Cardano Beam Tokenomics
Cardano Beam is a platform that adds GPS location to Assets on the Cardano Blockchain. It rewards users for their physical presence at a certain place at a certain time. Physical presence is anywhere on the World Map.
It is any for anyone who ever wanted to incentivize an individual to be at a certain location be it out of need or out of love (e.g. POAP). A form of a location-based nudge that could alter people’s behavior in a predictable way without limiting any options or significantly changing their economic incentives.
Its core functionality is placing and redeeming assets from the world map. On top of this core functionality, Add-ons will be built to support specific use cases
Event Organisers - Organisers place NFTs and ADA rewards at the finish line for those who registered. Participants register for events with their wallet ids. Example event: Lisbon - Algarve 200km
Charity Donations - Friends monitor the progress of their favorite cyclist/runner/walker in the Web App in real-time and place rewards on the route to cheer up.
Business Advertising - Local Cafes, Restaurants, and Shops place rewards near them to attract foot traffic. Clients pick them up and then redeem them for discounts.
Governments - Increase voter participation at local elections by placing curated NFTs near voting booths. Manage foot traffic at an ecological location by issuing a limited number of Visas on a first come first serve basis, and monitoring the movement of visitors.
Lifestyle & Gaming - Geocaching or a Pokemon Go type game with HOSKY tokens. Encourages movement and physical exercise. Create teams that compete to collect different types of tokens.
Parcel Deliveries - Tip the parcel delivery couriers by placing ADA next to your house. Only their wallet can collect and only if they arrive before lunchtime tomorrow.
Cardano Beam generates income by charging a fee in ADA every time an Asset is placed on the world map. The cost of redeeming an asset from the map is included in the cost of placing the asset and therefore it is free for those who pick up the asset.
The total cost of a roundtrip transaction, placing and redeeming an asset, is ~2.9 ADA + the Asset. This cost is paid by those who place assets on the map and is split as follows:
- ~1.3 ADA that needs to be sent with every asset and is dictated by the Cardano protocol
- 0.4 ADA to cover smart contract execution cost
- 0.18 ADA Cardano transaction fee
- 1 ADA Cardano Beam service fee
The transaction cost for redeeming the asset gets deducted from the 1.3 ADA that is sent with the asset. So the user that redeems the assets, in the end, receives the Asset + just over 1 ADA.
The Cardano Beam service fee is set at 1 ADA which is the minimum amount of ADA that can be included in a transaction. The fee is included in the transaction when placing the asset on the map and is sent to a Cardano address where the fees are accumulated
The Cardano Beam platform, therefore, earns 1 ADA for every asset that is placed on the map. This is the income stream of the Base protocol. Add-ons for additional use cases may establish additional fees in the future.
Cardano Beam currently runs on Plutus V1 scripts which is the first smart contract language released by Cardano. An upgrade to Plutus V2 is likely to reduce the roundtrip cost which we will pass on to our users. This will be done at a future date once the core functionalities have been fully built out
The income stream of the protocol comes from the service fee of 1 ADA per asset placed on the map. This income will be accumulated at a Cardano address and be redeemable by BEAM token holders in a proportional amount to their holding.
Cardano Beam platform issued 100 million "BEAM" tokens. Policy ID: b1a80ea5d4b5c9f8d550fb9fa9fe53433903f420a449c8977b3470fa
Allocation of BEAM tokens:
- 40% for Team Members vesting linearly over 3 years
- 40% for the Development Fund to fund the development of the protocol.
- 10% for Early Adopters distributed linearly over 3 years
- 10% for Partnerships
The fees from the platform will accumulate at the address where the BEAM tokens were minted: addr1v82jq7dyj3phm70udmra5l4an2ynzyymyelf67xl8yxaxns77vl37
On the first Tuesday of every month, the fees will be distributed to the addresses that hold the BEAM tokens. The snapshot of the BEAM token distribution by address will be taken from the most recent epoch end, not counting the Tuesday itself - if the epoch ends on a Tuesday then we will take a snapshot from the previous time the epoch ended.
The minimum amount of fees to be distributed is constrained by the minimum ADA transfer amount set at the Cardano protocol level and is currently ~1.3 ADA. Sending an amount less than this will be more expensive than not sending it at all. Therefore the fees that are not distributed because of this limit will be kept behind for next month.
A page will be developed to show the BEAM token distribution by holders at the end of each epoch with an estimate of pro rata fees.
