How to avoid that DENT Wireless is giving away valuable DENTs to the wrong people?
In this article I explain how DENT Wireless is rewarding the wrong people who take advantage of the badly executed strategies, policies, and actions with respect to the transaction flows of the DENT tokens inside the DENT ecosystem.
A long all the processes, there are several “leakages” where the team loses unnecessary valuable DENTs to the wrong participants…
When, where and to whom is DENT Wireless’ losing valuable DENTs?
- By giving away free DENTs to referrers and new DENT App users.
- By allowing traders in mobile data and prepaid packages to earn “free” DENTs.
- By giving away free voice minutes to Afterburner users who are not actual paying clients.
- By rewarding DENT Exchange traders with easy DENT trade income who trade in the DENT/BTC pair by always using market orders.
- By selling DENT releases from the main company wallet (war chest) too cheap.
- [Upcoming] By allowing users to buy larger sized data plans and split them into smaller ones and sell these on the new marketplace for selling unused data.
Table of Contents
- 1 Giving away free DENTs to referrers and new DENT App users
- 2 Allowing traders in mobile data and prepaid packages to earn “free” DENTs
- 3 Giving away free voice minutes to Afterburner users who are not actual paying clients
- 4 Rewarding DENT Exchange DENT/BTC pair traders with easy DENT trade income
- 5 DENT releases from the main company wallet (war chest)
- 6 [Upcoming] Selling Unused eSIM data
- 7 Summary and conclusion
Giving away free DENTs to referrers and new DENT App users
We have created articles about this subject earlier. Just read this article: DENT Wireless Marketing: referral and social media marketing, and other marketing strategies.
It describes the history and background of how DENT Wireless uses a referral program where it spent billions of DENTs to acquire new DENT App users without focusing on getting new paying customers on board.
Luckily, since last week, the number of free DENTs that both the referrer and the new user will get has been lowered to just 100 DENT for everyone.
And finally, the shift has been focused from getting as much as possible new App users to getting real paying new clients. Just have a look at the new campaign Buy an eSIM data plan and Get 5GB Mobile Data for Free (5GB for both the new user and the referrer).
So, enough said about this leakage. The team has picked this up.
Allowing traders in mobile data and prepaid packages to earn “free” DENTs
In our article about DENT Exchange, we described in this paragraph Trading Mobile data and prepaid top-ups on DENT Exchange in which packages can be traded and how this trading works.
We also explained that in all cases DENT Wireless is the issuer of these packages and sells them initially on DENT Exchange, and that besides the traders, who are temporarily holding these packages for just trading purposes, the ultimate buyers are always the DENT App users.
So, instead of a marketplace, DENT Wireless can easily sell these packages directly to the DENT App users without losing margin to traders who now can easily make a profit by just buying the packages from DENT Wireless and setting their prices higher. And of course, this leads to unnecessary high (inflated) prices. With unsatisfied DENT App users who can only purchase the packages for too high prices.
Hence, the simplest solution is to just stop with this marketplace, and only develop a mobile data marketplace for selling of unused data (and not for newly issued packages).
Giving away free voice minutes to Afterburner users who are not actual paying clients
As you probably know, there is a DENT Afterburner Loyalty Program. This program is accessible for DENT Android and DENT Exchange users. The idea is that loyal customers get extra benefits.
Currently, users who deposited their DENT into the Afterburner Vault, can get discounts (lower DENT Exchange transaction fees), extra rewards (more referrals and Offer Wall rewards), and also get free DENT Global Voice minutes (every 14 days). And the more deposited, the higher the benefits.
This sounds good, but there is a “problem” with the free voice minutes.
Users who just lock their DENT into the AB Vault, will get “unlimited” free voice minutes as long as they keep their DENT inside the AB Vault.
There is no need to purchase any of the DENT Wireless’ telco products. So, AB users, can have free voice minutes for “life”. Of course, this comes with a cost for DW.
Maybe, DW hopes that users get used to DENT Voice and will buy extra minutes, but as far as we can see, there are almost no DENT Voice sales (at least not in the public visible tradeable voice pairs on DENT Exchange).
So, you can argue why should DW reward AB users who are not paying customers?
Shouldn’t there be any form of “loyalty” from the AB user who purchases something from DW (at least once in a while)?
Hence, how can we stop this leakage?
Of course, the easiest thing is just to stop the free voice minutes.
