Reflections on DeWi Mining Economics (Nov’22)

Helium’s $MOBILE token—prior to exchange listings—was trading OTC around ~$0.0005, implying ~$12M circulating market cap (by end‑genesis Q1’23 projections) or ~$106M fully diluted. With $HNT around $2.50 (~$530M FDV at 213M max supply), relative valuations raise questions about the attractiveness of mining MOBILE.

Each MOBILE token represents a claim on $HNT in the subDAO treasury. Of 213M max HNT, ~132M were circulating and ~81M locked; of the locked, 10M (12%) to LoRa miners/veHNT, 24M (30%) to $HST holders, and 47M (58%) to subDAO treasuries. In theory, the fair MOBILE/HNT price reflects (1) MOBILE’s share of the 47M via HIP‑51 utility scores, (2) a discount rate (e.g., 6% per HNT staking yields), (3) future MOBILE issuance (dilution), and (4) any speculative premium/discount.

What the market was implying

• Share of rewards. Majority (~75%+) of future subDAO rewards going to MOBILE.
• Near‑term valuation. MOBILE fairly valued on ’23–’25E circulating supply.

Is the first assumption justifiable? Helium docs suggested LoRa would initially earn most rewards (~70%+), with MOBILE’s utility score ramping as paid data transfer arrives. Because rewards decay exponentially, distribution is front‑loaded into the ’22–Q1’25 window—making early paid usage the biggest lever for intrinsic value.

Treasury redemption & issuance

Per HIP‑53 language, subDAO HNT liquidity references “all locked MOBILE tokens,” which is typically interpreted against max supply. Practically, this meant treasury payout per MOBILE could be below its pro‑rata share using near‑term circulating supply (e.g., ~$0.0003 vs ~$0.0010 in ’23E), weakening any hard backstop and pushing miners to rely on forward buyers pricing on circulating‑supply metrics.

Paybacks & residual value

Based on miner reward and cost estimates at the time, DeWi miners saw ~7‑month paybacks on consumer deployments and ~10‑month on enterprise (during proof‑of‑coverage eras), normalizing as data transfer scales. Residual value matters: unlike many consumer LoRa radios (near‑zero resale), certain cellular radios retain utility for ISPs; even 50% resale can halve payback periods and meaningfully boost IRR vs a naive “months‑to‑1x” metric.

Data transfer unit economics

For 10 GB transferred on Helium: ~$5 of HNT is burned; ~$1.50 to HST, ~$0.35 to other networks (assuming 90% MOBILE utility), and ~$3.15 deposited to the MOBILE treasury. Only ~40% of MOBILE emissions reward data transfer (~31% incl. pre‑mine), so MOBILE miners capture just ~$1.00–$1.25 per 10 GB.

Under more conservative assumptions (e.g., 60% utility), treasury accrual falls and redeemable value drops further once future dilution is considered. By contrast, Pollen and XNET models route a larger share back to miners (~$2.00–$2.40 per 10 GB after dilution), strengthening the case for fully independent networks when economics diverge.

Notes / assumptions

• Foundation/team token schedules assumed linear (typical 3–10y vest/cliff patterns).
• MOBILE genesis initially 100M/day (donation extended runway), later 178M/day with 60% to miners; assumptions yielded ~212B max MOBILE if genesis extended through Mar 31, 2023.
• HNT max supply used here: 213M (vs 223M often cited) due to historical block‑time delays.

Disclaimers: This content is not investment, legal, tax, or financial advice. EV3 and affiliates may hold positions in assets mentioned.