Quote from: dararel on October 20, 2016, 10:48:33 PM

Good read from slack: Ron Bernstein
Ascribing a value to REP (the unassailable basics) Here are some thoughts about a basic method to evaluate REP tokens from an intrinsic perspective while minimizing assumptions. The writing assumes a basic understanding of the Augur trading ecosystem, and the role that REP and REP ownership plays in the system. REP Income Mechanics: The owner of 1 REP token receives 1/22 millionth of the trading (betting) fees that are generated from trading on the Augur platform as long as owners report compliantly. Assumptions and Investment Criteria 1/ Turnover: The currency volume of trades made on the platform upon which a fee is charged. This is Assumption 1. 2/ Trading Fee: The average fee charged for trades on the platform. This is Assumption 2. 3/ Time Frame: The investors time frame of the investment to determine the "total" value of REP. This is Investor Criteria 1. There is nothing more required to determine a "back of the envelope" value for REP. There are other factors that investors may consider such as potential "capital" appreciation of the token (itself the result of people's opinions of the future value of REP), comparative "dividend" yields - risk weighted or non-risk weighted comps, or the potential that REP may be used in the future on other platforms besides Augur. However, for now those are not going to be considered in this as an ELI5 rundown. An example follows using the assumptions/criteria noted. However: YOU NEED TO DETERMINE YOUR OWN ASSUMPTIONS AND INVESTMENT CRITERIA. That's the fun part....contemplating what a robust Augur ecosystem looks like in 5 years, what societal and technological trends must arise or continue for that to happen, what are the risks, and also, as an owner, what is the outlier upside potential... Criteria 1: The investor is considering an investment in REP over a TEN year time frame** Assumption 1: Augur will transact $1,000,000,000 of trades PER YEAR over the entire investment term of 10 years (i.e. $10,000,000,000 total over ten years) Assumption 2: The average fee charged by market creators PER YEAR for the life of the investment is 1% Here's the math using the assumptions above: $1,000,000,000 Turnover * 1% Trading Fee = $10,000,000 in trading fees payable to REP / 22,000,000 = 45 cents per REP * 10 year Time Frame = $4.50 THAT'S IT! There are some additional accretion factors for REP owners based upon a/ market creation fees that are paid to REP owners as a pool, and b/ compliant REP owners (who are reporting on a timely basis and are reporting accurately) will gain REP from those who are not reporting or are reporting inaccurately. For the purposes of this discussions, I've considered these attributes as "cherries on top". *There are some sophisticated valuation models that establish Net Present Value of a future revenue stream, and can apply that across an estimated growth of revenue curve as well. Those considerations fall outside the scope of the ELI5 ***If we want to add a NPV calculation even on the simplest terms, we need to apply Assumption 3: a "Discount Rate" in conjunction with Criteria 1. Using a 5% discount rate applied to the example, the NPV of a REP token (which resulted in a $4.50 valuation) is $2.76 today. Fun Facts: -Betfair reported ~ £53,000,000,000 matched volume on their betting exchange in 2014 and ~ £55,000,000,000 in 2015 (annual reports) -Bet365 reports: ~ £37,000,000,000 in bets in 2015 (http://www.legalsportsreport.com/11659/bet365s-slowing-growth-is-still-the-envy-of-the-industry/) -It is extremely difficult to find credible research about the potential appetite and volume for betting and trading in China and other parts of Asia. It is known that China "facing" entities dominate crypto mining and digital currency trading. -The fastest growing sector of global online betting is "in play" betting (betting while events are underway) -According to the Bank of International Settlements, it's estimated that the size of the global derivatives market exceeds $1 quadrillion annually.

"BUY BUY BUY REP will cost more than BTC in 2 years!!!"

This is incredibly optimistic...
Because there is no evidence for online gambling patrons switching to crypto in any numbers...
Especially the Big Players who are the ones that matter... how many $100,000 accounts will Augur have?

https://blog.coinfund.io/a-sane-model-for-pricing-augur-rep-tokens-32dbd9db5f6#.h558cukzn

The Coinfund analysis = REP is valued at 100,000 Year One users...
Which is unlikely considering Steemit is down to about 2,000 free daily users.

Where's the marketing?

Anybody can pull numbers out of their ass (reminds me of The DAO)...
At best, REP is "accumulate slowly while trading"... it's probably going down at least another 50%.