But a better solution would be to make the free voice minutes “dependable” whether or not a user actually spends money on DWs telco products.
There are many options, but think about “VoiceBacks” (like cashbacks), the more a user spends, the more voice minutes he will get. Not in the form of of voice minutes every 14 days. No, a simple X amount of Global Voice minutes for spending Y amount of telco purchases where the voice minutes have no duration/validity (or a long validity of at least 2 years).
(Of course, to reward DENT usage, we would like to see that users who pay with DENTs are getting extra free voice minutes. A great way to reward loyal clients, and excellent way to lower the token velocity)
Rewarding DENT Exchange DENT/BTC pair traders with easy DENT trade income
This leakage is for most of you “new” and needs some more background information.
It has to do that DENT Wireless is always buying DENT at the highest ask price, and selling DENT at the highest bid price. Or to say it in other words… buying and selling with market orders and not with limit orders.
So, let’s look more into these transactions.
DENT Wireless will buy DENT on DENT Exchange in 2 cases:
- In case a user pays with fiat (via PayPal or Credit Card) for one of DWs telco products. To activate the smart contract and to release this product to the DENT app user, DW needs to purchase the related DENT (as the received DENT by DW inside their balance triggers this release).
- In case a DENT app users receives free DENT incentives either as referral or Earn Tab reward. DW just has to buy these DENTs on the market.
In both of these cases, DW automatically buys the related DENTs with BTC via market orders in the DENT/BTC pair on DENT Exchange.
And DENT Wireless sell DENT on DENT Exchange in 2 cases:
- After DW receives DENT payments from purchases transactions by DENT (App and Exchange) users. Either DW gets paid in DENT directly, or from their own buying of the related DENTs as described under 1 above. In both cases, the DENT is a payment vehicle and DW will sooner or later sell these DENTs on an exchange (including on DENT Exchange) to transfer them into BTC/ETH/USDT and thereafter often into USD, just to use the USD to pay their regular business expenses.
- After DW releases new tokens into circulation (take them out of the main company wallet, see below).
For both these “selling” cases, DW can initiate the transaction manually and whenever they want with either a market or limit order (and can perform one big or smaller trade transactions).
Or for the received DENT from the regular telco product sales, DW can also use an automated script (or bot) to sell these tokens on DENT Exchange.
So, as the current buy transactions are all automatically executed against market prices (the lowest ask price), maybe you can imagine that smart traders know this mechanism and can take profit of these auto-buy orders.
These traders simply know that DW will buy anyway, how high or low they set their DENT sell orders.
The same can be said for the sell orders, most of the time, DW uses market orders.
And in the end, DW is losing bid-ask margins on every transaction, and smart traders will make a (small) profit. And the higher the volumes, the more (arbi)traders will earn.
Unfortunately, there are not many traders active in the DENT/BTC pair. So, the bid-ask spread is higher than it can be if more traders would be active.
Why are there not that many (arbi)traders?
Simply, because of the existing restrictions as only available to users in 43 countries, the maximum withdrawal limits of $1K per day and $5K per month, and the minimum 0.05 BTC withdrawal limit.
Of course, the solution is to “remove” these restrictions.
That said, how can the team change this auto-buying mechanism for users who pay with fiat and subsequent “selling need” more in their own advantage?
Well, the first principle should be…
Don’t sell under your original buying price. And even better… Only sell above your original buying price.
This way, DW “can’t lose” on the continuously buying and selling transactions.
So, what does this mean in practice…
For every automatically bought DENT as a result of a user who pays with fiat, and that DW sooner or later has to sell anyway, immediately set a higher-priced limit sell order. For example, a 3% higher sell order. This way DW earns “by definition” 3% extra.
Now, maybe you ask, but if the price of DENT will stay lower, than DW won’t “never” sell their DENT and the DWs “DENT stock” will increase over time.
Well, that’s possible, but first look at what happens if prices are decreasing.
First, DW will buy again for all new (fiat) transactions the necessary DENTs but this time at a lower prices, and again will set the sell price 3% higher.
Of course, prices move up and down. So, there will be a time when “a low is set” and prices will increase again. And DW will make a profit for all these lower purchased DENT as they will sell them for 3% higher.
And as DW is holding both DENT and BTC, like kind of a liquidity pool, and makes 3% margins all the time (plus 0.1% trading income), the BTC is increasing with these margins.
