One of our followers on Twitter asked us “What will you do when all of the ‘tokens to buy failed coins’ are used up? Is that the end of CoinJanitor’s capacity to clean up?” This is a very important question for us to address, and we would like to approach it from 3 different perspectives: economically, operationally and regarding CoinJanitor’s future developments.
Let’s start with the economic perspective. The JAN token, which is the tool CoinJanitor is deploying to buy dead coins, is a deflationary currency. Once CoinJanitor proves that the concept of buying out dead coins works, more dead coin holders will be interested in buy outs, generating a surge in demand:
- Given that JAN tokens are the only resource in the market that can satisfy that demand – not a lot of people would be encouraged to buy dead coins with other currencies, or they would have done it by now – the exchange rate of JAN tokens vis-à-vis dead coins should become more favorable for CoinJanitor.
- This means that the more dead coins CoinJanitor buys, the cheaper it will be for the project to buy the next coin, as the JAN reserve diminishes.
- Many would think that demand should also dwindle as less coins are left to be bought in the market, but coin death is a dynamic process. More coins are bound to die while CoinJanitor buys those that are already dead, helping to maintain demand steady.
Nevertheless, there could be a scenario in which CoinJanitor exceeds every expectation and becomes a victim of its own success: its reserves drop faster than expected and come dangerously close to being depleted:
- The CoinJanitor team thought about this scenario, so it will keep a strategic reserve of BTC and other top-ranked cryptocurrencies to buy JAN tokens in the open market.
- This provision also allows the project to intervene in the market to stabilize the price of JAN tokens so that its buy out process gains a degree of protection from speculation on JAN token prices – If JAN prices drop too much, reserves will be depleted faster and that could happen if there is a sudden dump of JAN tokens in the open market.
Replenishing CoinJanitor’s reserve is also a function of developing new tools with the code and data that the project will analyze after each buy out:
- These future developments will be sold to the public for JAN tokens.
- A portion of JAN tokens from the sales of these tools may go back into the reserve to shore up more acquisitions. After all, the assets acquired during those acquisitions will fuel further tool development.
- Future developments however, depend on our dead coin acquisitions. Our team wants to focus on the acquisition of dead coins first, so that it can start working around it. This means we will recur to economics and operational provisions to shore up reserves first if need be.
These points show how the CoinJanitor team has thought about the reserve depletion issue and how it will use every tool at its disposal to keep on buying dead coins, delivering on its promise to clean up crypto. We have built our system with resilience in mind. We are confident that we will be able to continue cleaning up crypto through thick and thin, especially if the public keeps supporting us and asking us the hard questions. Therefore, if you have a question, please ask us on Telegram, Twitter or Facebook. We welcome your inquiries because we want you to understand what we are doing, and because they strengthen our project!