The deflationary economic model is the best marketing strategy

—-Inspiration from the Development Differences between Kaspa and Grin for DW20

The Kaspa project has developed very well, and the community is growing. The market value of KASPA in Coinmarketcap has reached 2.8 billion US dollars, ranking 41st in market value. However, the Grin project has not developed well, with a market value of 500 million US dollars and ranking 1305th in market value. Grin was released as early as January 2019, while Kaspa was only released in November 2021. Grin has the advantage of early development, but overall growth is much worse than Kaspa. The Grin coin allocation economic model is fairer, while the Kaspa coin rapid deflation economic model is unfriendly to later entrants to the agreement. Everyone likes fairness, but why does Kaspa develop rapidly while Grin stagnates? There must be reasons for these.

Later, I saw Mr. Zhu Weisha, the founder of the DW20 project, say in the community, “What is the most attractive thing in the world? The attraction of making money is the greatest. Perhaps you don’t believe it, money can ‘grow legs’. For projects that truly make money, they often don’t even need advertising and promotion.”

I suddenly realized the difference in development between Kaspa and Grin. Kaspa and Grin are community-driven development projects, but the Kaspa rapid deflation economic model has achieved excellent and positive marketing. In contrast, the Grin inflation economic model has achieved nasty and negative marketing. Human nature is selfish, seeking benefits and avoiding harm. If Kaspa adds value to your investment, you will increase your investment in Kaspa, spend more time and energy participating in Kaspa community affairs, and introduce your friends to invest in Kaspa. If Grin causes your investment to suffer losses, you will reduce your investment in Grin and gradually withdraw from Grin community affairs, persuading friends to withdraw from Grin investments.

Prices are influenced by supply and demand. An oversupply of cryptocurrency leads to a drop in prices and damages the interests of cryptocurrency investors. If the interests of investors are damaged, they will leave, community projects will lose attention, and supporters will be lost. Cryptocurrency is in short supply, causing prices to rise and benefiting cryptocurrency investors; Investors gain benefits and may introduce others to participate in the project. Other investors entered, and projects became increasingly popular. The community attracts more attention, resulting in the development of the project.

The fact has proven that the development of cryptocurrencies is like this. Projects such as Bitcoin and Kaspa, which adopt a deflationary economic model, are thriving, while projects like Grin, which adopt an inflationary economic model, are not developing well. Even most people in the cryptocurrency industry currently believe that Grin has died. The only exception that has developed well using the inflation coin economy model is ETH. Still, ETH has a particular reason because of the 2017 ICO boom, which resulted in a very high actual demand for ETH. Although ETH is also an inflation economy model, demand exceeds supply, and ETH prices significantly increase. The rise in ETH prices has attracted more people to invest in ETH, increased enthusiasm and program maintainers, and developed the ETH ecosystem. In short, the increase in prices has promoted the ETH projects.

On the contrary, the Grin project has fallen into a death spiral of development. Before there was a large-scale actual demand, Grin adopted an inflationary economy model, with more and more coins and lower prices, investor interests were harmed, miners withdrew from maintaining the network, community popularity decreased, and program developers left the project. Bitcoin has proven that the deflationary economy model is feasible, and the success of Kaspa further demonstrates that the deflationary economy model is an excellent marketing tool. Some believe this deflationary economic model is unfair to those who later join the network, but Mr. Zhu Weisha has explained that returns and risks are relative. These early participants also take the most significant risk. The participants and investors who used the network in the early stage are both venture capitalists, with a high probability of failure, and they deserve more returns than those who later joined the internet. This is fairness.

In fact, DW20 is also a type of coin that needs to be mined, but it is a human resource mine. Computing power and innovation are both competitive means used to get mining coins. DW20 is a payment application. The more people join this network, the more valuable this network will be. This resembles Internet companies like X platform, WeChat, and TikTok. Drawing on the successful experiences of projects such as Bitcoin and Kaspa, Zhu Weisha adopted a deflationary economic model in the DW20 economic model. During the different issuance periods of DW20, the same people are attracted to join the DW20 network, but the amount of coins allocated will decrease. Just as POW mining coins provide the same computing power, rewards are also decreasing over time.

Whether the economic model of DW20 deflation causes price increases and attracts more people to join the DW20 network depends on the future development of the DW20 project. Mr. Zhu Weisha has chosen efficiency and fairness. He believes in market competition, and that competition will enable the most powerful newcomers to win. Whether DW20 is distributed fairly is not a monetary issue that needs to be solved. The issuance of Bitcoin has not solved the problem of wealth inequality, and wealth inequality is not a problem that DW20 needs to solve. The first task of DW20 is to develop the community. The more real users it attracts, the more it benefits the DW20 network and deserves more rewards.

One thing worth mentioning is that Mr. Zhu Weisha refused the invitation from community manager Sky to join the DW20 trading group. The DW20 trading group is a place where DW20 coins are traded with real currencies, reflecting the DW20 exchange rate. Mr. Zhu Weisha’s refusal to enter the trading group indicates that he refuses to be influenced by the DW20 price, or rather, he refuses to influence the DW20 price. As an investor of DW20, the author fully recognizes Mr. Zhu Weisha’s refusal to be affected by the price of DW20, and the author spent more money directly to increase his holdings of DW20. Mr. Weisha will continue to be unaffected by the price changes of DW20, focus on leading the technical team to solve system technical problems, and, at the same time, lead the development and growth of the DW20 community. Respect the free market of trading DW20. Let the price of DW20 increase with the expansion of the DW20 network, or let the price of DW20 decrease with the stagnation of the DW20 network.

The deflationary economic model is the best marketing tool; as Mr. Zhu Weisha said, money can “grow legs.” Advertising and promotion are often unnecessary for projects that truly make money. At present, the DW20 project has completed 12 rounds of seed rounds and entered the angel round with reduced rewards. The seed round joining the DW20 network rewards 100000 DW20 tokens, while the Angel round joining the DW20 network rewards 60000 DW20 tokens. Whether it is conducive to the price increase in the DW20 coin market, whether it is conducive to the growth of the DW20 network, whether it is conducive to the development of the DW20 project, and the ultimate result of all policy implementation. Chairman Mao said that practice is the only criterion for testing truth. The market value and ranking of the DW20 project are the criteria for testing the development of this cryptocurrency project; although not unique, they are also the most important.

Benefit declaration: The author holds DW20, and the article is not an investment recommendation.

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