Plus what’s the other reason besides a price decline why DW will end up with more DENT?
Of course, because DW sells more telco products (to people who pay with fiat) as that’s the only reason DW has to buy the necessary DENT. And DW is making a nice margin on telco sales (most of the time, sufficient to offset a temporarily DENT price decrease).
(And in theory, the higher the transactions volume, the higher the token price)
Plus, as a huge benefit DW gets paid upfront while only has to pay the individual local carriers whenever the DENT user will actually uses the data.
So, DW has to “reserve” a huge amount of the received fiat/DENT anyway for future carrier payments. Hence, it’s not that “bad” if DW owns a little bit more DENT after a price decrease. In the end, sooner or later DW will sell these DENTs with a 3% margin.
And of course, DW can “play with the risks” and decide how much DENT they want to keep on their balance. And if that maximum is reached, just used the current policy and wait for better times. But in the meantime, they could have made many “full circles” of earning 3% margin.
Also, the Offer Wall DENTs play a major role.
As explained, the moment a DENT App users earns DENT in the Earn Tab, at that moment DW automatically buys the necessary DENT.
But why shouldn’t DW buy these incentives from its own DENT balance (the ones with a 3% markup price)?
Of course, they can. And as a result, this lowers the risk for DW getting a huge bag of DENT.
Note: Offer Wall rewards are being distributed among the DENT app users, and DW doesn’t have to sell these DENTs, only later in case the user buys a telco product with DENT.
So, DW can also use 2 different treatments: 1) for DENT received from DENT app users as a purchase payment, and 2) DENT purchased by DW itself for app users who pay with fiat.
But whatever percentages or treatments DW will choose, there are many options to avoid losing many DENTS to traders who take advantage of the current auto-buying market orders and subsequent sell orders. Especially, on the sell side, DW can be smarter, and yes they can even offset the auto-buying orders by selling their own earlier bought DENT tokens into these orders.
BTW, there is another “small” leakage as DW is just charging too low withdrawal fees. The current withdrawal fee for DENT Exchange users who withdraw DENTs from their DENT Exchange balances to external wallets is 0.1%.
Now with the high ETH gas prices, DW often has to pay higher gas fees than the maximum transaction fee of $1.00 it gets from its users per withdrawal. As 0.1% transaction fee of a maximum of $1,000 withdrawal limit equals a maximum of $1.00. And that’s often insufficient to cover the ETH gas fees.
DENT releases from the main company wallet (war chest)
Currently, there is about 15 billion DENT left in the main company wallet. If you’ll read this article DENT token distribution and releases, you will see how the DENT token distribution looks like and give you some backgrounds about the main company wallet releases.
As you can read there, the monthly release of DENT tokens out of the main company since July 2019 is almost 800 million DENT on average. These releases were used for 2 main reasons:
- To pay the core team of about 16 “workers” each month. These workers all get paid out in the DENT token (and can be followed by analyzing this wallet).
- Further acquisition of new users via referral marketing, and other business expenses to grow the ecosystem.
But here is the thing…
As these releases are more or less predictable, and the market knows about it, smart traders take advantage of these releases.
And there is another negative effect…
As there are many potential investors who “stay on the sideline” and wait until (almost) all tokens have been released. Because of this waiting and without further new (unexpected) major announcements or news, and/or higher transaction volume, and the fact that the major social media marketing campaign will just start in 2021, the price of the DENT token is more or less stable without major spikes, and only reacts to “general market sentiment”.
So, to say it in other words, due to the expectable monthly releases, there is no upwards price pressure.
But what if the team decides upfront at which price levels they want to sell the remaining tokens?
For example, they are willing to sell 1 billion tokens at $0.000230, another 1 billion at $0.000240, etc. all the way up to $0.000370 for the last billion.
Or stop earlier at $0.00032 and will leave 5 billion tokens for “unexpected cases”.
This way, the team knows upfront how much they will get if the price moves up, and they “lock in” these prices.
The market on the other hand, knows that with one big push all tokens can be in circulation and if that happens, they will “miss the boat” (FOMO).
So, instead of being a “sell wall” it can rather be seen as an “opportunity wall”.
Of course, if DW needs 800 million in a month, and it didn’t sell these 800 million earlier on the market, the team will sell these just as happening now, and it the release will be deducted from the last 1 billion at $0.00037 (or $0.00032).
