A bull cycle is a period of time when the prices of assets, such as stocks, bonds, and cryptocurrencies, are rising. During a bull cycle, investors are more likely to take on more risk, and project teams can take advantage of this to raise capital and grow their businesses.
Buyback - the repurchase of tokens from the market under certain conditions. It depends on the specific project and its strategy.
The most neutral strategy is to repurchase tokens from the market from the protocol's profit.
For example, the protocol's profit is 300,000 per month, 50% of which goes to repurchase tokens from the market. Of these 50%, 10% goes to stimulate user activity, and the remaining 40% goes to the treasury, which is used over time for important updates, food for developers, and other operational expenses.
In general, buybacks allow you to maintain a comfortable price range for the token, both for the project and for trading among users. The more comfortable the chart is, the more users will buy, trade, and hold it.
The essence of buybacks allows founders to not so clearly kill the token price, maintain the user base, and fill their bags with both tokens and dollars, which will be needed to exit sideways, break through ATH on bull markets.
In general, the correct interaction of accumulated funds and news background allows you to both break through important resistances on the chart, and support the price by placing walls for the repurchase of coins, which serve as support.
We have analyzed the essence of buybacks and their application.
Now we need to figure out how to distinguish between cunning founders and those who really think at least a year ahead and plan not to bury the project.
The simplest way to unmask real buybacks that go to the development of the project, and not for profit over users, is to project the following theses:
The project token is deflationary or completely in the market (GMX and Arbi ecosystem, LOOKS)RoadMap is detailed for a year aheadLive social networks of the project, maintaining user activity Complete openness to the community and providing reports on where, where, and for what the money goes.
And of course, it is important to know exactly where and how the money for buybacks comes from (trading fees, NFT royalties).
If you don't understand where the protocol gets the money, these money are taken from your pocket.
In general, adequate projects develop according to the following model:
Year 1 - survive, gain a user base, and earn money to develop the project.
2-3 years - rebuild the company into a more sustainable model and start full-scale development.
3 and subsequent years - earn passive income from the product, improve the structure, and simply add updates according to the release of new technologies on the market, the brand is there, the project is built.
If the project does not have similar indicators, it can be marked as a high-risk asset for investing in the long term.
Let's add a little more information for thought.
If you remember the recent bull cycle, which lasted all of 2021, you can give a hundred examples of irresponsible founders whose earnings were based solely on the sale of their native token:
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This practice, when a project has no alternatives other than selling team tokens, always leads to sad consequences.
Of course, these are two sides of the same coin. On the one hand, the total killing of all those who like to take risks and buy highs. On the other hand, creating a safety net for founders that will go to the development of the project, although often it goes to buy a castle in Switzerland, but this is already lyricism.
In fact, as soon as the project has lived long enough, the coins have entered the market, and the stage of accumulation begins, and the development of the project with subsequent scaling.
Always remember that the market rewards the disciplined and those who know how to wait. And the greedy will be disgraced. The motto of greedy traders usually sounds like this: "In 2, or maybe 3 - our wallets will burst" and often not from profit.
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