Helium

Executive Summary

Helium (HNT) is a protocol that enables the deployment and management of wireless networks in a decentralized manner. Protocol participants receive rewards in HNT tokens by deploying/operating wireless devices and connectivity. Based on the LoRaWAN wireless protocol, the network utilizes blockchain to incentivize participants by combining the act of mining with the deployment of hotspots. Approximately 50-100 hotspots are needed to provide coverage for an entire city.

Overview

Due to its growth in the past 18 months, Helium Network is currently one of the largest tokens by market capitalization, breaking the top 50 as of January 1st, 2022. Its free gloat is ~40-50%, with a market cap of $4 billion and an FDV of $9 billion. It gains significant traction starting January 1st, 2021, as can be seen from the price chart and the google search trend below.

Team & Shareholders

• Amir Haleem, CEO & Co-Founder

  • BS in Artificial Intelligence

  • Previously held leadership roles in the gaming industry

• Marc Nijdam, CTO

  • Business and Informatics educational background

  • Leadership experience at Qualcomm, HP, Yahoo, etc.

• Frank Mong, COO

  • BS in Electrical Engineering

  • Leadership experience at HP, and other Silicon-Valley startups

The firm has raised over $164M in funding since 2013. Notable investors include:

• A16z, Multicoin, Alameda, 10T Holdings, Ribbit Capital, and others.

The latest round is a $111M ICO to a16z.

Consensus Mechanism

The network utilizes Proof-of-Coverage (PoC), an algorithm that rewards users in HNT by securing the network and verifying the hotspots coverage. The consensus is built on top of Helium’s own blockchain (not an ERC-20). Hotspots operators earn HNT equivalent to the value they contribute to the network by participating in the PoC consensus.

New blocks are produced every 1-minute with rewards being distributed roughly every 30 blocks (30-minutes). The emission rate started at 5M HNT/month, halving every two years. As of 1-August-2021, the emission rate of HNT has gone down to 2.5M HNT/month.

Next halving date: 1-August-2023

Tokenomics

At its core, the mechanics of the HNT token is similar to other projects out there. The goal is to create a positive feedback loop as the number of hotspots increases around the world, bringing awareness and expanding the utility of HNT. A complementary mechanism is the utilization of Data Credits that will burn HNT, reducing its supply and theoretically increasing its future price. Any device that is connected to and is actively using a Helium network hotspot must spend Data Credits to pay and maintain access to the network. The value of Data Credits is fixed at $0.00001 USD. New Data Credits are minted by burning HNT, creating a mechanism that will burn HNT as real-life use case demands for HNT increase.

The black swan event is if the HNT price drops significantly, as the positive feedback loop presented below becomes a negative loop instead. Fortunately, the energy cost to mine Helium is very low (5 watts), which indicates that miners most likely won’t turn off their machines if they treat their Helium mining gig as additional income.

Updated Multicoin’s Model

Total HNT per month	2,500,000
% to miners	66%
HNT to miners	1,650,000
# of hotspots	439,000
Average HNT per hotspot/month	3.76
Average HNT per hotspot/day	0.13
HNT price	$40.7
$ per day	$5.1
Cost of hotspot	$400
Payback in days	78

Source:

https://helium.plus/earnings-calculator

https://moneydoneright.com/passive-income/cryptocurrency-investing/helium-hotspot-review/

This means that at its core, HNT needs to increase its real-life adoption. # of hotspots is not the best metric, but instead, # of monthly active users is the most important metric.

There is no clear data as to how many active users are connecting to the Helium hotspot. We can do an estimation based on the following data: https://explorer.helium.com/market

HNT in Circulation	108,931,000
DC per HNT	4,035,230
DC Circulating Supply	439,561,639,130,000
DC Market Cap	$4,395,616,391

If we assume that there’s $4.3 billion of DC ever created in the market going back to when the HNT token was live as of April 2020.

$4.3 billion in 21 months = $204.7M of DC per month.

Total Addressable Market:

• Xfinity: 111.6M

• Spectrum: 102M

• Cox Communications: 20.9M

https://broadbandnow.com/Cable-Providers

Average US internet bill: $64/mo

Helium Network has an estimated 3,198,438 average monthly users.

If Helium gets 10% of Xfinity/Spectrum’s customer base, which is ~10M users or triple its current average monthly users, then we can expect 6M new users minting DC and burning HNT.

10M users will roughly mint $641M worth of DC/month, or equivalent to burning 16.02M HNT.

Conclusion

- need to know better real average active user data

- negative feedback loop during bear market, but not as severe as other tokenomics