When Metawhale announced the release of the Metawhale token series, they said they would start burning bitcoin as a part of the contract function on the ETH chain. What this means is that the wrapped version of bitcoin, renBTC, is being sent to the burn address 0x000000000000000000.... to never be used on the blockchain again.
What this means for BTC holders is that their BTC will be worth more due to simple supply/demand economics. If you are holding BTC, you might want to pay attention to this. If you don't have any BTC but you would like some, Metawhale contract guarantees that holders will receive BTC as a payout for holding MWBTC. So why shouldn't you just buy and hold BTC instead? Because doing so would not contribute towards the burning function of this contract, and BTC supply would not reduce.
What does this mean for BTC holders?
Many people question the purpose of this function, and maybe some may even think this is no big deal due to the insignificant amounts being burned (around 0.40865551 ? at the time of this writing), but what most fail to understand is how the protocol actually is designed to ramp up in volume as it is traded over time. It's a conservative estimate to guess that there will be at least 100 BTC burned, or even more, within the first cycle of the deflation. The contract is designed to scale with the fees that are generated from trading Metawhale, and a few things are happening to expedite this process towards scaling volume and burning more BTC:
1) Trading fees are captured and used to buy a reserve currency (in the case of Metawhale BTC, renBTC is purchased by the contract) and stockpiles this into a reserve to be claimed by the MWBTC token holders at the end of the deflationary cycle.
2) A portion of the fees that are captured from trading will reduce the total supply of the metawhale tokens from 1 million MWBTC to 1 MWBTC during the deflationary cycle, this means that 1 MWBTC will be worth what has been accrued in the renBTC reserve balance at the end of the cycle, currently $20k worth of BTC... not much but it will increase undoubtedly. This is reflected in the users share of the renBTC.
With the tokenomics designed to create a price floor supported by the reserve value of Metawhale, and the overall supply of the Metawhale tokens reducing to 1, you can count on one thing happening as we get closer to that end-of-cycle. Yup, FOMO will kick in. Price will ABSOLUTELY skyrocket. Hypothetically if the price of MWBTC is lower than what is guaranteed in the reserve value, token holders will walk away with free money. This is designed to garner interest in the token to attract investors for this inevitability of value guaranteed within the reserve.
What most don't realize is that Metawhale has a clone feature to give users the power to copy the BTC burning version onto any token that they desire. What this means is that you can burn any coin on the ETH chain by sending it to the burn address. This has huge implications for all of the tokens with a supply cap. Potentially investors could shrink the supply of their targeted coin and increase the value exponentially.
How long before BITCOIN supply will reach 0?
Possibly, never. There can never be 0 BTC supply due to the simple fact that some BTC are lost on wallets, and some BTC are stashed in holders wallets to be held instead of traded. After all, you would not expect to see every BTC on the market, some people just want to hold their tokens. Considering that the BTC supply can now be burned, we will inevitably see the price start to increase with the supply starting to reduce.
This means that if you are a holder, you may want to pay close attention to how Metawhale effects the overall supply of BTC for the future of this token. At the time of this writing, Metawhale is still largely undiscovered. However, If Metawhale proves effective, we could see an overwhelming shift in the market starting with BTC and moving towards other supply capped tokens.
If you have a good intellectual oversight of the crypto world, you may want to check out the metawhale tokenomics to see whats going on under the hood.
Metawhale information:
- DEFI Labs Telegram
- DEFI Labs Twitter
- MetaWhale Website
- MetaWhale Twitter
- MetaWhale Source Code
- MetaWhale Gold Contract
- MetaWhale BTC Contract
- DEXTools MWG
- DEXTools mwBTC
- CoinGecko MWG
- CoinGecko mwBTC
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