An automated solution for token distribution is not justified at the moment due to the low volume of fees, concentrated distribution of tokens with the founders, and the complexity of developing a bespoke smart contract. Should the volume of fees increase in the future, we will explore creating a smart contract to store the fees and have an automated disposer for the BEAM holders
The BEAM tokens get their value from the fees that users pay to use the platform. The users pay 1 ADA when placing an asset on a map and these fees get distributed to BEAM token holders
A possible valuation of the BEAM tokens can be rationalized by projecting the earnings that the platform could generate and using the Price to Earnings ratio of companies in a similar industry.
To size the market we took the UK as our sample and estimated that every year, in the UK, there are:
- 760 weekly park runs with an average attendance of ~200 people per run per week, or c. 40k park runs per year
- 1,000+ official running events with a participation of 3 000+ runners per event
- 450+ official cycling events with 100+ participants
This comes out to upwards of 10 million runs done at official events (including park runs) every year in the UK or 30k runs per day on average.
The UK has a population of 68mn.
Extrapolating this to Western Europe with a population of c. 197mn, US with a population of 329mn, Japan with a population of 125mn, and Australia with a population of 25mn, suggest upwards of 300k runs per day at official events. This is a very large market and the reason why the sports apparel market generates revenues of c. $200bn per year
The rest of the valuation is based on the assumption that Cardano Beam can capture a market of 100 runs per day, which is 0.03% of the target market.
Fee Generating Capacity
The main assumption is one medium-sized event is run on the Cardano Beam platform every day of the year with 100 participants and 10 checkpoints. On some days there are no events, and on other days there are more than 1. At this rate, the Cardano Beam team can support the event organizers should any technical questions arise. This implies 1 000 assets placements on a map per day, and 365 000 ADA in fees per year
Using the blockchain to organize has multiple advantages for event organizers and participants:
- A saving of between 5 and 10x on logistic costs for event organizers;
- A smoother race experience for participants where registration, timing and rewards can be managed in one app;
- Engagement from the public, who can interact with the participants during the event.
Price to Earnings (P/E)
Price to Earnings is a measure of how much something is worth given its ability to generate earnings and this is commonly used in Corporate Finance when evaluating companies. A P/E ratio of 100 means that the value of a company is 100x its annual earnings.
The P/E ratios vary significantly across industries. Staple industries (e.g. railways, utilities) tend to have lower P/E earnings as they are considered low-risk and have more predictable earnings. Tech industries, on the other hand, are considerably riskier with the potential for high earnings growths, therefore the P/E ratios tend to be much higher.
Fortunately, Prof. Damodaran from the Stern NYU School of Business maintains a list with P/E ratios by industry which we can use to inform our valuation. The closes industries to blockchain tech in that list are:
- Software (Entertainment) - Current P/E: 77
- Software (Internet) - Current P/E: 83
- Software (System & Application) - Current P/E: 107
- Telecom. Services - Current P/E: 80
- Entertainment - Current P/E: 177
The average P/E of these industries is 104, the minimum is 77 and the maximum is 177
Based on these P/E ratios, an annual earnings stream of 365 000 ADA is worth:
- 38mn ADA valuation - using average P/E
- 28mn ADA valuation - using min P/E
- 64mn ADA valuation - using max P/E
Beam Token Valuation
There are 100mn BEAM tokens minted. The fees generated by the platform will be distributed to the BEAM token holders in proportional amounts (e.g. 1% of the BEAM supply held will receive 1% of fees generated by the platform).
Given the ADA valuation of the platform between 28mn and 64mn, each of the 100mn BEAM tokens should have a value between 0.28 ADA and 0.64 ADA
Disclaimer: significant approximation is done when arriving at this valuation and should NOT be taken as a statement of facts.
Other Markets and Use cases
The platform has many other use cases than just organizing events, on which the above valuation is based. Therefore the potential target market is much larger
Smart Contract Audit
WARNING: The smart contracts of Cardano Beam have not been audited, this is due to the high cost of an audit, the relatively low value of assets that are locked in each smart contract, and the currently low amount of fees being generated by the platform.
The business proposition of Cardano Beam is to serve as a transfer of value between parties rather than a store of value for extended periods.
Caution should be exercised when locking value in smart contracts, and do not lock more than you are prepared to lose. We have completed the Plutus Pioneer program and followed existing templates to develop the smart contracts, however, it is important to recognize that we can not give guarantees about their security.
The Cardano Beam is developed by Dynamic Strategies