Welcome to the 83rd Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Merit Circle. This will be comprised of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!
Introduction
For the fourth Coin Report of 2022, I will be covering Merit Circle, as the winner of the May community poll. I will refrain from too much preamble but I would like to mention that prior to the publication of this report I had little to no idea as to what Merit Circle is or does, although I was aware of how much hype surrounded its launch and its huge capital raise.
I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about Merit Circle prior to reading this report, here are some primary links:
Fundamental Analysis
General:
Name: Merit Circle
Ticker: MC
Algorithm: ERC-20 and BEP-20
Sector: DAO / Play-to-Earn
Exchanges: Binance, Gate.io, Kraken, Gemini, Uniswap, Nominex, PancakeSwap, Huobi Global, Bitrue, LBank, BitMart, Poloniex, CoinEx and Hoo.com
Launch Overview
Merit Circle launched in September 2021, initially raising $4,500,000 in a seed round to fund development in exchange for 14.06% of the maximum supply of 1,000,000,000 MC, at $0.032 per token. In November 2021, they then raised $105,600,000 in a public sale for 4.1% of the supply, at $2.57 on average per token. DAO Governance was then immediately launched subsequent to the public sale. The Merit Circle supply was distributed as follows:
- Seed Sale: 14.06%
- Public Sale: 4.1%
- Binance Launchpool: 1.25%
- Community Incentives: 30.19%
- Team and Advisors: 20%
- DAO Treasury: 16.4%
- Staking Rewards: 10%
- Retroactive Rewards: 4%
Price-History Overview
There isn’t a great deal of price-history available as Merit Circle has only been trading since November 2021, with it forming its all-time high against Bitcoin at 24,500 satoshis late in that month, and at $14.95 against the Dollar. It formed its all-time low at $0.97 in Mid-May 2022 and at 3400 satoshis against BTC. I will take a more detailed look at this price-action in the Technical Analysis section.
Project Overview
Merit Circle is seeking to be a leading decentralised autonomous organisation, specifically focused on investment in play-to-earn gaming, whereby the DAO can lend out its own NFT assets to players, with the goal of increasing in-game earnings.
Let’s begin with some Metric Analysis:
Metric Analysis:
Below are listed a number of important metrics, all of which are accurate as of 26th May 2022. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.
Metrics:
General:
Price: $1.03 (3520 satoshis)
Circulating Supply: 104,239,520 MC
Total Supply: 1,000,000,000 MC
Maximum Supply: 1,000,000,000 MC
% of Max. Supply Minted: 100%
Network Value: $106,708,579 (3669.23 BTC)
Network Value at Max. Supply: $1,023,686,400
Exchange Volume: $1,865,692 ($2,290,566 excluding wash)
Exchange Volume-to-Network Value: 2.15% excluding wash
Category: Midcap
Average Price (30-Day): $1.388
Average Exchange Volume (30-Day): $3,672,333
Average Network Value (30-Day): $151,138,358
Average Exchange Volume (30-Day)-to-Network Value: 2.43%
Volatility* (30-Day): -0.1136
Average Daily On-Chain Transactions (30-Day): 198.8
Average Daily Transactional Value** (30-Day): $14,292,385 (source)
NVT*** (30-Day): 7.47
% Price Change USD (30-Day): -44.5%
% Price Change USD (1-Year): N/A
USD All-Time High: $11.70
% From USD All-Time High: -90.7%
Premine % of Max. Supply: N/A
Premine Location: N/A
Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 56.04 BTC
Liquidity-to-Network Value %: 1.53%
Supply Available on Exchanges: 15,715,887 MC
% of Circulating Supply Available on Exchanges: 15.08%
*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.
**Transactional Value in $ is calculated by taking the daily transactional value in MC and multiplying it by price.
***NVT is calculated by dividing the Network Value by the Average Daily Transactional Value. See here for more on NVT.
Supply Emission & Inflation:
Block Reward Schedule: Vesting unlock schedule as per this source
Average Block Time: N/A
Current Block Height: N/A
Annual Supply Emission: 315,560,480 MC (11,107 BTC-worth)
Annual Inflation Rate: 302.73%
Circulating Supply in 365 Days: 419,800,000 MC
Token Sale:
The following details were taken from this source.
