There's a audio version of this blog post, hosted on YouTube:
The Venice ecosystem now has 2 thingies. A "asset" created and destroyed out of an underlying token. The asset is DIEM. The token is VVV. The asset is range-bound. The token is not. This separation of the ecosystem into an asset and a token is interesting. The asset provides utility, a bit of thinking time every day. The token provides exposure to Venice’s ongoing project. The token is the only way the asset is minted.
I did a poll of my normie friends and the majority of people say that they would value DIEM at $300. And that’s my if-I-dont-think-about-it guess too. $300. But you can buy it right now for $190. That’s a large mis-match, a 36% discount from the consensus opinion.
I smell a rat.
Why is DIEM so cheap right now? Is DIEM a buying opportunity? Is the price of DIEM currently the equivalent of seeing Tether on sale for 90c? DIEM, objectively can be under-valued or over-valued and in theory it should not crater or moon.
So lets answer the question, if the finger in the air consensus is that it’s worth $300, Why is it cheap right now?
- Perhaps there's not enough demand. The ecosystem hasn’t matured and there’s no great tools that need DIEM yet.
- Perhaps there's too much supply. You can get your AI from many places and most people won’t have heard about Venice.
- Perhaps the quality isn't good enough. OpenAI, for sure, have more advanced models and a better App (if all you want is the smartest answer to your questions).
- Perhaps Venice don’t have “product market fit”. Their MO is “Privacy” - and most people have not yet woken up to why that is important.
Some of that may or may not be true. I'm going to have faith Venice will execute in time and any misses now are an opportunity to buy early while it’s cheap. I.e. I believe the gap will close.
Are there any other reasons for the low price of DIEM?
Yes, Firstly, the game hasn’t started yet. The legacy payment system for the API is being honoured for another 19 days. I.e. the Utility of DIEM isn’t activated yet. Existing API users don’t need DIEM yet. However, I would say these folks are smart and will have their continuity plan sorted already and likely have the DIEM they need. I’m not expecting a big buy up of DIEM in 19 days.
Any other reasons?
Yes, the entire market cap of DIEM is only $6.2M. DIEM launched with a whisper. A stone was thrown into the pond and hardly a ripple was created. I had wondered whether DIEM would be a vampire attack on VVV? I was worried any value that DIEM got would come at the expense of VVV. The question ended up being moot - the DIEM market cap is negligible - too small to matter. There isn’t enough liquidity yet for DIEM to have found a stable price. Even a small $10k buy, moves the price of DIEM! This means DIEM can and will be volatile. DIEM could teleport up to $300 in a day.
Any other reasons?
Yes, and this is where it gets a bit spicy… The distribution of DIEM is a bit ugly.
There was a bit of a gold rush that occurred on the Token Generation Event (11 days ago on 20/Aug/25). VVV stakers were primed and ready and 100% on the ball at minting DIEM as early as possible. Within a few minutes a large amount of the DIEM supply target was met. The winners were the ones that got a good mint rate early on. All the folks that got in early are now sitting on a boat load of DIEM. They will likely hoard it because they know if they burn it, they can never get as favourable mint cost ever again. It doesn’t cost much to hoard DIEM. It has an opportunity cost of 20% VVV yield, that's all. The upside of hoarding it is 1) If you plan to build an AI business in the future, you are sorted for your most fundamental resource, i.e. the AI. 2) If DIEM happens to rise in price, you have a liquid asset to sell, unlike VVV which is locked up for 7 days.
There are a lot of folk with unused DIEM and I bet every time the markets change some of these folks are asking themselves, should I sell? Everytime the cryptosphere makes out like the cycle is over, some folks might be thinking to sell their bags. Everytime there’s a token that looks juicy, some folks will be looking under the cushions for dry power and might be thinking their DIEM isn’t really doing anything for them. Stable coins are dry powder. DIEM could also be dry power. Some traders will be hoping to sell their DIEM to buy something with a view to taking profit to buy back their DIEM position later.
I think this means there’s sell pressure on DIEM, suppressing the price.
One way to look at this, if you want to be unfavourable, is to view the supply of DIEM as “pre-mined for free” by VVV whales. I think the logical market dynamics are screwed for a while. I’m worried the distribution of DIEM is distorting the fair market value.
Consider that if you need 1 DIEM today, you have a choice of either buying it outright for $190, or you can spent $1067 to buy VVV and then mint 1 DIEM yourself. it is a no-brainer to buy it outright for $190. This is supposed to create buy pressure on DIEM and raise the price. But the fact that so much of the supply is held by the pre-miners means that there’s more sellers than buyers.
DIEM - It's not a buy for me. I'm not convinced the downside volatility is over. DIEM tokens need to get distributed from the speculators to the consumers. Then it should be priced more like the utility that it is.
But it’s early days. Very early days. The Venice API as a product, is at the start of it’s adoption curve. We need builders to come. We need an appetite for the Venice API to build. We need DIEM to be needed. Until adoption happens, the main holders of DIEM are Crypto speculators and therefore there is a bad signal to noise ratio.
I’m playing the long game. I think things will play out nicely. I can see the Venice App getting better and better and DIEM becoming the payment method within the App. I can see VVV becoming deflationary in time.