Supply is the relative scarcity or abundance of an asset. Gold is expensive in part because it is relatively scarce and introducing more gold into the market — aka the mining process — is extremely expensive and labor-intensive. In contrast, wheat is significantly less expensive in part because it is vastly more abundant and much easier to produce.
The other side of the equation, demand, is the relative usefulness and/or desirability of the asset. A shoe made by Nike Inc. (NYSE: NYSE:NKE) is usually more expensive than one made by Sketchers USA Inc. (NYSE: SKX) in part because of the relative desirability of each. The global brand that Nike has created means more people want its shoes.
These variables are intertwined and influence each other but ultimately are influenced by different factors. And it is exactly these variables that the new crypto project Seasonal Tokens says it hopes to influence to benefit its participants.
Seasonal Tokens is made up of not one but four individual tokens — Summer (CRYPTO: SUMMER), Autumn (CRYPTO: AUTUMN), Winter (CRYPTO: WINTER) and Spring (CRYPTO: SPRING).
These tokens are reportedly designed to rise and fall in value relative to each other based on the mechanics the project has put in place that influences the relative supply and demand of each.
The supply is influenced by mining difficulty. The tokens use a proof-of-work (PoW) consensus mechanism, which means they must be mined. The difficulty can be set by the project — a digital analog to changing the concentration of gold in a mine.
Demand can be influenced by farming rewards. The tokens can be staked to earn rewards. Higher reward payouts for a certain coin make it more useful and therefore likely more in demand.
So when, for example, SPRING has been the easiest to mine for nine months, the tokens have been cheap and plentiful relative to the other three. Then the algorithm makes them the hardest to mine for the next nine months. Over this time, their price could theoretically be expected to rise.
Traders who anticipate this can trade their other tokens for more of SPRING. Then, when the value of those is theoretically highest nine months later, they can trade for more of the next token. This is the cyclical nature of the project that the team hopes will allow traders to consistently be growing the number of tokens they hold.
If you are interested in learning more about the project, check out https://seasonaltokens.org/.
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