big Whales and Whales), not only promise significant returns but also highlight the collection as a noteworthy investment within the NFT market. This perceived value, bolstered by the fund's expected growth and the strategic distribution of returns, may lead to increased collection turnover. Active buying, selling, and trading within the collection will not only keep the Wastebin NFTs liquid but also contribute to a dynamic market presence that attracts continuous attention and new capital.
As turnover increases, so does the collection's contribution to the community fund through transaction royalties. This cyclical growth mechanism ensures that as the collection gains relevance and sees higher turnover, the fund itself grows, further increasing the potential returns for holders. This creates a positive feedback loop where the success of the collection directly feeds back into the community fund, amplifying the benefits for all participants.
This synergy between collection relevance, turnover, and fund growth underpins a sustainable ecosystem where financial incentives and community engagement are mutually reinforcing. As the Wastebin project navigates towards its goals, these dynamics are expected to solidify the collection's position in the NFT space as a legacy project, renowned not only for its artistic appeal but also for its innovative approach to community-driven value creation and distribution.
Last updated