Macroeconomist calls business models of most altcoins unsustainable

Lyn Alden also noted that the UST stablecoin attracted investors with its high yield, but could not be used as a means of payment

25.05.2022 - 11:10

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2 min

What’s new? Macroeconomist Lyn Alden said that most altcoins are based on unsustainable business models. She explained that many projects intentionally sell assets at lower prices to make more profits. According to Alden, in such models, after an initial explosive phase of revenue growth, altcoin developers may raise prices. However, this will only work if the asset is in demand for its own sake, not because it is underpriced.

If you make a business selling $20 bills for $10 each, your revenue growth will be massive and your total addressable market will be nearly infinite.But of course it's unsustainable.Many altcoin projects and persistently unprofitable growth stocks, are basically that.— Lyn Alden (@LynAldenContact) May 22, 2022

What else did Alden add? The expert believes that a similar model underlay the Terra project: investors were attracted by the high yield, but the unstable structure of the UST did not allow the asset to be used as a means of payment. The economist added:

“If you make a business selling $20 bills for $10 each, your revenue growth will be massive and your total addressable market will be nearly infinite. But of course, it's unsustainable.”

What happened before? Crypto analyst Michaël van de Poppe spoke about three promising altcoins. He urged to buy Chainlink (LINK), Decentraland (MANA), and THORChain (RUNE) as soon as possible.

Also, analysts at investment bank Goldman Sachs named a condition for the success and viability of algorithmic stablecoins. To do this, the projects need to find a wider application for payments in the real economy. The bank noted that stablecoins fulfill a need of the cryptocurrency market, allowing investors to trade less volatile assets without the difficulty of converting them into fiat currencies.

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