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When I started writing about my crypto journey, I was not planning to share my views on any single coin or token here but rather focus on my general experience in the crypto world with a focus on games like Sorare.
I am deviating from this plan now to talk about the blockchain project that I am most interested in: CargoX and the token CXO.
For more detail on CargoX, please visit their website, the subreddit, the blue paper, or DeFi Waifu?s article on CXO tokenomics, as I am only going to give a very brief overview here.
CargoX and CXO
CargoX
CargoX’s mission to transport the global logistics industry into the 21st century started with the first piece of the puzzle — replacing traditional paper Bill of Lading documents with a blockchain-based Bill of Lading platform offering a fast, safe, reliable, and cost-effective digital equivalent, namely the CargoX Smart B/L.
A bill of landing is a document mandatory in sea freight and provides a detailed overview of cargo, transport route, and cost for every single sea freight. Currently, these are still paper documents and sent around by express courier service; digitization has started but not progressed very far, yet. CargoX is working on providing additional transparency in this process by utilizing blockchain technology to share this document quickly and efficiently with all parties involved.
CXO
CXO tokens can be viewed as the “gasoline” that fuels the issuance of Smart B/Ls. And gas is always consumed in the process. This makes CXO not just a pure utility token, but even places it into a special subcategory — a usage token. And the decision to use it as a mean of internal payment — for every Smart B/L purchase — creates a unique velocity sink, which definitely captures the value in the CXO.
CXO tokens are used to create new Bill of Landing documents in CargoX?s platform and a part of the tokens used are burnt in the process. For each Bill of Landing CXO worth $10 is purchased and 70% of these are burnt.
(note: an updated Bluepaper with potential changes to this is in the works)
Approach to CXO valuation
From what I have seen so far, technical analysis is widely used in the crypto community and for an asset class that is mostly driven by sentiment, I guess that makes sense. As most cryptocurrencies have very little to offer in terms of underlying value generation, fundamental analysis is not really used.
The approach I am proposing for CXO mostly uses data from the crypto world but also incorporates the real-world application of CXO in the shipping industry. I am fully aware of the approach's shortcomings, especially when it comes to the somewhat arbitrary selection of input data for the model and I want to stress that this is in no way financial advice but rather a personal project of mine. However, I still think this approach can give a ballpark number for CXO?s future value.
As a starting point, I use an arbitrary selection of mid-cap coins (lower half of CoinMarketCap?s Top 100) and compare their 2020 trading volumes to their market cap at the end of 2020. The assumption being that trading volume drives market capitalization and, for each given coin, higher volume means higher market cap.
The reason for choosing mid-caps is that coins with a higher market cap will behave differently from a small coin like CXO and coins from below the top 100 might have less reliable data on CoinMarketCap. I am planning to add to this selection at some point to make the estimate more reliable but the four are sufficient to show the approach.
I then use the average market cap to volume ratio and plug it into a table with other assumptions around CXO for 2022.
This approach results in an estimated market cap of $277m by the end of 2022, which is almost 6x the current market cap. In terms of the prize of CXO, the increase would be significantly higher due to the token burn but building this into the model will be a separate article at some point.
To be very honest, I have no idea how realistic these assumptions are but I tried to err on the conservative side.
As CXO is only really getting started with the Egypt project in July and is not widely known, yet, a tripling of retail volume (for my purposes here, this is all volume that does not come from the creation of BoLs) does not seem crazy.
The volume from Egypt seems more or less safe to me; if someone has a different opinion on this, I?d be glad to hear it.
Two additional projects of the same size is the part I feel least comfortable judging but from my insights into enterprise sales of emerging technologies seems at least plausible.
Conclusion
This is my favorite blockchain project by far and does not really fit into the "My Crypto Failure" setting of my other articles.
I am excited to have found out about CargoX and am looking forward to the start of the Egypt project in July.
I?d be glad to get feedback on the model and the assumptions from people who know more about crypto and CargoX than I do (you can contact me on Reddit: u/MyCryptoFailure) but I am pretty pleased with the outcome of this tiny after-work project.
