GRIN - FalconX Brokerage Research

- Every week, FalconX shares market insights with our institutional digital asset brokerage clients.

- Later on, we share snippets of these with the public.

- Here are some of our thoughts on Grin ($GRIN). If you'd like to become a client, request access here.

What is Grin?

Grin is a privacy coin implementation of the MimbleWimble protocol. Grin is a scalable privacy coin that has no addresses, no values, and is less storage intensive than other digital currencies. The coin has an unnamed founder, has been developed by the community and its mining algorithm is currently ASIC-resistant. The project has raised a total of $55k (Feb 3rd, 2019)  in community donations through a transparent funding process.

Grin utilizes Directed Acyclic Graph (DAG) to maintain the mempool state. This improves the performance and the scalability of Grin, while preventing duplicate unspent-transaction-outputs (UTXOs) and implies that the Grin blockchain scales with unspent outputs and not by the number of transactions.

Main Tenets -

1. Privacy as a default
2. Scalable transactions by storing a fraction of data
3. No ICO/pre-mine
4. Proven cryptography
5. Anonymous founding team with focus on community development

Criticisms -

1. Nodes must be online for transactions
2. No scripting language (ie. no smart contracts)
3. Many strong competitor coins (Liquidity - BTC, BCH; Privacy - ZEC, XMR)

Monetary Policy

A new Grin token is issued every second, ad infinitum. The block reward is 60 Grin with a block target each minute. Grin will have an infinite amount of coins with a linear supply schedule. This gives the project a predictable monetary policy where the dilution becomes smaller each year. The opportunity cost of selling Grin will be reduced as the stock to flow ratio will be incredibly low in the first few years after launch. This implies that Grin isn’t looking to replicate Bitcoin as a limited supply currency.

Privacy Market

Privacy cryptocurrencies are designed to preserve the privacy of their users. This is one of the major categories of cryptocurrencies with examples: Monero, Zcash, and Bytecoin. The privacy market is one of the few categories with a real use case in the near term. Privacy cryptocurrencies currently have around $1 billion market cap of $110 billion total cryptocurrency market cap. This group of cryptocurrencies had a weak performance compared to other categories in recent years. However, this could indicate a possible opportunity compared to the overall market.

Present popular privacy cryptocurrencies are able to handle their demands. However, none of them offer a scalable solution. Grin, introduces a new approach on how to offer great privacy and scalability. It is not possible to see amounts transacted in Grin transactions, hence the strong confidentiality. Grin uses Directed Acyclic Graph (DAG) to keep the mempool state. This improves the performance and the scalability of Grin, while preventing duplicate unspent-transaction-outputs (UTXOs).

Investment Potential

Grin is currently traded on exchanges including Poloniex, BitForex, KuCoin, LBank, Bisq, KuCoin, TradeOgre, Coinall and HotBit while it remains to be seen whether leading exchanges such as Binance will list the coin. Despite the long term promise of Grin, short term prospects of fair launch PoW coins can be grim. It is highly inflationary, especially in its early years. There will be no adjustments to supply nor a maximum cap. Grin is designed to be a private digital currency not a store of value that is deflationary.

Price predictions

The supply of Grin is infinite, and its emission schedule is constant. 60 Grin is awarded every block, and with block times fixed to one minute, which represents one new Grin mined every second for eternity, i.e. 86,400 new Grin every day. At the current price of $5.65 per Grin, almost $500,000 in new money needs to be infused every day just for the price to remain constant. If, for the next 24 hours, there was no net change in the money invested in the ecosystem, Grin would fall to $5.3.

With each day that passes, more money needs to be put towards buying Grin for the price to increase. For example, for Grin to hold at $5.65 by end of year, the market cap would see growth of over $150 million.

Traders must weigh the trade-off between technology and tokenomics when looking at Grin. With such an aggressive emission schedule, one must feel very strongly about what it brings to the table as a prerequisite to accumulate Grin. This growth is a function of fund flows into the cryptocurrency.

The information provided in FalconX documents and accompanying material is for informational purposes only.  It should not be considered legal or financial advice.  You should consult with an attorney or other professional to determine what may be best for your individual needs. FalconX does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. To the maximum extent permitted by law, FalconX disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. Content contained on or made available through this material is not intended to and does not constitute legal advice or investment advice and no attorney-client relationship is formed. Your use of this information is at your own risk.

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