Token Redenomination - Crypto Academy / S4W3 - Homework Post for @wahyunahrul
1). Explain what is Token Redenomination in your personal opinion? What distinguishes it from currency or other assets redenominations?
Tokens Redenomination
Tokens represents virtual denominations of crypto assets/ currencies created by blockchain developers during their projects . The projects are created on prevailing blockchains that serve as improvisation for people who lack the assets to build blockchains on their own. Tokens are created via ICO’s initial coin offering and are used for investment and economic motives. The popularity or interest shown in a token will determine the price of a token. If a token appreciates/rise it means that there are many that show interest in that particular and when a coin depreciates it means that particular token is not appreciated by people.a good project will always receive appreciation and vice Versa.
Sometimes the influence of peoples interest affects the price of the tokens to rise to a very high price that makes it limited to investors with higher capital As investors with lower capital won’t be able to afford that particular token. The way out is Token Redenomination.
Redenomination refers to act of simplifying a currency/asset while not reducing the worth contained within the currency. Redenomination is a step taken by the developer of a particular currency to increase liquidity (buying and selling power) of that currency. In a case of formal currency (fiat) the owner/developer in the Central Bank(the Bank issuing the currency) in the case of my country (Bank Of Ghana).
2). Mention the advantages and disadvantages of Token Redenomination.
Increased Investments: Token Redenomination as said earlier on gives chance for investors with lower capital to invest. When redenomination is done large numbers with interest to in that particular token but will lower capital will also be able to invest in that token.this will turn benefit the developer and profits can be used to complete new projects.
Liquidity: when there’s token redenomination numbers of investors increase and as investors increase the buy and sell power of that token increases.
Project Growth: As more investors invest in a stock the developers get more income / funds which can help in developing new projects or completing ongoing projects.As developers do redenomination they modify the projects which intend attract investors and they get the idea that the project will grow.
Increased Market Capitalization: the market cap value of a currency influence the amount of popularity(interest shown in that token). If a particular asset has a higher market cap value then it means that asset in appreciated and investors will like to invest in it and the vice versa. An increase in investors will mean an increase in the market cap value.
3). Do all cryptocurrency projects need to do Token Redenomination? Explain in your personal opinion.
As interest shown in a token grows the price of that particular token Soars that makes limited to investors with higher capital ,investors with lower capital won’t be able to invest in that token again, liquidity will be difficult due to small number of investors, there will not be enough funds for completing or initiating new projects because of small number of investors, for this reason Redenomination is required to solve the above listed problems.
4). Choose a project that has or is currently doing Token Redenomination and show how to convert old tokens into new tokens. (Screenshot Required)
The Sun token is one of the the redenomination tokens found on the Tron Blockchain. It was initiated by an organization called sun.io which runs on the Tron Blockchain which serves a platform for liquidity.
Earlier this year, June 4th the founder of the Tron Blockchain (Justin Sun) Distributed a circular through his Twitter account and also the Tron foundation account which was aimed at pre-informing the members of the community about the redenomination of the sun token with a ratio of 1:1000 which implies that the sully of the Sun tokens was to increase a 1000 times that is from 19,900,730 to 19,900,730,000. This was done to eliminate or belittle the investment barriers of the Sun token and also facilitate the growth of the sun ecosystem.He added that the sun token deserved more value than the value it had, that with the qualities of the ecosystem, the sun token deserved a higher market capitalization.
the primary factor is to vary the name of the recent SUN token to "SUNOLD" and also the name of the "SUN" token are utilized by the redenominated SUN token and also the change in logo during The process of the redenomination also the transaction address of the sun token will change from TKkeiboTkxXKJpbmVFbv4a8ov5rAfRDMf9 To TSSMHYeV2uE9qYH95DqyoCuNCzEL1NvU3S for the redenominated Sun token. Other features like 3pool LP, SUN-TRX LP, SUN Stake, and SUN Stake&Lock Airdrop of SUN tokens for veCRV holders and Stablecoin Swap feature were added.
How to convert old tokens to new ones
NB: I’m using an iPhone and I have an app of Tronlink and not an extension so I couldn’t connect the just swap so I will like to demonstrate like that but I won’t be able to get all the required screenshots.
- Visit just swap
connect to your Tronlink wallet by signing into the wallet.
click on the menu button at the top right corner.
- To swap sun old with sun tokens click on sunswap in the menu.
the page below will be displayed
Enter the amount of Sun old tokens you want to swap in the first column the equivalent Sun tokens will be displayed in the second column, the click on confirm swap button to confirm.
pop-up will appear requiring you to approve the processing of the swap click on Approve.
a different pop up appears again which asks you to sign a contract, tap on sign.
a pop up will appear saying that the transaction has be processed and is awaiting validation.
After it has been validated another pop-up will appear informed you that the transaction has been confirmed.
5). Analyze whether the token from the project you chose in question number 5 is worth investing in. (Screenshot Required)
After Redenomination the Sun platform has made a lot of improvements aimed at user comfort which include:
Stable coin Swap feature.
Airdrop of SUN tokens for veCRV holders.
Liquidity Mining with 3pool LP, SUN-TRX LP, and SUN Stake& Lock and sun stake.
The market cap of the sun token has increased and which means many people show interest in the token , so it’s good to invest in the Sun token so that as it gains more value you can gain profit.
Conclusion
As interest shown in a token grows the price of that particular token Soars that makes limited to investors with higher capital ,investors with lower capital won’t be able to invest in that token again, liquidity will be difficult due to small number of investors . Redenomination is done to break all barriers of investment.
I hope I’ve covered all questions asked @wahyunahrul, thank you professor for the lecture.