There's a audio version of this blog post, hosted on YouTube:
The intuitive price of DIEM
The price of DIEM is $131. That is to say the price of DIEM is low. $10 has never bought so much future thinking time.
Unlike most tokens, you can ask anyone to give you an intuitive price for DIEM. Once you explain the utility of DIEM, the “intuitive price” people usually come to is $300. I have asked many people - they would buy DIEM for $300. In this video I want to explain why they say $300 AND why perhaps DIEM is not there at the moment.
If I asked Joe Bloggs how much he’d paid for $1 of API credit from VeniceAI per day, the first thing he’d say is “what is an API”? So instead I’d phrase the question as:
- How much would you pay for a lifetime subscription to ChatGPT, text-mode?
- Or maybe: How much would you pay to generate 100 image generations per day, forever.
- I wouldn’t ask: “How much would you pay for 1 million tokens per day?” but that is an equivalent question more or less.
People say $300.
Since not everyone knows what an API is, let's explain it. Understanding the API is key to understanding the value of DIEM. The Venice team have built 2 products so far, the venice.ai website and the Venice Mobile App. The team have chosen to provide various features and services in their products however the underlying models are capable of many other things not built into the Venice product. The API is a way to expose the underlying models to the public such that anyone can tap into their power and build their own product with their own sub-set of features. The API allows for infinite variations of derivative works.
Right now, all over the world many smart people are building the tools of the future, the Killer Apps for your phone and for your Laptop and for your Browser. People have seen ChatGPT and have been inspired and they are building something that scratches and itch they have. They are vibe coding interesting ideas. There’s a guy in Timbuktu that is building a Personal Assistant App that is going to blow your mind because it’s going to keep you organised, set interesting things for you to do and boost your productivity. There’s a guy in Mongolia building a gym coach that is going to inspire you to keep fit and give you a Workout of the Day and finally peg your weight to where you wanted it. There’s a lady in Yemen that is building a chef that is going to show you how to cook the meal you really feel like right now and order the groceries you need at the best price in your area. There’s a dude in Katmandu that is building a household plant manager that is going to keep each of your pot plants alive by knowing when it’s best watered and when it needs re-potting and if it needs moving out of the direct sunlight. There’s a lass from Aberdeen that is building a digital friend who is going to share your interests and talk to you whenever something topical happens. There’s a bloke from Swindon building a newsreader avatar that is going to tailor a news show dedicated to what you care about. There’s a grandma in Peru that is building a parenting app that is going to nudge you at the right time to provide your kids with arts and crafts that they are going to love and is going to help you bond with them. There’s a Giga brain guy in San Francisco building a trading Bot that is going to earn you money while you sleep. There’s an English farmer boy building a Pet App that is going to help train your dog, and organise neighbourhood walks with potential doggy friends. There’s an Aunt in China building a joke delivery App that is going to be tailored to your humour and make you laugh out loud every day at 11am. There’s a doctor in Seattle building a pill reminder Bot that is going to ask you about side effects and discover new links between conditions never known before. Someone in Iceland is building a App to help them Journal, based on a AI that is going to inquire about your day that is going to help you be mega thoughtful. Someone in New Zealand is creating an obsession-quencher that is going to finally satisfy your thirst for knowledge.
There’s countless life-enhancing Apps being created. They are going to launch next year. It’s going to be ridiculous. The AI powered App ecosystem is about to go Foom!
There’s one thing these Apps have in common - they are going to ask for an AI endpoint of your choice and an API key. Bring your own brain. They are essentially different flavours of specialised Agents.
Venice doesn’t need to build the ecosystem. It is being built. Venice will provide a brain. DIEM is a brilliant pricing model for such brains. You are NOT going to want a “Pay as you Go” model. PayG is going to feel awful if it’s for something like reminding you to take your vitamin pills. You are going to want a “use it or lose it model”, where you feel you have an abundance of brain power. You will be safe in the knowledge that the thinking firepower you bring to bear is not a cost, it’s an asset. It’s a total 180. Your AI, can be sold again. It’s part of your estate now. No one gets this yet! Even after using your DIEM for many days or years, you can sell it, likely for even more than you bought it for. This way of “paying” for AI is so utterly different from anything else out there. It’s very unique.
If you buy DIEM today, you can try all these future Apps. You can bring your own brain to them. You will be sorted for “brain power”. It’s like if you bought all the petrol you never needed for your car upfront and you can drive it for free from now on.
In parallel to the wider ecosystem Venice itself is also going to be providing interesting services. Venice was very early to the digital character game. I would be surprised if they didn’t want to give those characters a voice so we can chat with them naturally. I would be surprised if Venice didn’t release Video models that to operate sustainably need a boat load of DIEM. In a matter of months or years, the A.I bubble is going to pop and the megacorps are going to have to balance their books and their services are suddenly going to cost an arm and a leg, either in dollars, or in privacy via Ads. These AI’s are going to be ultra persuasive so their Ads are going to super compelling in the worst way possible. When that happens, you will enjoy being able to opt-out, by owning DIEM. Video from Venice would be cool. uncensored video even cooler ;) What if Venice Characters could video talk to you? What if I could feed in my Grandpa’s journals and some of his pictures and voice and talk to his likeness. That’d be interesting.
I would be surprised if Venice didn’t expand on their privacy focus - I’m not keen on a voice recorder App that listens to every sound in my life. But my God would it be useful. Given any provider of such an App in the world, Venice would be my top choice. They have my trust. Trust is hard to earn.
