Merit Circle - Long-term value

Unique Positioning, Competition & Comparative advantage

$MC Long-term value, Unique Positioning & Competition …

Folks keep asking :

" Are you worried about other guilds ? "

In order to address this question, we must first ask ourselves :

What are Merit Circle’s qualities that allow it to not only not be hurt by competition, but benefit by their introduction into the metaverse / p2e space (unique comparative advantage) ?

In my last article, we introduced Merit Circle, and briefly touched a bit on its unique positioning as a value-add to the space …

One cool thing about competitors in this space (P2E, Metaverse & specifically in Merit’s case), is that the more eyes / players / guilds / scholars / investors & attention that comes in, Merit … should be in a unique position to benefit (not compete) with other entrants. Think of $MC like a blanket that continues to spread out to accommodate an ever-wider pool that is the blockchain digital gaming / earning economy. Each new piece not only fits, but is like an additional cog in the wheel that makes participating … all that more appealing (& potentially profitable) for all parties involved.

Why is it that Merit benefits from competition, & others may have a more difficult time? What is it’s edge?

The answer lies primarily in Merit’s unique positioning as a metaverse hedge fund / index.

At its core, Merit is basically an index : they are strategically investing into the most promising games / guilds via their seed rounds (outsized ROI potential), granting them access to discounted NFT deals (land, profitable & scarce items, etc) from these exclusive partners.

This is the key reason I was initially drawn to $MC as an investment thesis, and continue to hold with strong conviction for the long term.

Can this comparative advantage be copied / easily outcompeted ?

In the case of Merit, if a new market entrant acquires, partners, shills or otherwise benefits the assets that the Merit DAO already holds in its treasury - that is a net on net benefit for $MC & its stakeholders - it is a GOOD thing.

Bottom line : Whether or not you think more market entrants are / are not beneficial for Merit, as long as the assets said entity acquires also benefits Merit (mutual incentivization), both entities share a mutual benefit of price appreciation on acquired assets (vs. competing). It’s in Merit’s vast network of backers, team experience, network, tacit knowledge / skillsets and vision (think : being early), that allows it to retain this unique positioning.

Tokenomics & Positive Feedback loops as incentive on price

A quick foreword on recent $MC listing on Binance Launchpad …

While true that the recent listing of $MC on Binance via the Launchpad model might contain both pros & cons for the project short-term (mostly due to short-term unlocked staking rewards), longer term, this increased visibility & volume, like prior launchpad projects before it, should serve as spring board to much higher levels than would have been seen without.

Reference @Sp33dyCrypto ‘s excellent analysis below on prior launchpads :

Speedy @Sp33dyCrypto

From the above analysis Im confident we will see a good returns after farming ends or perhaps somewhere in the middle of launchpool farming as supply goes shock anyway. With catalysts and reports on revenue+buybacks from revenue. $MC is the strong contender to outperform them all

Moving forward - I expect this early launchpad period in $MC ‘s life to be regarded as the bottom of the chart. We can compare this to $ILV’s early chart history - which saw a similar ‘ spring board ‘ carved out - this was a period in Illuvium’s life prior to staking vaults going live, which could serve as an apt comparison (besides the fact that their token models are quite similar).

$ILV early chart history (prior to staking vaults)

$MC early chart history (includes binance launchpad)

Moving Forward : Long-term Staking - Based on successful Synthenix & Illuvium Token models - :

After the initial Binance launchpad era ends (& its associated mild inflation, ETA ~1 month) - the only way to take advantage of $MC’s staking rewards will be to first make a long-term commitment to the project, as all staking rewards will again be subject to a 12 month escrow period. This is important, because it does more than just prevent token dumps & added tokens to circulating supply - in essence, the 12 month escrow period tells prospective stakers / supporters of the project, “ Hey, we see you, we would love for you to be a part of this community, & reward you with our tokens, but in return, we need you to stick around ! “. This is in contrast to other ‘ guild-like ‘ projects / models that simply ‘ gift ‘ large allocations early to a vast swaths of predatory VC’s - the mindset here is : where there is an opportunity / quick $ to be made, opportunists arrive. In the case of Merit & it’s $100m+ LBP fair launch, quite a few cash grabs, ‘ me-toos’ & opportunists have shown up - this is to be expected.

One key to hone in on that made the $ILV (Illuvium) staking model - and continues to make the project / community as a whole, so successful to date is the 12 month escrow period on vault staking rewards for early backers. $MC has a similar model, with a few enhancements, including buy backs & burn mechanisms (which also further support price).

An interesting note about $MC staking : as more folks that participate and liquidity deepens, although the earned APR (for staked rewards) will lower, it is key to remember that folks that wish to take advantage of this APR must first acquire $MC tokens on the open market (in either single or double sided staking programs). This, in essence, creates a feedback loop of positive incentive on price, whereby the net on net reward for early supporters / stakers is enormous. (this dynamic is also partially true on the binance launchpad program - although users / participants can also opt to stake $MC using non-native tokens, such as BNB, for remainder of the program).

Again, although the price in & of itself doesn’t actually increase ad infinitum, it is supported by the continued influx of market buys - in order to acquire the requisite $MC to stake and earn further rewards. This results in a much more robust, long-term sustainable / healthy APR for backers. It’s a good system that rewards long-term holders, & disincentives short-term minded flip & run behavior.

DAO Revenue (Games, NFTs, Investments, etc) - :

While an integral & important part of Merit’s ecosystem - Perhaps the smallest component from an ROI standpoint comes from revenue directly sourced via Merit’s scholars / gamers.

A large component with Merit that is easy to overlook for many is the fact that, unless you are a VC or private-level investor, it will be very difficult to attain the same assets, for the same prices that Merit’s DAO attains (and $MC token holders benefit from). It is not a stretch to imagine that some of that DAO revenue / ROI eventually will find its way back to benefit price (via buybacks / burns) of the native $MC token - see ‘ Revenues from strategies used to buy back $MC tokens ‘ in the below figure.

Visual representation of the treasury mechanics of the Merit Circle DAO

According to the Merit team, this process will be ongoing and the treasury will constantly grow its holding of non-native tokens while they continue to invest in P2E.

Merit has also published their first treasury / transparency report, which documents key investments and their market performance as of Nov. 30th 2021, and gives an eye into their overall financial position -

#2 - Treasury report December 2021

Using this report, we can see some standout performance :

• GENE : 25k$ inv -> now worth 500k$

• PYR : 125k$ -> now 1.xM$

• UFO : 50k$ -> now .9m$

• PathDAO (a more recent investment by the DAO) at 200k$, we can project is now valued 2m$+ based on recent price performance

♐ Key takeaways …

• Whatever grows the space of gaming / nft / metaverse / p2e (be it a guild, game, fund, etc.), Merit Circle, & thus, $MC holders, benefit - at seed level.

• Merit’s vast network of backers, team experience, network, and tacit knowledge / skillsets allows it to retain this unique positioning.

• Increased appreciation on assets held in treasury = higher ROI = greater potential for buybacks / burns = higher $MC price / greater yield.

• Positive Feedback loops on price, incentivized by staking, reward long-term community thinkers and supporters, born from the proven success of the Syntheix & Illuvium communities.