Should U trust, UTRUST?
I came across a new project the other day called UTRUST, it’s a payment solution akin to PayPal but with the added ability of being able to checkout in any cryptocurrency you desire. This sounds fantastic, a real workable solution to a problem that is likely to be very prominent in the coming years. Needless to say I was interested in the project and started digging in to find out more. After looking through their website and reading the white paper however, I have some issues!
I’m going to dive a bit deeper into my thoughts and feelings, but I wanted to just preface this by saying I don’t have the answers to all the questions so would be very open to further discussion on this, and I don’t want to openly trash a promising looking project but I feel like I need to air my concerns.
Token Value
Normally when projects openly discuss the value of their own token or the potential investment opportunities of said token on their website, it throws up a red flag. From a professional/business stand point, dedicating any time or screen space to anything that isn’t pertinent to the project and how you’re going about solving a problem, is an issue for me. UTRUST don’t discuss this at any length on their website (but they do dedicate a full section of their white paper to it. (Page 19 — Value and Strategy).This section refers to the ‘burning’ of UTRUST tokens to increase it’s value, here’s a quote from the white paper:
The higher the volume of transactions in the UTRUST platform, the higher the potential market value of the token. Since a percentage of the transaction fee is removed from the pool in each market transaction, the more UTRUST platform is used (with any crypto), the further the price of UTRUST appreciates, a built-in adjustment that acts as our self-correcting mechanism
Followed by
This so called intrinsic deflationary engine makes UTRUST not only the safest platform, but a great utility token with growing value.
I can understand this approach as a way to entice more investors to the ICO, helping to possibly alleviate any worries about future value, or as a marketing tool to incentives investors or token holders to promote the platform as it’s within their best interest. But I’m a little concerned about it’s appearance in the white paper and it’s prominence on the website (including their informational video).
This dynamic adjustment of the fee burn rate will be managed by the UTRUST platform analytics engine with the goal of balancing token supply and demand while encouraging transaction growth.
This implies that by reducing the token supply, transactions on the platform will subsequently increase? If anything it may do the opposite, encouraging holders of the token to HODL in the hope of future returns. Having a fixed token supply is in and of itself deflationary when compared to FIAT currency, so by further deflating the supply (“at a rate no faster than 50 million a year to a minimum cap of 100 million”) you are adding additional value to a token that would perform its duties better if it wasn’t seen as a valuably asset. This is one of the issues with Bitcoin being used a currency, it’s seen as too much of a valuable asset to use as a medium of exchange.
The way this system will work is UTRUST take a 1% fee from a transactions, then use a percentage of that fee to ‘buyback’ UTRUST tokens that will then be ‘burned’.I can’t help but feel this is added complication to a project that has a big enough hill to climb. It’s comparable to PayPal burning a percentage of their stock for each transaction. That’s great news for investors but doesn’t help the company grow or gain more users.
Ultimately I’m not sure what position to take on this. On the one hand you have a much needed solution to a growing problem, and with an initial token price of $0.065 if you were to invest just $100 and UTRUST went on to gain just 5% of PayPal’s $80 Billion market cap, that would be a huge return on your investment. But on the other hand you have a business that in a Medium post about their project openly endorsed HODLING its ‘functional’ token?
As always please share your thoughts on this, I want to believe in this project! Am I wrong?