Venice is well capitalised. They can cook for years. Let them cook. Don’t give up on them. They are going to build on the best open-source models and the best ideas from other AI Apps. This is a multi year endeavour - not one Crypto cycle.
The future is bright for DIEM, Very Bright. The possibilities I can imagine are endless. The “product market fit” of DIEM is foreseen.
Bulled up? Convinced?
So… Why is the price of DIEM at all time lows right now?
I can answer that. The price of DIEM is being distorted to the down-side. DIEM does exist in a free and fair market BUT the market isn’t intuitive and it isn’t liquid. Let me explain. I have 4 points to make.
Firstly, let's get the easy one out the way. Real DIEM has not been fully activated yet. Venice have announced they are sunsetting “Legacy DIEM” on Wednesday October 8th. This should make things more transparent. I don’t anticipate it having much effect on price, but let's see.
Secondly, we have a liquidity problem. A huge liquidity problem. Since DIEM is a small asset there is naturally low liquidity. DIEM has a low market cap and a low number of users, 1050 to be exact. It is a utility token. Providing Liquidity cuts you out of the utility. Why would you want to provide liquidity given that it isn’t meant to be volatile so there isn’t much volume fees to capture? The whole point of DIEM is to stake it to get the API credits. By design, it drains it’s own liquidity. This is a problem to be sure. There is only $1M of liquidity. A $1000 purchase changes the price for everyone! With this shockingly poor liquidity, Negative sentiment, crushes the price! DIEM price is being punished with the power of a thousand suns right now.
Thirdly, the DIEM price is suppressed by the Minters. “Suppressed” isn’t the correct word because the mintablity of DIEM by owners of VVV is the mechanism. It’s the whole point of owning VVV. A few weeks after launch, DIEM was going on a run and there was a chance of DIEM getting to a level it deserved but minters took advantage of the opportunity. I think they thought we were in times of froth. They killed the pump. The minter dynamic will curtail the high. Such are the tokenomics right now. It’s only been a couple of months. We aren’t mature yet. VVV holders control the upper range value of DIEM. That’s the design. I’m happy with it. On the downside, the emission rate of 10M VVV per year powers the printing press of DIEM. On the upside the mint-rate curve mathematically regulates the printing press of DIEM. This is all coded into the smart contracts of VVV and DIEM. Fair game.
Now for the main “distortion” - DIEM is “Liquidity bonded” with VVV. This is why I said the market isn’t intuitive. DIEM isn’t priced in dollars, it is priced in VVV.
When the DIEM Token Generation Event occurred, Venice used some of their VVV treasury to mint the first 10,000 DIEM and then created a liquidity pool of VVV paired with DIEM such that DIEM had a starting price of $50 when priced in VVV. This was an important part of the launch. It provided the initial price for DIEM.
This created a “Liquidity bonding” between the 2 assets - since the overwhelming majority of liquidity comes from the DIEM-VVV pool, if VVV drops in price by ½ (which it has), then it will drag the price of DIEM down by ½ as well. Some call this “Hearts Law” because Richard Heart, of HEX fame, used to talk about it frequently.
I don’t care what you think the fair price of DIEM is, it is bonded with VVV so it’s price is going to be a mirror to VVV. The only way to get away from that is if an alternative liquidity pool is built up. Since DIEM is a utility based on 1 dollar per day of compute, to me it would make sense if there was a DIEM-USDC pool but there is no incentive for one to form let alone dwarf the VVV pool enough for DIEM to find it’s own peg, independent of VVV. So for the foreseeable future, DIEM is going be beta to VVV (or is it gamma? I don’t know the correct derivative terminology!). If VVV goes down in price, DIEM is going to go down more, and vice versa.
When I first understand this, I was glum. But then I cheered up. So, this is your edge. Now you know. The “fair market value” of DIEM is being suppressed. I don’t know how far down DIEM can be pushed by VVV but I’m sure eventually it’ll pop and find it’s fair price. What will break the bonding?
- The initial DIEM-VVV pool is full range. These old skool full range pools are not as capital efficient as concentrated liquidity. They have to have an equal dollar value of both tokens in them at all times. A full range pool makes no sense for DIEM because it has a reasonable floor and ceiling price. If we build a new pool within a smarter range and reinvest the fees back into the pool, then slowly over time we can probably drain the original.
- Intuition is with us - DIEM should be priced in USD, not VVV. “Each Diem token represents $1 per day of Venice API capacity that never expires and never changes value.”. Come on! It is begging for a LP with USDC.
The “aha” moment will come. I expect it’ll come when a Killer App is released and DIEM is clearly the best “payment option” for it because the DIEM payment model far superior to pay as you go.
What if you could buy a token that allows you to query a thinking machine? And what if the IQ of that thinking machine is going to rise by a few points every few months? And what if you are able to re-gift or re-sell that token later? Surely if you buy it when it’s low IQ, you will be able to sell it for more when it’s high IQ? Food for thought!
In conclusion, DIEM is mis-understood. I know I’m a contrarian for loving it but I honestly feel there needs to be more positive views out there because the Market hasn’t “gotten it” yet. To me, it’s like there’s treasure recently surfaced by a change in tides and no-one has spotted it yet.
Michael Saylor says that “Volatility is a gift to the faithful".
Lets see. I hope that’s true.