RavenCoin Tokenomics Explained
If you don’t want to read the full article, the video below goes over everything written.
Tokenomics Definition
For those wondering what tokenomics are i’ll give a brief overview of what the word means. Tokenomics is a broad term which describes all the elements that make a particular cryptocurrency valuable and interesting to investors. This includes everything from a tokens supply and how it’s issued, to things like the utility case or basically what its goal is to achieve in the crypto market.
Ravencoin Overview
I will start with a brief overview of Ravencoin and then get into the main features of the coin which I think would be good to know for potential users and investors into the coin. Ravencoin was launched back in 2018 on the 9th anniversary of Bitcoins launch. The aim of the project is to create a blockchain optimized specifically for the transfer of assets such as tokens from one holder to another. Ravencoin was forked from a Bitcoin node so it has many similarities in the code but some changes were made. It’s also a very fair coin as the release was not favored to any parties involved in the launch. They had no pre-mine and no initial coin offering. Many coins choose to donate a certain percentage of block rewards to developer funds but raven coin has no developer fund so all projects builts on the network are done because they wanted to build them instead of having an incentive of the developer fund.
Ravencoin Burn Mechanics
The first unique thing about Ravencoin is that it has a burn mechanic. Burning coins is when you decrease the supply of a coin by sending it to a burn wallet, this wallet doesn’t allow transactions out so it takes the supply off the market. Ravencoin’s burn function happens when assets and tags are created on their network. They have various different costs to produce an asset and this is then sent to a burn wallet. So the more dapps created on the network, the more Ravencoin is sent to burn wallets. This way of burning coins is different as many coins just tend to burn at the rate of inflation. Currently there has been around 17 million coins burned which is around 0.02% of the circulating supply. This is a unique way of burning coins that allows for natural burning of coins instead of it being linked to inflation of a coin. However for this type of burning mechanic it needs more developers on the network who are creating assets. This would help burn more coins and start to decrease the supply of coins. To create an asset on the network you must pay a maximum of 500 RVN, which isn’t really that much when compared to the total supply of the coin. Maybe they are planning for the future when the price of the coin increases and it becomes more expensive to create assets.
Tokenomics
The block time for Ravencoin is 1 minute. They took Bitcoin’s block time and divided it by 10. So it only takes 1 minute to confirm a transaction on the network and this is one of the faster block times than most cryptocurrencies. When mining Ravencoin there is a limited supply of 21 Billion instead of the 21 million used for Bitcoin and they have the same type of havlings as Bitcoin. For the first 2,100,000 blocks the reward will be 5000 RVN. With Bitcoin the first halving was at block 210,000 so they have just scaled it up for Ravencoin. Recently back in january of 2022 we had the first halving for Ravencoin and the block reward has been slashed in half down to 2,500 RVN. So far miners have mined just under half of the supply and it will start to slow down with each halving, the current circulating supply is 10,500,000,000 which equates to a market cap of around $300 Million. This puts it at around #110 place in the list of cryptocurrencies. If you calculate every halving until the max supply is reached, then it shows us the last block will be mined in 2174, after that the mining rewards will be through fees on the network. This is the main aim of proof of work cryptocurrencies, to build enough projects on their platform to support miners when the block reward stops.
Ravencoin Mining
When it first started Ravencoin used X16R algorithm which was designed to be ASIC resistant, with the efficiency of ASIC miners improving all the time it eventually led to this algorithm not being ASIC resistant. So the Ravencoin team made a custom algorithm of their own and called it KAWPoW. It’s based on a very popular algorithm called ProgPoW, but has its modifications to keep ASIC’s off the network and allow fair distribution to GPU miners. Now this is great for GPU miners but also has its pitfalls which I think can be a bit detrimental to GPU mining. Firstly KAWPoW is very energy intensive on your GPU and tends to push your GPU to higher temperatures, this overtime will damage your GPU as there’s more stress on it. Now other algorithms aren’t as harsh on GPU’s so there’s more incentive to mine on them if you care for your GPU’s health. The loss in hashrate for Ravencoin could be a big factor when it comes to the price of the coin. Miners make up large amounts of transactions on the network, so if you lose miners then trading slows and your coins price doesn’t go up. I would suggest in the future they try to fork to a different algorithm that allows for better efficiency on GPU’s.
Ravencoin NFT’s
Ravencoin also has a large NFT platform which has been very successful for new artists that want to mint their art for less on smaller blockchains. It’s very community focused and I’ve seen that the Ravencoin reddit promotes a lot of projects that are minted on the NFT platform. So far the highest I’ve seen one NFT sold for was 10,700 RVN which at today’s price is around $300. NFT’s have been a big part of successful networks like Ethereum and Solana, it allows for more volume running through the network and causes the price to go up. When big projects are minted on the Ethereum network we see large volumes on blocks and this helps increase the price of the coin. Because Ravencoin is building this early on, it means that they have the infrastructure already there if more famous artists want to start minting on the network and creating NFT’s. Creating NFT’s also adds to the burning mechanism on the network, so they are adding to the deflation of the coin and increasing the demand on a small scale.
Asset Creation
Many cryptocurrencies allow for asset creation and Ravencoin has really put this on another level. It has a major focus on this as Ravencoin doesn’t use smart contracts to create assets like many other cryptocurrencies do. The best utilization would be for businesses that want to raise capital and allow for small time investors to invest into their business. For example, if you have a farm with 5 fields and different crops, you could create a main asset called ‘Farm’. Then 5 sub-assets which represent the 5 fields you have on that farm. Each sub-asset will be priced at different rates depending on what crop is growing that year in each field and how much potential profit it could make. Then people can choose to buy the token which is linked to that field. Then from there you can sell it to a buyer after every year when a new crop is decided to be grown on the field. This type of asset creation and selling allows for worldwide investment from anybody interested in getting into certain businesses. Now you’re probably wondering why this is any different to any other blockchain. Well firstly its not run on smart contracts, this is great as some smart contracts can have errors which down the line in the future may compromise the asset. Ravencoin simplifies and secures this because you just have your own main asset on the network and then anything under that asset is connected upwards. Overall it allows for any level of investment into any sub sector of a business, it’s like being able to invest in google before it was open to public investment. Even the smallest of companies can sell certain aspects of their business and this allows for more opportunity for capital to be invested. Ravencoin provides the perfect platform for this and it’s very cheap to get started.
