SLT valuation formula, part 3 of many

Based on part 2 of my token valuation thinking, let’s dig into SLTs:

• utility value (price for service * quantity sold)
• trust in the project to manage the token to be a store of value.

To summarize below, I

• have a mixed perception for the SLT value in all time frames (short-, medium- & longterm), the range between the positive and negative is large
• still think the risk-reward looks atractive

SLT utility value

I’m very bullish on the crowdfunded ABT!

We have a benchmark for Smartlands here in Sweden, a company called Tessins that crowfunds lending for properties in the traditional lending way. Minimum investment varies but I would guess average $3.000, loan time 1-3 years and you need to hold the investment stipulated time and an interest around 10%. In three years, they have gone from 0 to $130 million in funded loans through 116 projects and atracted 43k investors. I find 23 people on their home page as staff and the company was profitable already the first year in operations (2016) without large accumulated losses in preparation phase. Tessins shows that there are many retail investors looking for fixed income investments when we get close to 0% in money funds.

Smartlands plan is to do property, business and agriculture on global market, with no minimum investment requirement and possibility to sell your token during term. In total a much better proposal and opportunity compared to the Swedish benchmark.

So far, the pace in Smartlands preparations have impressed me, a little bit over a year from ICO to soon the first ABT. Looks like Smartlands have a good team in place in many different areas as crypto, IT, financing, sales, rules and laws etc.

I was a little bit bothered when the fee structure was announced, was sure the service fee was going to be paid by the lender, but they choose the other way around. I assume one of the reasons for this is the secondary market: the ABT price will most likely be a little bit higher then par value since you don’t need to pay the 2% fee.

Updated text after re-reading the information about fee structure:

Smartlands have only released the investor part of the fee structure. From the news release “We should point out that the fees mentioned here are not the only ones on the Platform. In fact, the list is long and boring, but it’s crucial to familiarize yourselves with it. However, we feel that it’s the topic for another discussion.”

From a project start up perspective Smartlands is a black hole. Organized as regular company with low or no transparency on owners, funding and financial position, organization and staff, short term activity plan, mid and long-term strategy and vision and so on. Key persons SLT holdings are also unknown. We have even less information then a regular equity-based start-up.

I have no clue on what volume the Smartlands team aim, below one guess.

The utility value, here “Total SLT purchase volume $”, is not huge but it’s “chasing” very few SLTs. Last week we had a trading volume of $82.000 on my guestimated 700k SLTs ($1,6 million) nonHodl volume. 

We all hope for the positive loop to start: “the utility value” creating an increase in price when buying the nonHODL share, attracting more HODL buying of the now lower nonHODL share increasing an even higher price, in a “never ending” loop.

Risks

• Most start-ups run into same finding; the initial time plan and budget was too optimistic. How patient are our unknown owners and how much funds are they willing to risk? What new questions will pop up at and after launch?
• All SLT holders might not have same information. Large SLT holders related to the Smartlands team, institutional lenders/borrowers might get more information then retail investors
• Slow adoption rate for ABT in the investment world. For Smartlands to grow rapidly, the ABT needs to attract the middleclass savers and institutional money. This can be tricky; the target group are most likely not very close to the crypto world right now. There might also be a geographical hesitation in the retail investor group seeing an increased risk looking outside home market
• Smartlands are targeting high yield investments and some early failures of paying out dividend and/or principle would hurt the project. A way to mitigate this would be to announce an internal recovery fund
• I see two short term risks, first the crypto bear market pushing down the overall crypto interest and the second risk in “buy the rumor, sell the news”-event when most STO purchases for first ABT might already be done not pushing the price higher

Trust in the project to manage the token to be a store of value

My perception of the shortterm trust in Smartlands is high, so far, all good. Good progress, the communication flow I find good and the first voting created a feeling of being part of the project.

But …

Smartlands is not a decentralized open source project. The trust in the project can continue to be high but the margin of error to be a store of value will be very small over all time frames.

I find the token supply policy very attractive, pre-mined extremely low 7,1 million SLTs. And as said before, I think the set up with staking SLT when participating in ABTs is very clever (although I said before it is a unique set up realizing several tokens have staking requirements).

Number of SLTs controlled by Smartlands, 30%, I find well balanced. Not too much to jeopardy the price in the long run but also enough to make the token price important to Smartlands. The plan on how to use them is unknown.

I have no in-depth knowledge about the Stellar platform, but I have a slightly biased interpretation of what I have read. Don’t look like a fully decentralized project to me but I have no longterm opinion about Stellar. I find it easy to use, it’s fast and I like the decentralized exchange.

We are in early days for crypto and Smartlands which can be seen on the 3k of SLT holders. I think this might be the single best indicator for the SLT future development, it needs to grow significantly over the next 1-2 years for the SLT to become a store of value. 

When it comes to HODL-share, I think it looks good after monitoring it for the last quarter. The >3.000 SLT proxy for HODL works so far, the 3k might be a little bit high. It’s going to be interesting to monitor this coming year.

Liquidity in exchanges and several trading pairs as $, BTC, ETH must be in place for SLT to become a store of value. I’m sure SLT will be listed on several exchanges over time and the liquidity will come when the ABTs are successfully launched.