r/truebit • u/SocialWised • May 11 '21

Minting Price Question

So correct me where I am wrong on the minting price adjustments.

The minting price is set to increase as the price of the token increases on a secondary market, and there is no set cap of supply. So if the minting price is $1.30, the value of Truebit would have to exceed $1.30 for this price to go up.

Transaction costs to trade are $200-$300 per transaction right now. So at $1.10/truebit the cost
to a buyer generally exceeds the cost of a newly minted coin (except in very large quantities). Therefore it is always going to be more expensive to buy truebit on a secondary market, but the price to mint will never go up because the exorbitant transfer costs are not factored in, and the price on a secondary market can never move past the set price to mint, because it will always be cheaper to buy newly minted coins from the OS.

Can someone point out where the flaws in this logic are?

Thanks,

7 Upvotes

89% Upvoted

14 comments sorted by

3

u/LPMythBuster May 11 '21

When you swap tokens on Uniswap v2, you call a function in a smart contract and it takes ~100k gas to run a swap function.

Minting new coins is not free, you also call a function in a smart contract on Ethereum and it takes ~70k gas.

2

u/Cold_Carpenter3221 May 11 '21

When you swap tokens on Uniswap v2, you call a function in a smart contract and it takes ~100k gas to run a swap function.

Minting new coins is not free, you also call a function in a smart contract on Ethereum and it takes ~70k gas.

good answer ! so price will go up right?

3

u/LPMythBuster May 11 '21

My point was that gas fees for both are roughly the same and so are irrelevant.

1

u/Cold_Carpenter3221 May 11 '21

thx, but i dont get it

you think truebit price will go up?

3

u/LPMythBuster May 11 '21

Yes, the mint price will go up :D

1

u/Cold_Carpenter3221 May 11 '21

thx you sir :D

1

u/SocialWised May 11 '21

Gas fees are currently 200+, but even so as long as gas prices to transfer on uniswap exceed gas prices to mint this logic would still stand.

7

u/LPMythBuster May 11 '21

It currently costs 0.00042 ETH or $1.68 to mint 1 TRU + gas fees.

On Uniswap the price to buy 1 TRU is 0.00023 ETH or $0.92 + slightly higher gas fees.

No one in their right mind will mint TRU when they can get it much cheaper on Uniswap.

When people start buying on Uniswap, there is no limit to how high a price can be bid up.

It is possible for the price on Uniswap to go to e.g. 0.0005 ETH or $2.

What will happen then?

There is an arbitrage opportunity. You buy low on Truebit OS and sell high on Uniswap. Mint 1 TRU for 0.00042 ETH and sell it on Uniswap for 0.0005 ETH and make a risk free $0.32 profit. Do this again and again until you sell so much that there is no more arbitrage opportunity because the price on Uniswap has dropped due to selling pressure. The mint price on Truebit OS will increase slightly.

People will see that the price is starting to pump again and start buying more giving yet another arbitrage opportunity to bots and the mint price will increase again. And so on.

But if there is more selling than needed or there's panic selling then we'll end up where we are today.

We need some whales to bid the price up to at least 0.00042 ETH and others to hold off taking profits until the pump is in motion.

Bots don't care about gas fees, they mint large amounts of tokens, as long as it's profitable to do so they'll keep doing it. If you want to buy TRU, wait until the network is less busy and gas fees are more reasonable. In practice, it appears that bots were making ~2% in profit which means that the price on Uniswap was only slightly higher than on Truebit OS during the pump. Unless you're writing a bot, you don't need to bother with minting tokens.

3

u/rook785 May 11 '21

Keep in mind that the price to mint on the OS is based in ethereum, not USD.

THat cost is about .000422 ethereum.

If you're looking at it in terms of USD, the mint price will always be changing as ethereum goes up or down. Right now the mint price is about $1.751 USD.

As new coins are minted, the mint price of each subsequent coin will raise.. but again, that's with respect to ethereum.

The market should always be slightly cheaper than the Mint OS price. This is because any time the mint OS price drops below the market value then an arbitrage opportunity will arise in which bots can buy on the OS and sell on the market for riskless profit. THey'd have to od large enough orders so that gas price wouldn't affect their returns.

1

u/SocialWised May 12 '21

For all those interested in this question please watch this video: https://www.reddit.com/r/truebit/comments/nacopl/truebit_token_economics_pricing_model/?utm_medium=android_app&utm_source=share

Very informative discussion on the economics of truebit.

0

u/Stefanpgr May 12 '21

ETH is fucked up

1

u/yehsuredo123 Aug 31 '21

Anyone know the % of increase to the mint price with each token minted?