The Importance of the TEA Utility Token
The TEA Project features two tokens, TEA and Camellia (CML). The CML token is an NFT that is used by miners to activate their mining nodes. CML can therefore generate TEA through mining. Much of the value of a CML seed is related to its capacity to be rewarded with TEA either through gas fees (paid by endusers) and public service rewards for performing services like remote attestation (paid by the state maintainer nodes). Let’s take a closer look at the supply and demand for TEA as well as its role as a utility token in the TEA ecosystem.
Supply (and Demand) of TEA Tokens
TEA is a non-inflationary token with a supply of 100 million. CML supply is on the other hand determined by the demand for compute resources on the network. The more compute resources are needed, the morce CML will be released so miners can deploy their hardware on the network.
The price of TEA will be stable relative to compute resources but not to any external price like dollar stablecoins.
When we say that TEA is a stablecoin pegged to the price of computing, that doesn’t mean the price will be stable relative to the dollar. It instead means that the price of TEA is pegged to the consumption of computing resources; consuming a TEA token will always result in a fixed consumption of computing services (CPU time, network traffic, and storage). A consumer using a TApp must pay TEA that is used in part to pay miners for using their hardware. This amount required to run the TApp doesn’t change relative to TEA. That’s what we mean when we say that the TEA token is stable relative to computing costs.
What About Positive Demand Factors on the TEA Price?
The TEA Project’s miners are primarily interested in being compensated for joining the network. If TEA farming is profitable, then more miners will likely want to jump into TEA farming, but they will need TEA to buy Camellia seeds. So the TEA price will benefit from more miners coming on board. As more TApps enter the ecosystem, there would be more demand for computing resources resulting in the price of TEA going up.
Why Won’t Miners Dump TEA?
While there’s always the possibility that miners will dump TEA, there are reasons why this is not likely to happen.
By design, TEA isn’t a store of value. Knowing that TEA is a stablecoin pegged to the cost of computing and the cost of computing always goes down, this implies that, over time, TEA itself will buy more computing power. But a miner could be worried that their TEA is less valuable the longer they let it sit in their wallet.
So early investors looking to support the ecosystem can invest in the ecosystem by purchasing TApp tokens (which results in the TEA being locked in the TApp token’s bonding curve). Whether purchasing CML or TApp tokens, these actions will have a positive effect on the price of TEA. Another choice is to buy other miner’s staking token. In this case, the staking token investor would gain shared revenue from other miners according to the strength of their CML (because every Camellia is a different NFT).
The only scenario where a dump would likely occur is if there was a major loss of confidence in the project by its token holders. It stands to reason that the TEA token price, just like CML, will remain healthy as long as all the participants in the TEA ecosystem beleive in the project.
No matter how well we design the miners’ economy to boost TEA initially, it’s still a short-term solution. In the long run, the key rests in the demand for the usage of TEA tokens. The TEA project team has started working on so-called rich TApps that run on the TEA network. Building the ecosystem, especially leveraging the existing FIL, ETH, and DOT ecosystems, is the team’s main goal for a sustainable future.
