ICP achieves operational profit milestone

ICP hoddlers will remember January 2025 as the point at which positive cashflow was achieved. This is an irreversible and major milestone in the history of the Internet Computer (IC).

Just a few weeks ago I posted the first part of my ICP tokenomics assessment (https://nuance.xyz/fractaleer/12095-434go-diaaa-aaaaf-qakwq-cai/icp-tokenomics-part-i) in which I concluded that ICP will hit positive cashflow within the first quarter of 2025. Less than a month later, it happened: on 29 January ICP burned (in Jan) exceeded ICP minted for node providers (in Jan) with 2 days of compute left in the month. This makes January 2025 the very first month during which Internet Computer compute revenue (ICP burned) exceeded network costs (ICP minted for node providers). By the end of tomorrow, the total number of ICP burned will be 270+K, that’s an increase of 60+% month-on-month! Below are the updated data points and graph, accurate at noon UTC 30 January.

Achieving positive cashflow within 5 months since Aug 2024 - when compute on the Internet Computer (IC) was two factors of magnitude too low to offset node provider rewards - is a stellar outcome that gives us a glimpse of what the IC is capable of! And because of ICP’s unique tokenomics, it’s also practically guaranteed to be irreversible. Compute on the IC is in the early stages of exploding and while additional node machines will need to be added in the (near?) future, the compute delivered by the network will be more than enough to pay for the associated cost and continue to grow operational profit. The price of ICP also will have zero influence on operational cashflow as both node provider rewards and compute cost to developers is fixed in fiat XDR. Good times!

Finally, a quick heads-up for hoddlers worried about the current ICP price. The model I presented in the second part of my tokenomics assessment (https://nuance.xyz/fractaleer/12200-434go-diaaa-aaaaf-qakwq-cai/icp-tokenomics-part-ii) suggests that ‘effective deflation’, which shrinks the supply of ICP in circulation, will be achieved within the 2025 calendar year in the event the ICP price remains at or below US$10. That would be an early Christmas present to hoddlers and a major surprise to crypto investors around the globe. It may be expected to put serious bullish pressure on the value of the ICP token. However, it should also be noted that the ICP price is a major factor in the inflation/deflation dynamics of the Internet Computer Protocol, such that a sudden increase in token value will temporarily shift the balance back in favour of inflation until compute revenue on the IC catches up. In this way the ICP price is likely to see-saw it’s way up to 20x and beyond over the next few years.

CONGRATS Internet Computer, hoddlers and the Dfinity team!! 2025 will be an amazing year. Fasten your seatbelts!

Fractaleer

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