$LMR- The Bitcoin Hashpower Marketplace

Deep Dive Into Lumerin: Funded By Coinbase Ventures, Fenbushi, and more!

Henlo. Today I bring to you a project I’ve been looking into. Hope you enjoy this report with a cup of coffee or something~

Disclaimer is at the bottom, but I do hold tokens in this project.

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Introduction 

Overview

Lumerin is one of the more interesting projects that spun out of the bear market. Launching in March 2022, they’ve grown to be a $50M marketcap project with not much advertising. Their product is simple - they view hashpower as a commodity and are building a decentralized marketplace to buy and sell hashpower.

Hashpower currently lacks an effective and transparent means of trading - the Titan network introduces a new protocol for provable hashpower. The result is a platform that can trade hashpower.

Lumerin assures that the hashpower participants are trading is real by using hashrate oracles, and they aim to eventually decentralize the entire process in which this is done. 

Like all protocols, I want to focus on the problem it solves so that we can evaluate whether we’re dealing with a good product. Let’s dive in.

Problem It Solves

Lumerin seems more like a B2B solution than a B2C solution - individuals themselves wouldn’t be too interested in buying hashpower, I feel. So here are the arguments as to why miners would use this product:

Buyers:

1. Risk Mitigation

It allows miners to hedge against market volatility and the fluctuating value of cryptocurrencies. Miners can use hashpower futures to hedge against the risk of future price fluctuations in their koins. By locking in a price for their future hashpower, they can mitigate the risk of declining prices.

2. Cost Efficiency

Selling hashpower can help cover operational costs, such as electricity and maintenance, making their mining operations more sustainable.

Miners located in regions with particularly high prices may never be able to run a sustainable operation. In that context, it may be more convenient for them to buy hashpower from another miner in a cheaper location than mining at high costs themselves.

3. Keeping Up With Difficulty

Large miners can take advantage of instant, remote, and on-chain hashrate acquisition to keep up with higher mining difficulty in real time, maintaining their competitive advantage until they can expand their physical operations and install new hardware.

This enables them to remain competitive without having to wait for manufacturing and shipping of new machines.

Sellers:

1. An Additional Revenue Stream

Selling excess hashpower provides additional income, especially during periods when mining profitability is low. This will provide miners with more predictable revenue streams, reducing their exposure to both crypto market volatility and fluctuations in mining difficulty.

2. Hedging Against Bitcoin Volatility

Keeping the treasury solely in Bitcoin is a double-edged sword, and it can have catastrophic consequences during a strong market correction. In that regard, miners can split their revenue into two different BTC and LMR streams to mitigate Bitcoin volatility risks, meanwhile building a tokenized hashrate reserve to boost their Bitcoin mining capacity when needed.

Tokenomics

Total Supply: 1 billion | Market Cap: 49.5 million | Circulating Supply: Unsure
Price: $0.04751
Supply Breakdown:

• Team: 47.6% (25 + 22.6)

• VCs / Insiders: 23.1% (8 + 15 + 0.1) 

• Public: 4.3%

• Miners: 25%

Pretty subpar tokenomics. Generally, tokens being vested each month create a source of supply that will constantly be dumped on the market.

Thesis & Risks

Thesis - Why Can Lumerin Succeed?