MOON Market Cap is Misleading

We look at the market cap of MOON and and think that it is low and that it has a lot of room to grow. I have read many comments where people compare it to the market cap of other cryptos. You can do that here if you are so inclined.

The fact is that MOON has low liquidity. What that means is that even though the market cap of MOON is in the 8 figure range, there is only ~$200,000 of liquidity on DEXs. Half of that is MOON and the other half is ETH and stablecoins. That means that on DEXs you could only get ~$100,000. Now there are two CEXs that you might be able to get $25,000 to $100,000 from them. That means that realistically the liquidity of MOON is less than 1% of the market cap.

A $10,000 buy or sell order has a 10%+ price impact. This deters large purchases. Now there is an OTC market. The nice thing about the OTC market is that you can do large trades without impacting the price. Recently, there was a scam on the OTC market involving one of the trusted brokers (likely not intentional on the brokers end, but it still happened) and there is a less trust there than previously.

You can help make the market cap of MOON more “real” by adding liquidity. The recent proposal that passed to incentivize liquidity was designed to get more people interested in adding liquidity. When you add liquidity you get fees from the transactions on the DEX. There is a simple, but also sometimes hard to grasp concept called impermanent loss where you can end up with less value of crypto than you started with if both tokens in the liquidity pool don’t go up or down in value at the same rate. If you expect MOON to outperform the market then this will likely occur.

Even though the liquidity that added to the pool might be worth less than if you did not add it to liquidity, it will provide a tool for MOON to flourish. This will likely benefit your MOON that you did not add to liquidity greatly.

The MOON liquidity rewards and the fees might completely offset impermanent loss and you might end up in the green with your liquidity pool addition, or you might be in the red. Regardless you should add liquidity. If you have never done it, it is a great learning experience and the fees on Arbitrum Nova are such that if you only want to “experiment” with adding $5 of liquidity it is not cost prohibitive.

Let’s make the market cap of MOON more “real”.