First, it is necessary to understand that under the pure speculation assumption, the purchase of a Key immediately results in a loss of 22% based on book value (10% is just a red herring), and a loss of 70%+ based on EV calculation (22% is just the second layer of red herring);
After understanding the first step, it will be found that the Key price does not need to rise to a very high level in order to extend the EV breakeven period indefinitely. At this time, the entire FT market will become a multiple-game of "guess the mean 2/3", and the market equilibrium point corresponding to the Key price speculation threshold will continue to decrease. At this stage, funds are flowing to lower-priced Keys, and the market with lower market value has already been monopolized by bots;
The breakthrough lies in providing utility to reduce the position of some Keys in potential liquidation, thereby increasing the EV of other Keys, until escaping the regret of Ponzi. Unfortunately, bots and the 5% FT handling fee are killing this market, eliminating the possibility of a breakthrough.
How to understand the difference between EV and book value:
Zhang San, Li Si, and Wang Wu raised funds to buy a cow, a duck, and an egg.
It was agreed that the first person to exit would take the cow, the second person would take the duck, and the last person would take the egg.
Zhang San/Li Si/Wang Wu all thought they had the right to claim a cow.
But in fact, their rights to claim are all equal.
There are 6 possible outcomes, each of them taking:
1) Cow, Duck, Egg 2) Cow, Egg, Duck 3) Egg, Duck, Cow 4) Egg, Cow, Duck 5) Duck, Cow, Egg 6) Duck, Egg, Cow
The probabilities of the six outcomes are equal.
Therefore, what Zhang San truly owns = 2/6 * cow + 2/6 * egg + 2/6 * duck
That is, 1/3 cow, 1/3 duck, 1/3 egg
At this time, Zhao Liu joins the game and needs to provide a house.
When he joins, the house is divided into four parts, with Zhang San, Li Si, and Wang Wu each receiving 1/4.
This is why from the EV perspective, buying results in an immediate loss of 70%+.
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