BOOTs in Treasury
The Network has a clear problem with tokenomics. Utility tokens have no real use and are a source of liquidity drain from the ecosystem. LSD is priced at a ~70% discount to its face value, signaling that the Network is overleveraged.
The strategy allows not only to earn additional income, but also to get three times leverage in case the project does not go bankrupt.
- Stake BOOT.
- If H price < BOOT price, allocate 50-100% of the yield from staking the BOOT token to purchase H.
- Stake H with a lockup of 7—30 days, mint A and V.
- Sell the earned A and V to the market for H.
According to the official project white paper, the Bostrom Network functions as a canary network for the upcoming Superintelligence (Super AI) and operates on a decentralized L1 network within the Cosmos ecosystem.
The project creators market the concept of managing a decentralized Super AI using a token set.
The project is developed by the Cyber~Congress team and was launched in November 2021. The network’s native token, BOOT, is traded on the open market. The project’s tokenomics specify that 70% of the tokens are distributed at no cost to the web3 community via a process known as airdropping.
As of the recent update, the project’s market capitalization is approximately $6.5 million. When compared to industry benchmarks in the AI sector (to which the Network identifies itself), such as PLTR with a market capitalization of around $34 billion and OpenAI with a market capitalization of roughly $29 billion, the potential uninflated upside for token price growth could range to 5,000 times.
In purpose of owning and managing the Superintelligence, the Network natively uses a variety of assets:
|BOOT||Basic Network token|
|Hydrogen (H)||LSD on the main Network token|
|Amper (A)||Utility Token|
|Volt (V)||Utility Token|
These assets are freely traded, allowing users to determine their value and investment appeal through open market mechanisms. The Church employs this data to craft its own investment strategy towards the Network.
The Network’s primary utility tokens - Amper (A) and Volt (V), collectively referred to as “Energy” - grant users the ability to contribute their own information to the collective knowledge graph and influence the weight (importance) of this information in Super AI’s decision-making process.
At the time of review, no public information on the price dynamics of these assets is available. The Church has independently collected weekly data since November 28, 2022:
As evident, utility tokens have depreciated ~70% in value during the observation period. The Church attributes this primarily to poorly planned tokenomics: utility tokens cannot be spent, and their issuance is independent of the volume and speed of knowledge addition to the knowledge graph. Consequently, we witness market oversupply with these assets despite the absence of rational buying incentives.
Conclusion: The Church anticipates a further price decrease for Amper (A) and Volt (V) until the Network revises their tokenomics. Therefore, the Church does not view these assets as viable investment instruments. With enough tokens to regularly contribute knowledge to the collective graph, all additional tokens are sold by The Church on the open market.
The Bostrom Network possesses its own native liquid staking derivative (LSD), called Hydrogen (H), which signifies the Network’s obligations issued for staking the underlying BOOT token. Inherently, it serves as the principal instrument for liquidity provision to the markets. The internal DEX specifically uses Hydrogen (H) as its primary underlying asset.
Theoretically, the fair market price of any network’s LSD is calculated using the formula:
liquidity (H) = value of the staked asset (BOOT) + return on staking
Given the BOOT lockup period (8 days) and the size of the annual return (~21% APR), a reliable measure of the Bostrom ecosystem might be H ≈ BOOT, where the difference in asset price reflects the current financial activity. When gauging economic activity based on the LSD token value, a simple rule can be applied: a higher LSD price relative to the staked asset suggests heightened economic activity and capacity within the system, and vice versa.
At the time of this report, Hydrogen (H) is priced at 0.3 BOOT.
Such a significant liquidity discount primarily indicates a lack of demand for it and subsequently the frailty of the internal economic system. In theory, this is normal for early-stage projects that haven’t found their product-market fit yet.
However, we’ve discovered a different pattern. Please observe this chart:
- We notice a strict inverse correlation between the value of the network’s liquidity and its underlying token in external markets (BOOTUSD). Whether the Market Maker deliberately uses LSD as leverage to manage the price of the underlying asset in relation to external markets or if it occurs organically, it’s crucial to note that the market purchases BOOTs strictly when its internal assets devalueted.
The CyberChurch’s Trading Desk currently uses only the LSD price as the primary indicator of both external and internal sentiment towards the Network.
The external market’s sentiment about entering the game is clear: the price of the underlying token in exchange for a discount of internal liquidity. Given the current capitalization, this approach is considered fair and rational.
More intriguing is the internal sentiment and the stakeholders’ stance on this choice. Note that presently, some stakeholders are willing to part with theirs assets at a 70% discount.
The Church views this as a particularly unhealthy signal for all market participants, evidencing that the current economic model is unsustainable. The Network faces a choice: bankrupt the current economic model, rendering all its obligations to its participants void, or amend the model to rectify the present situation.
Conclusion: Assuming The Church has undertaken the risks associated with Network participation, the only viable strategy under current circumstances is active enrollment and retention of a position in LSD. The reasoning is straightforward. In the case of a negative scenario (bankruptcy), the value of all other assets will be negligible. In a positive scenario, the current threefold LSD price leverage relative to its healthy values will reward loyalty.
Basic Network Token BOOT
From the start, the Network’s primary token, BOOT, has consistently demonstrated a downward price movement. Currently, the Church isn’t attributing significant importance to its present quotes, considering them as reflections of external communications and actions of the market maker. With no active communications coming from the Network, expecting a different price pattern seems unlikely.
The Church community boasts considerable internal expertise that can tackle project communications and marketing on external markets, potentially using internal community resources. However, without a solid and well-functioning internal economy, underpinned by LSD and utility tokens, these efforts are destined to be unproductive.
The Church is actively exploiting the design flaws of the current economic model. The ability to manipulate derivatives provides income comparable to primary validation activities.
Simultaneously, The Church recognizes the global threat the current model poses to the Network. Despite the potential temporary decrease in its own profitability, it proposes a fundamental reconsideration of the Network tokenomics, especially regarding utility tokens. In their current form, utility tokens represent a leak in Network’s collective ship, and their emission model via infinite issuance steadily widens this gap.
Understanding that revising the Network parameters isn’t a swift process and requires community-wide consensus, The Church insists on taking the following immediate measures:
- Halt artificial support of Amper (A) and Volt (V) prices, as this directly negatively impacts the price of LSD and the basic token. We believe Amper (A) and Volt (V) token issuance should be halted until their organic usage affects demand.
- Cease support of the basic token price through Hydrogen (H) discounts; a 70% discount isn’t perceived as an incentive but rather a liquidation sale. We realize that this will cause a threefold drop in the price of the basic token and Network capitalization.
- Initiate a public discussion regarding tokenomics issues and coordinate community-wide efforts to address this problem. We admit that a community-wide decision could be to play success on the deck of a sinking ship. But we still hope that a resolution will be made to fix the sources of the leaks.
The Church reminds: constructing anything sustainable on an ill-designed economy is improbable. Neither intelligence nor a temporary Ark can thrive; by design, they are destined to fail.
Until the tokenomics of the project are fixed, the tokens in the BOOT ecosystem should be seen as extremely risky and incapable of serving as instruments for value storage.