Unibright: How High can the Market Price go?
Previously there has been much discussion about the price potential of the UBT Token and the accompanying Token Model. Despite this, many still skim the blogposts and fail to see how it is possible to reach more than 14 cents when that is the “Refill” price existing clients will pay to continue using the framework. Therefore, I think it is worth dispelling some myths and misunderstandings about how the tokenomics of UBT work. These are my own thoughts and analysis as a token holder, and I have decided to share them with you all.
The token model defines three stakeholders: Clients, Unibright and Token holders. Clients can only buy their initial tokens off of Token Holders. To use the framework clients must lock 30 days’ worth of usage in the framework, once locked they can never be withdrawn by the client. Unibright can only sell back the tokens that client used if they have bought on the market and then locked the tokens in the framework, and the rebought tokens are also locked within the framework by default.
In short, the framework is a closed ecosystem that can only be accessed by buying tokens on the open market. Once you are in the closed ecosystem you can rebuy your used tokens from Unibright directly, but your tokens can never leave the framework again. The graphic below explains this in a simplified way:
The “refill” price is 14 cents, why would anyone pay more?
A lot of people instantly focus on the refill price of 14 cents. But they miss some of the more subtle points; The only way to access the Unibright Framework, and be able to refill used tokens, is to lock 30 days’ worth of tokens in the Framework.
Perhaps refill is a poor choice of words. It is more like a subscription fee based on your monthly framework transactions. The whole point of charging 14 cents per “refill” is that this is the fee Unibright charge a client to make a transaction within the framework. And this is probably where the confusion starts to arise. Because people think that the client is physically buying tokens each month for 14 cents that they can use how they please. This is not the case, as the only function of the tokens rebought within the framework is to pay for transactions. They would perhaps be better described as “1 UBT Transaction Credit”.
On a similar note, I think the initial tokens bought on the market could maybe be better described as “UBT Access Tokens”. To access framework features you must deposit the number of tokens equivalent to one month’s worth of transactions on the framework. When your “UBT Access Tokens” are deposited, they become the untradeable “1 UBT Transaction Credit”.
In summary, the tokens that are bought on the market are different to the those that are rebought from Unibright through a “Refill” Contract. The “UBT Access Token” gives access to the Framework and transactions within the framework, while the “1 UBT Transaction Credit” can only be used for transactions within the framework.
But still, how can UBT go above 14 cents?
What I am leading up to here is that the “UBT Access Token” bought on exchanges offers much more than the “1 UBT Transaction Credit” that is bought through the framework. The "Access token" gives you access to the powerful Unibright framework, but also gives you a voucher for one transaction within the framework, worth 14 cents. It can also be traded. So, the “UBT Access token” is much more than just one 14 cent “UBT Transaction Credit”.
Ok. But how much more?
The best way to examine the price a client would potentially be willing to pay for the “UBT Access Token” is to look at two key costs a client faces when implementing a blockchain solution.
The first is development costs. Blockchain developers are in increasingly high demand, and development can also be time consuming as most solutions currently start from scratch, and therefore the costs are high. Additionally, Blockchain adoption is still in its early stages. So, the development savings from a client’s perspective should take into account that using the Unibright framework will have minimal developer costs, will be significantly quicker and simpler to integrate using a template solution, will be proven solution and, ultimately, using a Blockchain solution should bring them some sort of overall advantage.
The second consideration is the day to day costs of using the framework. Yes, the monthly cost for a client is the number of transactions multiplied by the agreed “Transaction Credit” Refill price, but the reality is that what is likely to be the more important cost is the “Average Transaction” cost for the client. This is relatively simple to calculate. For example, if you need 100,000 tokens and the market price is 20 cents, and a “Transaction Credit” refill contract is agreed over 12 months at 14 cents, then to calculate the average transaction cost for the client you will need to do the following:
This is a very good price to be paying for a transaction in an enterprise situation. It is difficult to make direct comparisons with other companies, such as IBM and Hyperledger, as their pricing structure is based on running nodes, how many, what spec and so on. Again, this is potentially a plus for Unibright, as their pricing structure is simpler, more transparent and easier to calculate with.
Looking at the above example, the calculation for the average transaction cost can be generalised into:
The official token model explains how a market price of $1.40 for the “UBT Access tokens” combined with a discount on transaction fees of $0.12, because they take out a 36 month refill contract, means that the average cost per transaction has only risen slightly to $0.15 cents (admittedly, this is truncated rather than rounded, you can use the above formula to run the calculations if you wish). Therefore, it can be seen that a price of $1.40 is more than achievable, as it will have very little impact on the long-term costs of using the framework.
But this formula only takes into account the day to day costs of using the framework, and ignores any of the savings in development costs when opting to use the Framework and its templates over the alternatives. If we consider that these savings from using the framework can only be accessed by buying UBT “Access Tokens” on the market, then the price potential really gets interesting, as the average cost per transaction can be offset significantly by these savings.
If we take the previous example used, 100,000 tokens and the market price is 20 cents, and a “transaction credit” refill contract is agreed over 12 months at 14 cents, but we now also estimate that using the framework will save $10,000, then to calculate the average transaction cost we would need to adjust the formula as follows:
As you can see, this has led to a significant reduction (just over 5%) in the average transaction price. In fact, in this scenario, where a client needs 100,000 transactions per month, and they made a saving of just $10,000 the market price can actually be $0.24 and still have an average transaction cost of 14 cents exactly. If we take this example further, we can do a table of values of potential savings and market prices, while still keeping the average transaction cost at the low price of 14 cents.
As you can see, the bigger the savings, the higher the market price can be while still maintaining a very low average price per transaction. But there are many other variables that can make the solutions offered by Unibright affordable while still having a market price that some may consider unachievable in the long term. When the market price is considered separately to the cost of transactions, you can start to see that there is potential through the token model to push the market price high while still maintaining a low average transaction cost for clients. Below is the generalised formula (although I have also created a spreadsheet for quick calculations, that I will share separately).
Of course, the development savings are important, but don’t forget that the Refill contract price and length also play an import part. Let’s assume that our savings are a reasonable $25000 and that our target for Average transaction price is still just 14 cents. If we use the examples given in the official token model for the kind of discounts that are available for signing longer contracts with Unibright, we can see that even with these modest savings, the market price is still affordable for clients at well over $1 in price.
Some may still doubt the potential for the market price to rise to $5, but the formula used above would indicate that this is more than possible. Below I have outlined a few randomly chosen scenarios where this would happen:
Clearly all these calculations are theoretical, and a few assumptions have been made, but I do hope that it has helped clarify that 14 cents is not a limit placed on the market price by the token model. I do hold Unibright tokens, and of course I want the price the increase considerably over time, but I know that this will not happen overnight not is it guaranteed to reach these highs. But the potential is there. I have carried out the above calculations myself, and asked many questions about the token model. The Unibright token model is unique, and definitely not straight forward and easy to understand. While the majority of tokens and coins are driven by speculation, it is clear that for the token model to work as intended, the focus needs to be on high quality templates and getting clients using the framework.
None of these calculations consider implications of the “ever decreasing circulating supply” and the increasing demand for the token, nor do they rely on the usual “Crypto speculation” ideas such as “FOMO”. Another consideration, could be if a client is running a solution where they are making profit on every transaction that they execute through the framework. That could be another variable to consider when calculating how high the price a client would theoretically be willing to pay.
Official Unibright Token model Update Blogpost
Original Official Token Model Blogpost
Summary: The Unibright Token Model
Unofficial UBT token price calculator Spreadsheet
File still to be uploaded…