Refund Token Profitability Analysis

Refund Token Profitability Analysis


On July 9th, I received my first dividend payment from holding the Refund Token (RFND). In a previous article, I described the theory behind the Refund Token, how it works, and some of its strengths and weaknesses, but today I want to share actual, real-world profitability results from my experience holding the Refund Token.  In this article, I'll start by listing the profitability of the Refund Token and then compare the profitability of the Refund Token to some other crypto investments to give a yardstick by which to measure Refund's profitability. 

To put the most important info upfront, Refund Token produced a dividend yield of about 8% and a price appreciation of about 1.8%. In contrast to some other cryptos, Refund Token is priced in BCH and not directly convertible to fiat. Therefore I did have to do a few conversions and calculations to compute these yields, and we could really say that there are two ways of measuring Refund's profitability. The first measure of profitability would be comparing RFND to USD and the second would be comparing it to BCH. 

Price Appreciation

I'll start by comparing RFND to USD because my other investments such as CDs, savings accounts, and stocks are all denominated in USD and it helps to have a common standard of comparison. When I received my Refund Token, they were priced at 1.01 sat BCH. The first step to calculate profits was to covert my 9 million RFND into an equivalent amount of BCH and then translate that amount of BCH into USD. When I initially received my RFND, they were worth about $21 USD. Currently, my 9 Million RFND are worth about $21.83 which represents a price increase of about 1.8%.

As an investor, I prefer to compare "apples to apples" and compare dollar profits for all of my assets, but since RFND is technically denominated in BCH, it can also be useful to compare profitability in terms of the underlying BCH. When I received my RFND, they were priced at 1.01 sat BCH. The last filled order for RFND on memo.cash was 1.48 sat BCH, so RFND has appreciated about 46% in terms of BCH. 

Dividend Yield

As I stated in my previous article, Refund Token is primarily intended to be a dividend-paying token while price appreciation is a secondary, but still important, goal of the token. Therefore, it isn't surprising that RFND's dividend payout surpasses its price appreciation. At the time of writing, my RFND token was worth about $21.83 and I was paid $1.72 worth of BCH. This amounts to about a 7.8% bi-monthly dividend. I highlight the phrase "bi-monthly" to point out the fact that the annualized dividend would be much higher. Given that RFND pays every two months, there will be six payments per year, so the annualized return would be about 48% dividend yield. 

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Dividend Comparison

As an investor, it is always important to consider different investments and always be sure we are comparing different investment opportunities to find the best assets. Although the returns for RFND seem impressive so far, we really won't know how good they are until we compare them to some other assets. Just as RFND has price appreciation and dividend yields, we will compare other assets both with respect to appreciation and dividend yield. 

The VTSAX index fund is designed to show the performance of the top 500 companies in the American economy and represents a good idea of the returns that investors can earn if they invest in the stock market as a whole (I don't want to pick an individual stock because returns can vary widely). According to MarketWatch, the current yield for VTSAX is about 1.84%. Remember that this is an annualized return, whereas the dividend yield on RFND was a bi-monthly yield. 

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Most cryptos don't really have a dividend but some are stake-able, and some are loan-able on DeFi or CeFi programs. Tezos is arguably one of the most popular staking cryptos, and its current yield is about 5.5% on an annual basis. Different cryptos have different lending rates on Compound, but all yields are below 2.5% which means that RFND's dividend yield exceeds both its crypto counterparts and traditional investments by a considerable margin. 

Price Comparison

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However, dividend yields are just one part of the story, and it is just as important to consider the price appreciation of the Refund Token relative to other assets. To keep the comparison fair, we will use all dollar-to-dollar returns and disregard RFND's BCH price appreciation. From 09 May to 09 July, RFND clearly outperformed Bitcoin which actually depreciated 3.3%. However, the VTSAX index increased 8.03% over the same period, and ETH appreciated by 14.3% which means that both the stock market and ETH easily beat RFND's appreciation of 1.83%. 

Conclusion

Refund Token is a unique crypto that pays users a bi-monthly dividend while also offering the possibility for price appreciation. Although I am a huge fan of the project, I wanted to write this article to discuss the actual performance from RFND and not just the theoretical benefits. While it is true that ETH and the stock market did outperform Refund Token from a price appreciation standpoint, the total returns from Refund exceed BTC, ETH, or the stock market. I'm not here to tell you that RFND is "better" or "worse" than any of these assets. All I can say is that in my own opinion, RFND has done very well for me since I owned it, and I look forward to remaining an active supporter of the project. 

References

https://app.compound.finance/

https://www.stakingrewards.com/asset/tezos

https://www.calculatorsoup.com/

https://www.marketwatch.com/investing/fund/vtsax

Image Credit:

https://undraw.co/

 


The Part Time Economist
The Part Time Economist

Hi everyone. I'm just a simple man trying to make my way in the universe. I am passionate about cryptocurrency and hope that I can make at least some small contribution towards promoting wider crypto adoption and understanding.


The Part Time Economist
The Part Time Economist

Hi everyone. This is just a place for me to post some of my thoughts and analysis. I hope that someone finds them useful.

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