I’m pretty sure such a release scheme will “free up” the market and reduces uncertainty to a minimum and will probably lead to a higher price.
To reduce the risks of having DENT on exchanges, the team can for example transfer 3 billion tokens for the first 3 levels, and add another 3 billion more in case they have sold these levels.
Also, to stimulate the DENT trading volume as it’s now fully dominated by Binance, I would like to see a DENT/WETH trading pair on UniSwap.
The team can just use the first billion tokens for this to set up.
[Upcoming] Selling Unused eSIM data
After this new marketplace for selling unused data will go live (expected to be launched in Q1 2021), a DENT (App or Exchange) user can first purchase the biggest data plan (currently the 20GB for $74.99) and split the plan into (20) smaller 1GB data plans, and offer these on the new marketplace to make a profit.
So, a DENT App user now has the option to either buy the regular 1GB data plan directly from DW for a price of $4.99 or this user can buy this data plan on this new marketplace with a discount for a price (to be paid with DENTs) somewhere in the expected range between $3.75-$4.99.
But here is the thing…
These DENT App users are already a user/client of DW…
So, why give away margin to some traders?
These traders won’t bring in any new clients for DW.
I mean for resellers with their own clients, the situation is different. Here, it makes sense to allow resellers to buy bulk data in the (upcoming) DENT Gigastore with a discount and sell smaller data plans to their clients.
But why allow other “traders” to make some free income without doing any marketing to get new clients onboard?
I rather prefer that DW keeps the margins themselves and can lower the overall pricing as a result.
And don’t forget that (possible) resellers will stay away or stop with reselling if their potential clients can just buy the smaller sized data plans for better prices on the DENT marketplace. Without the marketplace resellers could sell 1GB plans for $4.99 but now have to lower their prices to prices reaching $3.75, or even lower if referrers and new users who got free referral or joiner data will also try to sell the free data incentives (if allowed to sell as we don’t know the conditions yet).
Also, I don’t think it’s a good idea anyway to have a marketplace for selling unused data.
Allowing users to sell unused data comes with a cost. While other providers can benefit from the fact that on average 15-20% of the data is unused within the validity period, such that they can lower their pricing accordingly, DW can’t lower their pricing.
So, what do you prefer? A 1GB data plan with 30 days validity priced between $4.00- $4.25 or a 1GB data plan with 365 days validity for $4.99, and you know upfront that there is a high change that you will use all your data within 30 days?
A calculating user will go for the last option (but on average these users overestimate their usages and will only use 80%-85% of the data).
And in all comparison tables on review and comparison websites, people will look at the lowest price per GB, and select the ones with sufficient coverage and long enough validity period.
As a result the DENT worldwide eSIM data plans with 365 days validity “look more expensive” in comparison to cheaper priced individual country plans with shorter validities.
So, allowing users to sell unused data leads to missed income (no unused data income, plus margin leakages to traders) and higher prices. Resulting in less competitive pricing and a lower market share, and probably less professional resellers who otherwise would have offered the data plans to their own clients.
Let alone that by allowing users to sell (new and unused) data, there are many complicating aspects to consider for DW due to all kinds of legal and fiscal rules worldwide…
Hence, all users who want to “trade” (i.e. sell unused data) should have done proper KYC/ALM as DW should give info about sales transaction (and trading income) to fiscal authorities (for many countries).
Also, if a user/trader buys a 20GB plan in a non-taxable country (for sales and VAT taxes), and splits this plan into 20x 1GB plans, and sells these 1GB plans, for example, to buyers in the EU. The individual countries in the EU don’t accept this sale to take place without the proper VAT…
However, although I don’t believe in the secondary market benefits for DW, with the current pricing and setup, at least, it will lead to more usage of DENT credits/tokens.
I mean if the price for 1GB is cheaper on the secondary market, most (new) users who want to buy a 1GB data plan will prefer the marketplace.
This will lead to more DENT usage (and storage) by definition. And this is what token holders are looking for.
Summary and conclusion
Although I’m happy with the current DENT ecosystem, I think that there are several “leakages” where the team loses unnecessary valuable DENTs to the wrong participants…
Luckily, the number of free DENT referrals already have been lowered significantly, and now this leakage has (temporarily?) stopped. And although the other leakages still exist, they can relatively easily being stopped.
I hope DW’s management team will discuss these leakages into more detail and come up with proper solutions.
Let this article be the start document for further analyzes.