Public Sale Period: November 2021
Total Tokens: 1,000,000,000 MC
Total Tokens Available for Public Sale: 41,020,000 MC
Average Price Per Token: $2.57
Total Raised: $105,600,000
Total Tokens Sold: 41,020,000 MC
Further Details:
- Seed Round: $4.5mn raised for 140,625,000 MC at $0.032 per token, or 14% of supply.
- Token Distribution is as follows: 14.06% Seed Sale; 4.1% Public Sale; 1.25% Binance Launchpool; 30.19% Community Incentives; 20% Team and Advisors; 16.4% DAO Treasury; 10%; Staking Rewards; and 4% Retroactive Rewards.
Distribution:
Address Count: 6,564
Supply Held By Top 10 Addresses: 1.89%*
Supply Held By Top 20 Addresses: 2.42%*
Supply Held By Top 100 Addresses: 3.45%*
Inactive Address Count in Top 20 (30 Days of No Activity): 8
*Excludes smart contracts and team and exchange-owned addresses, and is calculated as a percentage of circulating supply.
Analysis:
If we begin by taking a look at on-chain data, we find that Merit Circle has averaged 198.8 daily transactions for the past 30 days, equating to an average daily transactional value of $14,292,385, which gives it a 30-day NVT of 7.47, which is absurdly low. I am not too sure what is going on here, but upon inspection there is one day of transactions that skews this figure drastically, where, on 10th May, ~271mn MC was exchanged, accounting for 62% of the transactional value of the past 30 days.
Now, looking at the remaining General metrics, let’s take a look at Volatility:
I calculated this to be -0.1136 for the past 30 days, which is moderate, and thus not necessarily indicative of an accumulation range. It is possible that Merit Circle is being accumulated here but we will need to look more deeply at both holder activity and the chart later in this report.
Next up, we have the metrics relating to Liquidity:
Firstly, I found that there was 56.04 BTC of buy-side liquidity within 10% of current prices to be found across all exchanges, equating to 1.53% of its Network Value. This places Merit Circle in the top quarter of all projects previously featured in these reports, which is promising.
As for sell-side liquidity, I found that 15,715,887 MC was available for purchase in the orderbooks, equating to 15.08% of the circulating supply. This is the highest figure recorded in these reports, narrowly beating out Gather from the previous report, it must be stated that 14.15mn MC of this is liquidity on Uniswap and PancakeSwap and only 1.5mn MC is on centralised exchange orderbooks. Nonetheless, there is plenty of Merit Circle available to purchase.
Moving onto volume, Merit Circle is reported to have traded $2,865,692 of Exchange Volume over the past 24 hours, equating to 2.69% of its Network Value. However, some of this is wash trading on less reputable exchanges, and if we discount the wash, the actual traded volume appears closer to $2,290,566, which is 2.15% of its Network Value (or market cap). Further, Average Exchange Volume was $3,672,333 (accounting for wash) for the past 30 days, equating to 2.43% of Merit Circle’s Average Network Value for the same period. This indicates a moderate level of speculative interest of late.
Now, let’s take a look at Supply Emission:
If we consider the supply emission schedule, there is an unlock schedule for vested tokens that indicates 315,560,480 MC of supply joining circulation, equating to 11,107 BTC, which provides 302.72% of annual inflation, which is huge. This puts circulating supply at 419,800,000 MC in a year’s time.
Now, more important than the nominal figures for emission alone are their relationship with traded volume and liquidity.
If we take the above figure of 315.5mn MC joining circulation in the forthcoming year, we can work out that average daily supply emission during that period will be 864,549 MC. This equates to 30.4 BTC, or $885,027-worth. Given this, Merit Circle’s 24-hour traded volume of $2,290,566 is sufficient to support such emission. Further, its buy-side liquidity is 1.84x greater than that daily emission, which is modestly supportive of prices. Headwinds for future price growth however appear to be potentially very high.
Finally, let us take a look at some Distribution:
Using the rich-list, I found that there are currently 6,564 holders of MC on Ethereum.
Of the maximum supply of 1,000,000 MC, if we look specifically at circulating supply and exclude team, exchange and smart-contract addresses, the top 10 control 1.89%; the top 20 control 2,42%; and the top 100 control 3.45%.
Further, 924,500,000 MC is owned by the top 15 addresses, equating to 99% of the maximum supply, all of which is smart contracts and team and exchange-owned addresses.
