The MIDAS Lock-in represents a very different financial strategy to that taken by other platforms offering similar services; moving away from a fee structure reliant to cover fixed costs to one offering a zero fee platform.
To the benefits of our users and listed projects, Midas is operated in a similar manner to a ‘traditional’ business. We closely analyse and monitor our financial progression, budgets and future projections. By doing so, we are able to offer feature such as the zero fee platform based on carefully considered calculations and financial projections ensuring that this change is sustainable in the short and long term.
Through the final article in the MIDAS Lock-in series, the progress Midas has been making behind the scenes - financially speaking - will be assessed and analysed to demonstrate how Midas can introduce such a revolutionary new feature sustainably and why the MIDAS Lock-in is here to stay for the long term.
What changes will be experienced through the launch of the MIDAS Lock-in?
Let’s start with outlining the changes we expect to the Midas revenue structure after the introduction of the MIDAS Lock-in:
Revenue taken via fees are set to decrease
Most obviously, the revenue we take through fees will decrease. After the introduction of MIDAS as an option for paying fees, we have typically experienced around 65-70% of investments paid in MIDAS, with the balance of fees paid in coins.
With MIDAS received from fees burned, we will only experience a loss of revenue from the 30-35% of investments chosen to be paid via the coin.
VPS/server overheads set to increase
With the expected increase of nodes operated by Midas after the introduction of the MIDAS Lock-in it is expected that our expenditure on server costs will increase - despite our ability to streamline server costs (see details on this below).
Number of users to Midas expected to increase
As Midas moves away from a model were fees are taken from the core activity of the platform - masternode investing - to one were fees are charged on optional features that each generate revenue, we expect this to increase the number of active investors, giving Midas greater potential to generate revenue from our wider investment ecosystem.
Revenue diversification: The changes implemented by Midas and the opportunity this brings.
Over the past six months, Midas has focused on the development and introduction of new investment instruments and investment features as well as launching wider platform in our ecosystem to achieve one goal: Diversify core activities along with our revenue streams.
By doing so, we effectively cross-subsidise revenue streams allowing Midas to offer our platform as zero fee across all coins via activation of the MIDAS Lock-in. The ability to offer Midas as a zero fee platform in the long term is not influenced by the success or adoption of the MIDAS Lock-in; thus launching without this was a financial possibility. However, by launching Midas as zero fee with the MIDAS Lock-in has provided MIDAS with a utility equal to or stronger than the previous MIDAS fee model.
All platforms offering instant shares have two core revenue streams; masternode revenue, and service fees. Platforms who gain revenue only via these sources are limited in two ways:
1) this revenue must stretch across project and platform development, salaries, buyback (if part of the WP), servers and any other fixed cost or overhead the project must cover, and;
2) the project operating the platform places all their interest in a single investment instrument, thus not providing themselves nor their investors with diversified opportunities should the masternode space find difficulties, and therefore placing the future of that platform at risk.
For platforms who have not diversified, writing off service fees from their generated revenue simply is not possible, and launching their platform as zero could not happen.
However, this is where Midas is a little different! Through the launch of varied investment instruments and platform features, Midas has diversified by an additional eight revenue streams across the five revenue categories displayed below, which has provided Midas with the opportunity to the write-off the revenue previously generated from service fees to offer the platform with zero fees across all coins:
Midex revenue: Revenue associated with the operation of Midex exchange.
Fline revenue: Revenue share provided through the profit generated by the Fline bot.
Commercial revenue: Revenue generated through commercial collaborations with a number of platforms, exchanges, services and advertising channels.
Marketing services: Revenue generated through optional marketing services and features provided to the projects listed to Midas.
BTC in BTC out revenue: Covers any revenue generated by the BTC in BTC out concept and any other OTC service fees taken.
Cost controlling: A vital part of any business
For any business to succeed, they must have a firm grip on their finances. There must be a strong understanding in budgeting, revenue forecasting and profit analysis to ensure targets are being achieved and maintained in order to support the development and progression of that business.
Midas is no different. In addition to diversifying our revenue streams, Midas have also been working on keeping a tight control of fixed costs and overheads. Without this tight control, writing off a major revenue stream whilst maintaining the same costs and overheads would be a dangerous strategy.
With the launch of Midas as a zero fee platform alongside the MIDAS Lock-in, we have assessed that the number of nodes we will operate is due to increase.
To provide tight control of overheads, Midas are now able to deploy a node for between €0.30 - €0.50/node/month and allows for a far higher number deployment of nodes whilst keeping server costs under control.
This goes a long way in gaining absolute financial control of the Midas business model to ensure the long term sustainability of Midas as a zero fee platform.
Let’s take a closer look: the MIDAS revenue breakdown and projections
Key to any business - traditional business or otherwise - is working cash flow. Without it, everything stops! Displayed in the image below is revenue analysis and projections for 2019.
Revenue streams developed by Midas have been grouped in to the six categories shown below:
Existing revenue streams
Masternode revenue: Rewards generated by an unfilled Instant Share, later sold to BTC.
Service fees: Fees taken in the coin, later sold to BTC.
As mentioned in the opening paragraphs, all shared investment platforms hold these revenue streams. Reputable platforms handle the sale of these coins responsibly and sustainably. Midas make any coins accumulated available through BTC in, so no coins are sold on exchange.
New revenue streams (see descriptions above)
BTC in BTC out revenue
It is our intention to further diversify revenue streams, bringing new investments instruments to the Midas community and continue the migration to a platform generating revenue from optional services to allow the core activities of the Midas ecosystem to remain free to our current, and new users.
How this change will provide a positive impact to overall revenue?
Midas as a zero fee platform is a major milestone for the masternode space. By becoming the first platform to provide the ability to deploy nodes or partial shares in masternodes without any cost, this is expected to bring an increase of new users/investors to the Midas platform who search to find greater profit potential in their investments.
An increase of users to the Midas ecosystem provides greater potential for increased MIDAS utility as well as greater potential to generate revenue from the optional services developed and launched by Midas.
Through detailed financial projections, we have been able to calculate the average revenue a user will generate within the Midas ecosystem per month through the optional investments instruments or services provided by Midas. Through the results shown below, a gradual increase in revenue generated from the average user can be seen, which we expect to occur through the increase of awareness and development of these services. These figures do not take in to account any unknown future features/services launched by Midas.
Throughout this week, we have published a series of articles addressing the Lock-in, financials, economics and the benefits:
Tuesday 9th April - Midas launch zero fee platform
Wednesday 10th April - The benefits of the MIDAS Lock-in
Thursday 11th April - MIDAS economics: How will the Lock-in effect MIDAS
Monday 15th April - The financial outlook of Midas: How can we afford this?