Since the launch of the platform, BIBOX exchange attracted more than a million traders and reached more than two hundred million dollars in daily volume over 206 trading pairs.
First seen as Binance’s younger sister, due to the similar designs of the two platforms, Bibox found a way to stand out on its own. The advantages of the platform are based on principles of security, stability and transparency. These are the advantages that Jeffery Lei, CEO, has emphasized since the beginning of the project. Bibox Exchange has positioned itself as the first AI enhanced encrypted digital asset exchange platform thanks to a full panel of quantitative algorithms offered to both individuals and professional investors to automate their trading. Furthermore, the platform placed itself in the niche of “mid-caps” tokens, thereby avoiding a strong competition of Binance, already well established in the crypto sphere.
Nevertheless, even though the platform is the trading tool’s rising star of crypto sphere, its token, BIX, is trading at 0.4133$, almost 90% below its highs.
The BIX Token
On November 20th, 2017, the BIX token was first listed on the Bibox Exchange. Initially, BIX could only be purchased with ETH or BTC. The starting price was about $0.2647. A few days later, on January 7th, 2018, BIX reached an all-time-high of $2.67. Incredibly, this marked an increase of over 1000 percent.
The BIX Token is an ERC-20 token based on the Etherum blockchain. The total supply of tokens is 267,941,449 BIX of which 140,000,000 are locked by the Initial Team. These tokens will be unlocked in 20 percent installments every year following the table below. Currently, BIX is the 123rd largest cryptocurrency, with a market cap of $42,306,148.
BIX Price: Users Could Provide a Floor
The initial purpose of the BIX token is to offer a certain amount of discount for users paying their transaction fees with BIX tokens as described below.
Thus, Bibox provides a real incentive for Bibox platform regular users to permanently buy and hold BIX tokens in their portfolio. This functionality makes BIX a “utility token.” The number of regular users represent a daily demand for BIX and, therefore, creates a valuation floor for the token.
The Bibox Bear Case
Today, Bibox exchange sees an Average Daily Volume of ~242,100,000 USD. Bibox charges 0.1% fee per transaction which leaves us with an evaluation of ~242,100 USD of Average Daily Commission.
Based on the discount rate above, we can evaluate the average daily demand of BIX tokens, assumed by “users” (tokens bought in the sole goal of paying trading fees), at ~73,235 USD.
Compared to the Average Daily Volume of BIX tokens trading at Bibox Exchange, we can evaluate the Average Daily Volume (%) of regular users at 0.2733%.
Conclusion: The theoretical floor price we arrive at is very low compared to the offer placed in the market during the ICO.
In October, 2017, the Bibox Exchange team had a successful ICO, raising $19,000,000. At that time, Ethereum, the only accepted means of payment, was trading around $361. BIX tokens were priced between 1800–2000 BIX/ETH. At equivalent ETH prices today, BIX is trading at 549 BIX/ETH. This represents a ~3.5x increase since the ICO.
As I explained in a past article (Welcome to CryptoLand: Could Smaller ICOs be Better?), the tokens issued are nothing less than the pre-sale of the company’s future revenues. The Bibox team pre-sold $19 million in BIX tokens. Since the market is now trading ~3.5x higher this represents ~$66.5 million vs a daily demand of ~$73,235.
Translation: The market is anticipating that the BIX exchange will make 900 times more than they are currently making in commission fees.
Upside Risks:
Of course, the fact that there is a daily demand however implies a positive impact on the price which we calculated to be +0.4513%/day (from a basic impact calculation formula used in stock markets). But, it still leaves us far below the price at which BIX tokens are trading today.
Another potentially positive impact on the token price would be an increase in activity and users on the platform. Nevertheless, since the discount rate is divided by 2 each year, this removes the motivation to buy the token and should largely offset any increase in activity.
Favorable Token Terms:
Token destruction
“Bibox promises to destroy BIX tokens it earns from service fees (up to 300 million in total).”
Every quarter, 25 percent of net profit is attributed to buybacks and burning. The first buyback and destruction of BIX tokens took place on April 20th, 2018 when 1,575,600 BIX were burnt. Later, on August 7th, 2018, a further 2,003,300 BIX were destroyed.
In total, 11.05 percent of the original circulation of BIX will be burnt. If net profits remain constant, this would imply that the buyback program will continue till mid-2021.
This buyback program inflates our estimates about daily demand. According to our calculations, the $73,235 of daily demand increases to $122,177 with buybacks.
BIX Incentive Reward
BIX Incentive Reward was launched on April 19th 2018. This program is a long term plan (subject to adjustments based on the situation) witch redistributes 45% of Bibox weekly Net Profits proportionally between BIX token holders.
Token holders are eligible providing they (1) hold the token on Bibox platform and (2) have traded at least once during the week (from Friday 17:00 to Friday 17:00).
BIX Incentive program is thus kind of a backdoor dividend. On August 6th 2018, Bibox announced having redistributed 10,052,495 BIX in total since the launching day of the program whose, 5,577,062 of them during the second quarter of 2018.
Based on the same optimistic assumptions than earlier about Bibox’s 27.14% quarterly net profit increase, we could expect receiving 42,140,052 BIX over the next calendar year out of the Incentive Reward program.
Compared to the number of BIX in circulation, it would represent a dividend yield of ~41.18% over the year.
Conclusion: Bibox is Trading Rich
Today, I arrive at a theoretical price based on the ‘user floor,’ calculated above of one BIX = $0.0006. If we factor in token destruction, annualized, this price increases to $0.0155.
Last but not least, the BIX incentive reward which represents a +41.18% annualized over our holding would bring the token to a final price of $0.0219 by October 8th, 2019.
Bibox is a fantastic trading platform providing access to unique tools and algorithms, as well as a wide list of tokens. Nevertheless, considering the spread between our theoretical floor price of $0.0219 and the current price of $0.4133, I believe BIX is currently overvalued, and does not represent a compelling buying opportunity.
This article is not intended as an offer or solicitation to buy or sell any financial instrument. All comments and statements are to be considered my own opinions and are not intended to be relied upon.
