Read our previous blog article on Understanding Tokenomics? This time, we’re applying the knowledge learned to ApolloX’s native token APX.
Here’s your quick breakdown of APX tokenomics.
1. Market Capitalization
Formula: Token price * circulating supply = Market Cap
Market cap is the total value of a token. In general:
- High market cap — Project could be more established, safer investment; but slower growth
- Low market cap — Project could be very new, could be more risky; but greater growth potential
With a token price of $0.072 and a circulating supply of 521 million (as of time of writing; 5 May), APX has a market capitalization of $37.9 million.
While this may seem little, if you look at APX’s fully diluted market cap — which essentially multiplies the token price with the maximum supply — the figure shoots up to $725M. This takes into account locked APX tokens, such as in the community treasury.
Market cap is a useful metric, but there are also other factors to consider when evaluating tokenomics.
2. Token Supply
Aside from maximum, circulating and total supply, you can also look at a token’s inflation or deflationary pressures i.e. how fast the token is released and how this rate changes over time. In theory, deflation generates more demand, thus creating scarcity which drives the token value up.
Going back to APX, we see these factors at play:
- Deflationary pressure: 1% burn tax on each transaction (except whitelisted transactions like staking)
- Token burn: 5,755,000,000 APX burnt for ApolloX 2.0, ApolloX’s plan to transition to DAO governance
- Trading Rewards: From the third year, 15,000,000 APX will be released every month. From the sixth year, 9,000,000 APX per month until fully released
- LP Rewards: From the third year, 2,281,250 APX will be released every month
Note: ApolloX was founded in late 2021.
APX is a deflationary token and supply will only keep decreasing. However, we can also keep in mind that APX from trading and LP rewards released in the future will have to be absorbed by the market at that time.
3. Token Distribution
Distribution refers to how tokens are split up and what they are used for. Often, traders look at the initial token distribution (initial launch) to determine any insiders. Having too many insiders could lead to easy manipulation of the token.
APX’s initial token distribution was its IDO on decentralized exchange PancakeSwap. It was a fair launch with no investor or team allocation and no pre-mining, indicating a higher chance of tokens to be spread out widely.
Genesis allocation of APX:
45% (4,500,000,000 APX) to Community Treasury;
44% (4,400,000,000 APX) to Users as trading rewards;
5% (500,000,000 APX) to Marketing & Partnerships;
3.5% (350,000,000 APX) to Retroactive Mining Rewards [Completed];
2.5% (250,000,000 APX) to list on PancakeSwap [Completed].
With ApolloX 2.0, 5,755,000,000 APX was burned. Amount before and after the burn:
Community Treasury: 4,455,000,000 APX → 1,100,000,000 APX
Marketing & Partnerships: 500,000,000 APX → 400,000,000 APX
Trading Rewards: 4,300,000,000 APX → 2,100,000,000 APX
APX in the treasury are locked for future use in new product launches, including the upcoming ApolloX DAO. Marketing & partnerships are subjected to a linear vesting of 5 years, and APX allocated to trading rewards are released per month as mentioned above.
4. Token Utility
What incentivizes traders to buy and hold APX? Token utility — here are some uses for APX and how it can benefit traders.
- Save on Trading Fees: Trading on ApolloX DEX earns traders APX cashback. Essentially, they get discounted trading fees or even trade for free.
- Boost Trading Rewards: Acts as a multiplier for trading rewards, incentivizing users to hold more APX.
- Get Staking Interests: Staking APX on ApolloX DEX earns traders additional APX to be rerouted into trading or to grow APX holdings.
- Earn LP Rewards: Can be swapped for LP tokens on PancakeSwap. LP can be staked on ApolloX DEX to earn more APX.
- Trade ApolloX NFTs: APX is the payment currency when minting NFTs from the ApolloX ecosystem.
- DAO Governance: Gives holders voting rights for DAO proposals that shape ApolloX’s future.
We hope this was useful in helping you understand how to evaluate tokenomics. Above all, always DYOR in crypto!