Sesterce Capital is building a position in WOO-WOO Network’s native token.
WOO Network is a young exchange we believe brings disruptive features to the market. We view this as a medium to long term opportunity play.
The content below is for informational purposes only. It is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product.
THE WOO NETWORK
The WOO Network connects traders, exchanges, institutions and DeFi platforms with democratized access to the best-in class liquidity and trading execution at zero or low cost.
The WOO Network’s 3 main products:
Front-end trading platform that fully sources its liquidity from WOO Network to provide professional traders with superior trading execution via deep liquidity and lower to zero-fee trading
WOO Network’s liquidity can be directly integrated via API across partner exchanges and institutions to immediately upgrade their order books to a depth deeper than top exchanges and tighten their bid/ask spread.
WOOFi is a decentralized exchange platform providing the best possible swap prices and reduced slippage at lower fees.
WOO Network recently raised $30M in Series A round led by Three Arrows Capital in Q4 2021. WOO Network intends to allocate the funds to expand its team as well as build new derivatives products and develop their social trading feature, as well as DeFi trading.
"While the exchange landscape is growing more competitive, WOO X is poised to make a mark with its deep liquidity coupled with lower to zero-fee trading – these two propositions are phenomenally useful for institutional and retail traders to achieve superior trading execution,” — Three Arrows Capital co-founder Su Zhu
A second leg of Series A funding for $12M closed beginning of the year saw Binance Labs as lead.
"Woo Network adds significant value to the crypto ecosystem by providing deep liquidity and zero-fee trading both on- and off-chain. We are excited to expand our long-lasting relationship and explore further collaborations, especially on Binance Smart Chain”. — Binance Labs Investment Director Peter Huo
Any market participant with a decent experience in crypto
markets has at one point struggled with liquidity issues. Whether it is with slippage, spread or price impact, it is very well known that some assets can be a real pain to trade. This is in part because liquidity is spread amongst too many exchanges. As of time of writing, the total crypto market cap oscillates around $2T - with alt coins representing just above 60% - while crypto offerings spread across more than 500 exchanges, DEX and CEX, some of them with ridiculously low volume, yet baring no choice for buyers and sellers but to use them in some cases.
Because liquidity and volume are not sufficiently scaled and spread across trading venues, large investors, especially institutional based, are unable to enter the market, or don’t even bother trying when facing the pain of dry liquidity.
This is where the WOO Network comes into play. The WOO Network , formerly WOOTrade, is a dark pool providing first class execution and deep liquidity for large and institutional players by partnering with exchanges, OTC desks and quant teams, such as Kronos Research, WOO Network’s incubator.
A dark pool allows large transactions to happen anonymously outside of the public market through deep order book
offering high liquidity. This enables a whale to come to market buy 100 Bitcoin without having to worry about spread or slippage.
ZERO FEE TRADING
Another one of WOO Network’s catchy arguments is
« zero fee trading ». How is the platform able to generate revenues while offering feeless trading experience to its users? All thanks to one magic trick: Payment for Order Flow. PFOF is the compensation and benefit a brokerage firm receives for directing orders to different parties for trade execution. The brokerage firm - here WOO Network - receives a small payment, usually fractions of a penny per share, as compensation for directing the order to a particular market maker. This guarantees little to no trading fee when staking the platforms native WOO token.
WOO Network earns revenue on the back end, allowing zero fee trading while still being a profitable business model.
THE WOO TOKEN
The WOO token is a utility token allowing enhanced trading experience and access to first class trading features and services.
50% of the revenue generated by WOO Network contributes to the monthly buyback and burn through the purchasing of $WOO off the secondary market, removing them permanently from the circulating supply.
The monthly token burn stats can be viewed on WOO Network’s website.
$WOO can be staked to reduce trading fees and increase referral rebates.
Institutions generating large volumes on WOO X receive increased API trading rate limites and fee reductions.
A portion of tokens received from WOO Ventures early-stage project investments will be distributed to stakers.
$WOO can be staked on WOOFi to earn yields from the WOOFi swap fees.
DeFi liquidity provision and yield farming.
Borrow and lending
WOO tokens can be used as collateral for borrowing and lending on: Sushi Kashi, Rari Capital.
WOO stakers can gain access to social trading features on WOO X to emulate highly professional trading strategies from top-performing traders.
Access and discounts for institutional yield strategies
Users staking WOO tokens benefit from reduced capital requirements, management and performance fees for institutional-grade asset management services — such as Kronos Research's asset management services that generate stellar yields regardless of market conditions.
WOO Network will be progressively decentralized. WOO tokens are planned to be used as governance tokens to earn voting points based on amount and duration staked. Governance tokens will be able to be used to vote on various proposals affecting governance structure, listing, revenue sharing mechanisms, and staking mechanisms.
Sources: WOO Network Media platforms, Investopedia
WOO token information as of 21 JAN 2022 according to CoinGecko
Circulating supply: 884M
Total supply: 2,990.4M
Max supply: 3,000M
Market cap: $656M
Fully diluted valuation: $2,226M
ICO price: $0.03
Our primary concern when looking at tokenomics is the ability of large token holders to have a negative impact on price through the constant dumping of their allocation as their unlock schedule allows them to sell on the open market.
In WOO’s case we are mostly concerned in the Token Sale and Team allocations of tokens:
Of the 20% token sale, 10% were sold in private and public sales. The other 10% have been sold through seed and private equity rounds. These tokens vest linearly over 1.5 years from April 2021 to October 2022.
We are thus currently halfway through the unlock schedule for these large token holders. We believe that most short term sell pressure has faded as early investors covered their initial investment plus some profits.
20% of total supply have also been allocated to the WOO Network team. These are vesting linearly over 3.5 years, with a large share held in reserve for future team members. This is the portion we are most concerned about as it presents the highest risk in terms of price dump and project abandon. However we believe the backing of recent large funds such as Three Arrows Capital, and the incentives to build and hold these tokens outweigh the short term benefit of dumping.
WOO Network is currently ranked #44 amongst exchanges according to CoinMarketCap through a score grid based on traffic, liquidity, trading volume and confidence in the legitimacy of trading volumes reported.
We believe there is a 10x conservative potential growth in the number of weekly visits, putting it at Bitfinex’ — another institutional/whale positioned exchange — and MEXC — an exchange designed for retail investors offering a wide range of tokens — level.
Native Token Comparison
We consider FTT to be the benchmark of exchange native tokens, both in its use case as well as token buy and burn mechanism. We will use it as a relative valuation metric. 30% of FTX’ derivatives platform goes towards the B&B of FTT, while 50% of WOO Network’s revenue is used for the B&B of WOO.
Here are revenue stats going towards token B&B for 2021:
FTT’ revenue is currently 130x larger than WOO, although the comparison is deceitful because of the rapid growth and expansion of FTT, as well as its first mover advantage, revenue to fully diluted market cap ratio is about 16x larger for FTT.
We believe a 10x upside potential can reasonably be assumed considering the growth outlook in revenue, which should translate to a rapid growth in WOO’s market cap as investors will be looking to capture the value created by the exchange.
We thus forecast a price per token of $10.
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