Hi @jayplayco here.
Running a business means that you will have cost that you need to cover. To cover that cost you will need to ask for “money” from your clients. Managing a normal store would mean that you have a good that you buy for a lower price than you can sell it. You will have to sell enough so that you can run your business based on the margin of your sale.
The current world is now much more complicated and there are a lot more business models. Let’s dive into some of these models.
- Buy low, sell high (not talking about trading but normal daily selling of goods)
- Exchange time and expertise with money (all kind of services)
[Source: Annie Spratt](https://unsplash.com/photos/kr_88BakygA)
A lot of traditional daily life income scenarios are covered with these two points, but after the Internet era we have also models where the first step is to create value and traffic and create the income later (mostly with advertisement). In most cases these kind of companies need external capital to be able to grow. For startups this is called venture capital.
[Source: Hello I'm Nik](https://unsplash.com/photos/v4DvdRhLvrY)
Now, we are coming closer to Steemhunt, as I would now go into the world of Blockchain. We have seen a lot of ICO's in 2017-18 getting funded in Million of dollars. In most cases these projects had only a piece of paper (called White paper) and a great list of advisors (who normally got a bunch of the tokens to be able to dump them directly after a listing on an exchange). This kind of phenomena was similar to the Dot.com bubble, where you needed only to mentioned that your business will have a relevance with "www" and you got funded. (It was not really THAT easy, but it was crazy times) 2017-18 was similar with ICO's as investors just throw their BTC and ETH to every ICO they had the hot info "This is going to be the ONE". We know what the result of that time is now, as it is written in history.
Including Steemhunt, we have now the next generation of startups and projects that are utilizing the Blockchain and using the advantage of leverage the possibilities of an own token economy. But after seeing different ICO’s, IEO’s and also the launching of HUNT tokens at Daybit, it got me thinking what a Startup is actually going through with it.
1. IEO and getting listed.
As long as you are not preparing an STO, which requires that you have a security behind your token, you are going to sell normally a utility token. There are different kind of interpretation of what is a security token and what is an utility token, but we will blend that for the simplicity out of this article.
Steemhunt is a utility token, which means that you have bought a token that can be traded (later) into a service that Steemhunt is offering. It is communicated as a utility token and even the investors knew it at the IEO, that they are buying a utility token.
A Steemhunt token is actually something like an Amazon Gift Card but not pegged with any FIAT. So it does not actually have any security behind it. But due to the law of the market, if there are more tokens available then buyers of the token, the price will fall (which is in the moment happening with HUNT tokens, but also happened to every single ALT coin in the market). If there are more buyers then sellers, the price will rise. Even if there is no security behind the token for a pegged value. Based on this mechanism you can now calculate a value for each HUNT token and it is in the moment a bit lower than the IEO price. Reason is quite easy, there are more HUNT tokens coming out to the market than buyers are able to take in.
2. The psychology of an blockchain investor after the listing.
[Source: Amazon Chart from Start](https://www.macrotrends.net/stocks/charts/AMZN/amazon/stock-price-history)
Amazon needed 20 years to get from 1USD to 1800 USD. It is remarkable based on their stock value, but it needed its time to get there. Steemhunt is at the end a traditional startup that is concentrating to build a great product and community using and utilizing blockchain technology.
After the listing a few parts have changed, as now the human psychology comes into the pod, including the specific behavior of Blockchain investors.
Blockchain investors do have a similar thinking like stock investors, even that utility tokens are not stocks and should not have any direct influence from what the company is doing. But the reality is, it does. Even if utility tokens are not stocks, your investors will trade it on exchanges, which has a very similar feeling when you trade stocks. You are going to buy low and sell high. Additionally, a lot of traditional Blockchain investors are looking for a “price kick” after the listing, as they have seen it from many other projects.
The sad reality is, that these kind of price kicks are normally financed and sponsored with the incoming funded money that a project would actually need to finance their project and not the manual rising of their token price. There are even terms for that kind of service providers and the price for their service is in most cases so high that it only make sense when your funding was in some higher Millions. Additional cost will happen, when you try to get your token or coin into an exchange, which will keep you without any funded money left you can use for your project development.
[Source: Pablo García Saldaña](Pablo García Saldaña)
The difficulty for projects that don't get funding in Billion dollars, or at least in 100 Million dollars is that they will need to decide if they are going to spend the funding to develop the token (price) or the project.
3. How to startup a Dapp
[Source: Clark Tibbs](https://unsplash.com/search/photos/startup)
Steemhunt is now preparing Reviewhunt which will allow Makers and Brands to find easily Influencers and Geeks that can write, post and video about their products. The payment gateway will be easy to use for companies, as they would need Fiat payment. The API and solution is in development with Daybit. Influencers would get their reward in HUNT tokens, which they can then use later on Ideahunt (crowdfunding platform) or also just sell them on an exchange. As the incoming FIAT from Brands and Makers will be directly bought out of the market, it will stabilize the token price and if the sales is going higher, the token price is going to rise.
My personal expectation is, that Steemhunt will need to concentrate their resource on the development of Reviewhunt which would start the real HUNT token economy.
Another part that I would have for Dapp’s, that are looking for a listing of their token is, as long as there is no real revenue you can couple with your token economy, you will have to fund the price stability out of the money you got actually funded to invest into your project. The difficulty here is, that it is not enough to create and run just a startup, but that you need as a Dapp also to take care of an own token economy. For that it would be needed to architect your token economy, so that it has the chance to grow together with your project.
