How to calculate the value of a Fee Backed Asset (for investment)

[yvv]

It all depends on how much money do you want to raise to implement the feature. If you want $300 to implement maker-taker, I'll buy some of your MAKER at $0.0003.

[bytemaster]

I would simply estimate the total value of the yearly volume in all markets (by whatever means), then I would estimate the average market fee charged by issuers (0.1%).  Then I would estimate the percent of the market fee allocated to the MAKER feature  (50%) then I would take 20% of that as the revenue for the feature.   

To to set an average we assume that all non-BTC volume on crypto exchanges moves to BTS.  This is $5M /day in volume.  This is a reasonable target if we assume the industry is growing and prediction markets, etc start using this feature.

5M * .001*.5*.2 => $500.

This will generate  $500 per day in buying demand for MAKER or $182,000 per year.   If we assume this $182,000 represents a 5% dividend then the market cap of MAKER would be $1 million dollars (est).   
 
*If* you think BTS can achieve $5M / day in volume in assets using this feature with a 50/50 probability within the next 2 years, then I would say MAKER should be valued at between $250,000 and $500,000 after discounting for risk and time value of money.

Now there is some possibility that BTS will hit $100M / day in volume (similar to all of crypto) as the whole market grows to be $1B+ in daily volume.  So you would have to take the weighted probabilities of different outcomes and average them to get the present valuation of the feature.   

If you discount my estimates by 50% just because you think I am overly optimistic then a minimum valuation of $100,000 is how I would estimate it.

[Samupaha]

I would argue that the value of a FBA is proportional to BTS value.

What exactly is the mechanism that will create the proportionality? I'd guess that at least one factor is that rising price of BTS means that there are more users, and some of those users will also use the feature that will bring value for FBA.

Interesting math!   Can you do similar calculations for MAKER assuming MAKER gets on average 10% of all trading fees?

Math itself is quite simple here. Bigger problem is how to estimate the values for calculation. One reason why I made this example was that I was hoping that somebody else could do similar calculation for MAKER. It's so complicated that I haven't yet fully understood it. And I have no clue how to estimate how much trading there will be.

Feature itself is propably going to be useful forever? Forever meaning here "as long as Bitshares is used". For this calculation I'd say something like seven to ten years is same as "forever in cryptoland". Or how big is the possibility that a better market maker incentivization program will be invented? I guess that is possible too.

[bytemaster]

I would argue that the value of a FBA is proportional to BTS value.

Interesting math!   Can you do similar calculations for MAKER assuming MAKER gets on average 10% of all trading fees?

[Samupaha]

Now that we have two FBAs on presale it is a good time to think how to decide how much value an FBA might have. This is to help you to decide how much you should bid if you want to invest in FBA.

Let's take STEALTH as an example.

STEALTH will get 80 % of transaction fee for stealth transfer. Fee will be three times normal transfer. If we keep the $0.20 fee for normal transfers, it will mean that stealth transfer fee is going to be $0.60 (but this could obviously change if the committee decides otherwise). Owners of STEALTH will get 0.8 * $0.60 = $0.48 per every stealth transfer.

Let's say somebody wants to buy 100 000 STEALTH, which will be 10 % of total amount of one million. Every time a user makes a stealth transfer, this person will get 0.1 * $0.48 = $0.048.

How much he should pay for the 100 000 STEALTH? It depends how much he expects people will use stealth transfers and how long the feature will be used until it is replaced with something else.

Let's say that the risk being replaced will rise significantly after three years. Three years is a long time in cryptoscene and propably during that somebody will invent something better than stealth transfers and it will be accepted in the Bitshares blockchain. So the investment should be made back in that time.

How much people will use this feature? First it'll be only a few transfers per day, but eventually it might be tens of thousands. Let's say it will be on average 3000 transfers per day during the first three years.

Now we can calculate the value of the investment: $0.48 * 0.1 * 3000 * 365 * 3 = $157680

If the investor can get 100 000 STEALTH for less than $157680 (1.5768 USD/STEALTH), this will be profitable investment.

Cryptonomex will produce the stealth transfer feature for $45000 so we can calculate the starting price. $45000 / 1000000 STEALTH = 0.045 USD/STEALTH

Original investor will get all one million STEALTH. If this example is close to what will happen in the future, he will get big profits from this. He could sell 10 % for $45000 for somebody and break even instantly. Everything after that will be profit without any risk. Buyer of the 10 % stake will have risk, but the expected profit is still very big.

So far all presale bids have been made to STEALTH:BTS markets, but this has one negative side: you have to keep an eye on price of BTS and change your bid accordingly. Because BTS is still very volatile, it's better to calculate the value of an FBA in some fiat currency such as USD. This is why I recommend that bidding for an FBA should be made in USD (or CNY or EUR) markets. It will be simpler to calculate potential profits. Of course, if you have a bot that will make the bidding for you, it doesn't matter what currency you use because the bot can change bids instantly when prices change.