Token Redenomination - Crypto Academy / S4W3 - Homework Post for @wahyunahrul
Good day steemians,
Today’s topic is Token Redenomination. Following is my homework presentation based on the questions given.
Question 1
Token redenomination simply means renovating a coin to a suitable preference. Token redenomination happens when a coin increases in value which affects the liquidity of the coin or asset. Token redenomination is however practiced when the coin or asset is certainly increasing in value which in normal circumstance will make traders with low capital to find it quite difficult in trading in such asset or coin. Token redenomination is the process of re-establishing a coin to a certainly low equivalent rate which would give room to traders with low capital to go into trade of such coin. This is why token redenomination is practiced.
What distinguishes it from currency or other assets redenominations?
With respect to token redenomination, the coin undergoes replication such that the value of the coin is reduced after incurring an increase in value such that low capital traders will also be able to buy the coin since the purchase power would be less.
On the other hand , currency redenomination simply refers to the action where by fiat currency are revamped because of the considerable change in the currency’s purchase power. This is caused as a result of inflation in the currency. The function for currency redenomination is to aid curb inflation in the economy so as to make it steady
Question 2
Advantages of token redenomination
token redenomination bring about liquidity in the market of the coin because investors will dominate in the market since it’s has a lower value rate unlike when the price or value was increased which wasn’t favorable to traders with small capital.
The value of tokens becomes cheaper which allows investors with small capital to be able to invest in the token.
Attraction of more investors. With token redenomination, traders or investors find it more appealing to invest and also investing more due to the low value of the coin since at a cheaper value more of the tokens can be bought.
Disdvantages of token redenomination
when there is token redenomination , the token becomes unfamiliar to investors because of the changes made and may repel investors away from trading in such coin.
With token redenomination, it causes all orders placed by investors cancelled due to the restructuring of the token. This however causes some inconveniences to some traders.
it bring about inconvenience to traders or investors since with a new structured token, there is various changes which needs studying in order to invest in the coin.
Question 3
Sincerely there is no reason for token redenomination if the coin hasn’t exceeded the normal price limit. As said above token redenomination is only done on tokens which have crossed the normal price level. There are numerous coins in the market that are stable and infact servicing very well. Example I will consider the Tron (TRX) token. This token is one of the dominating tokens in the market with a very low price. Such tokens are stable and needs not any redenomination. There are numerous token similar to the TRX and even better ones. Bitcoin (BTC) widely known is one of the most stable coins in the market.
Question 4
Here I will be illustrating the procedures to convert old tokens to new tokens after redenomination. I will be using the PUNDI X token for the illustration. PUNDI X token is a token which is under redenomination.
Steps to follow
- step 1
Go to the PUNDI X official website. - Tap on Swap now as illustrated with the arrow.
- step 2
Once you tap on the swap now , you will be directed to the swap page. Now you can link to your wallet. - Go to wallet connect as shown below. Now you can tap on the wallet you want to connect.
Screenshot taken from pundix.com
- step 3
Here I will like to connect my MetaMask wallet. So I tap on MetaMask as shown below. It will take you to your MetaMask wallet indicating to connect wallet. Again tap on connect.
Screenshot taken from MetaMask wallet
Screenshot taken from pundix.com
- step 4
Automatically your MetaMask wallet will be connected and go back. Enter the amount of NPXS that you want to convert in the bar indicated with the arrow.
Screenshot taken from pundix.com
As seen i don’t have NPXS tokens in my wallet, However, after you enter the amount of NPXS tokens you want to swap, the amount of PUNDI X tokens you would be receiving will be displayed to you in the ratio 1000:1 respectively.
Question 5
Sincerely I have little knowledge as to whether the pundix token is worth investing in. However I would like to compare the pundix token with one of our reliable coin which is worth investing in which is the Bitcoin (BTC)
A chart of pundix token and BTC
Screenshot taken from CoinMarketCap
form the image above, it can be seen that the pundix token has a close range with the BTC. This is to tell that the pundix token is quite worthy of being invested in since it has a close movement range with the BTC which is a very worthy coin.
Below is the statistics of the pundix token
Screenshot taken from CoinMarketCap
Market Cap= US$0.33 Bn
Circulating Supply=258.492 M PUNDIX
Total Supply=258.492 M PUNDIX
All Time High=US$7.136
Volume 24h=US$26.589 M
Max Supply=258.527 M PUNDIX
Rank=#232
Market Dominance=0.02%
Conclusion
Basically, token redenomination is to help investors with low capital to be able to purchase the coin since the purchase power would be less. Token redenomination is regarded as the restructuring of a coin which has exceeded its normal value. It is also to increase the liquidity of the market.
I will to acknowledge professor @wahyunahrul for this was a very good topic which was very well explained. Thanks for the humble service for I have understood the lecture very well.