Among the top 20 non-exchange, privately-owned addresses, 8 were inactive over the past 30 days, whilst only 1 address was found to be distributing and 11 were accumulating, with net inflows into these addresses of 1,022,985 MC over that period, equating to 0.98% of circulating supply. This is quite promising from a speculator’s perspective.
And that concludes this section. Onto the Merit Circle Community:
Community:
There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.
Social Media:
Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.
Merit Circle is present on all platforms except Facebook. To begin, let’s look at the various social metrics that I calculated from the Merit Circle Twitter account:
Twitter Followers: 100,851
Tweets: 1,485
Average Twitter Engagement: 0.09%
Facebook Likes: N/A
Facebook Posts (30-Day): N/A
Average Facebook Engagement: N/A
As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.
Twitter:
Merit Circle has a large audience of 100,851 followers. Its engagement rate, however, is quite poor at 0.09%. Relative to global benchmarks, this is only twice the average across all industries of 0.045% and 3.3x greater than the average in the Tech and Software industry of 0.027%. Relative to other projects featured in these reports, it is in the bottom five, which is disappointing, but nominally there is engagement here – it is simply that the audience size is so large and many of these followers are not being engaged by the content. What I will say is that there is a clear commitment to publishing content here, which is good to see.
Facebook:
There is no Facebook page for Merit Circle.
Telegram:
The Merit Circle Telegram group has 8,818 members.
Below, I have summarised my takeaways from the past week of activity:
- The team are active in the chat and regularly respond to community questions and queries.
- The chat is sporadically active, with some days seeing regular discussion throughout the duration of the day and others seeing very little activity at all.
- The community are active in not only discussing the development and future expectations of Merit Circle but also in progressing these aims themselves, which is rare to see.
- The community also have more social discussions not relating to Merit Circle, and there is rarely discussion on price, which is refreshing.
- Much of the discussion focuses on the play-to-earn sector, dissecting how users are likely to be accrued, how they spend, what dynamics are important etc. It is very promising from an outside perspective.
- Whilst there are some announcements that also get published here to keep the community informed, I will focus on these in a separate section later in the report where I determine developmental progress.
- Overall – good stuff indeed.
Discord:
The Merit Circle Discord group has 21,801 members.
Whilst the Discord is nearly three times larger than the Telegram group, the level of activity is roughly the same, where most channels are largely inactive, but the Token Discussion channel is about as active as the Telegram. Within it, much of the discussion overlaps with that of the Telegram group, albeit even more acutely focused on the development of Merit Circle and its MC governance token. Beyond this, there is nothing particularly interesting except to mention that there are almost 1600 gamers in the Discord channels focused on play-to-earn, as well as ~7,770 in the DAO channels. Among other important channels, Governance has some activity, as does Marketing Ideas, but these have been fairly quiet over the past couple of weeks.
BitcoinTalk:
There is no BitcoinTalk thread for Merit Circle.
And that concludes my evaluation of the Merit Circle community.
Let’s take a look at its development:
Development:
For the following Development analysis, I will be evaluating project leadership, the whitepaper, the roadmap, available wallets and finally providing a general overview of developmental progress:
Project Leadership:
There is no information on the core team available on the website, but there are 22 employees listed on LinkedIn.
This listed team comprises:
- Marco van den Heuvel – Chief Executive Officer
- Tommy Quite – Chief Financial Officer
- Thale Sonnemans – Head of Operations
- Omar Ramirez – Product Manager
- Thomas Francken – Investment Manager
- Freek Caron – Growth Manager
- Remco Katz – Partnerships
- Pearl Renua – Head of HR & Culture
- Rainier Gomez – Head of Community
- Aseem Mundkur – Junior Operations
- Jen Herrera – Community Moderator
- Cleif DC – Community Moderator
- Kevin Ian Bones – Scholarship Manager
The remaining team are not listed on LinkedIn.
Whitepaper:
There is no whitepaper available for Merit Circle.
Roadmap:
There is no roadmap available on the Merit Circle website, but I did find this one below from the Binance Research report:
Whilst it would be far more useful to have a more detailed roadmap whereby potential investors (and users) can evaluate both the direction and progress being made for Merit Circle, this at least gives us some indication as to the most significant goals for the project, with each quarter focused on something distinct.
In Q4 2021, Merit Circle was focused on scaling of community and strategies, whilst in Q1 2022, the focus moved toward tooling, whereby a player dashboard was developed for the benefit of the users. Subsequently, as we have moved into Q2 2022, the focus has again shifted to decentralisation, with on-chain voting and subDAO roll-out. As we move into Q3, Merit Circle will be focused on brand leverage. This will include building out eSports teams, player sponsorships, sponsorships deals, NFT deals and liquid vaults.
Whilst, as I say, this does give us some indication as to where the efforts are being directed, something with greater detail would be beneficial, particularly with links to further reading on each of these topics for potential users who are largely unaware.
Wallets:
As Merit Circle launched with an ERC-20 token and a BEP-20 token, there are a plethora of available wallets, including hardware wallets like Ledger and Trezor, web wallets and mobile wallets that are ERC or BEP-compatible.
Developmental Progress:
I have provided some key takeaways regarding Merit Circle’s developmental progress below. These have been compiled from the various blog sources available, including Medium and their own newsletter:
- Merit Circle partnered with Cantina Royale, bootstrapping existing NFT collections in a top-down arcade shooter game.
- Merit Circle partnered with Axes Metaverse, created by Azur Games.
- Merit Circle partnered with Shrapnel, a first-person shooter that is expected to be the first moddable triple-A FPS game on blockchain.
- Merit Circle partnered with The Lord of Light, a RPG.
- Merit Circle partnered with Undra, an explorative MMO.
- Merit Circle partnered with Blast Royale, a cross-platform mobile-first game.
- Merit Circle partnered with Goons of Balatron, which features a play-to-earn card strategy and land ownership.
- Merit Circle is currently developing an NFT marketplace for in-game assets to improve upon user experience.
- Merit Circle partnered with city-building game, Civitas.
- Merit Circle Studios is an arm of the DAO that will allow for publication of their own concepts and projects as well as incubation of third-party games – an example of which is Edenhorde.
- Merit Circle partnered with Web3 Football Manager game, Footium.
- Merit Circle partnered with MetalCore, a MMORPG with play-to-earn and win-to-earn components.
- Merit Circle partnered with Flair Finance, an NFT launchpad and escrow protocol.
- Merit Circle partnered with Rainmaker Games, a play-to-earn gaming platform, similar to Epic Games and Steam.
- As of March 2022, Merit Circle DAO is now focused on four verticals: Investments; Studios; Marketplace; and Gaming.
- As of 30th April 2022, the Merit Circle Treasury contained $115,318,533, down ~$5m from the treasury balance in December 2021. Of this, $35.85mn is in cash or cash equivalents, $45.1mn is staked, $9mn is in NFTs and $25.5mn is in tokens.
And that concludes my fundamental analysis of Merit Circle.
Technical Analysis
MC/USD
MC/BTC
As MC has only been trading for 7 months at this point and thus there is not a great deal of available price-history and both the Dollar and BTC pairs look identical. As such, I will focus on the Dollar pair here.
If we look at MC/USD, we can see that price began trading on listing at around $2.67 – a little above the average public sale price – and then rallied for a couple of weeks into an all-time high at $14.95 in late November. Following this, price entered its first bear market, bleeding out for months until it broke and closed below that $2.67 low in mid-January 2022, which led to a period of consolidation between $1.86 as support and resistance at $3.15. This consolidation ended in April, leading to a breakdown below range support and capitulation into the current all-time low at $0.97. At present, I would not be interested in this for an entry, as we have only been range-bound above that low for a week or so. If the pair manages to hold this range between $0.97 and resistance at $1.18 for several more weeks, it becomes a little more interesting, but given the fully diluted valuation and the fact that we are still 30x above seed round prices and with ~300m+ MC to be unlocked over the next year, I think we are more likely to break lower and continue bleeding. Given this unlock schedule, I will be staying clear of MC for the foreseeable future unless we somehow see a significant capitulation below current prices right the way down to within a few multiples of that seed price.
And that concludes my evaluation of Merit Circle.
Conclusion
This report is now approaching 4,000 words, and it is time to draw it to a close.
My final grading for Merit Circle is 6 out of 10.
Here, you can find my grading framework, for reference.
Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.
I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.
