Economics of owning an Urbit Star

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Here's how I see the economics of the Urbit ecosystem. You have three types of assets: Planets, Stars, and Galaxies.

Planets

A planet is a permanent identity on the Urbit network. Purchasing a planet is kind of like purchasing a static IP address, that comes with a permanent vps attached to it. It's yours, forever. You can store whatever you want in it, and you can run whatever apps you want. So, the question is, what is a planet worth?

Over the last couple of years, it seems that a planet is worth about $20. For a long while planets were selling for $20, but since gas prices were high that price has turned out to be $20 plus gas fee, which at times could be $300. I have had people purchase planets from me for $300 after gas fees.  So we have long-term evidence that planets are worth between $20 and $300, and that's at the current level of functionality (beta).

I could argue that the people paying $300 really know what they're getting and the people paying $20 are just tire kickers.  

At the time of this writing, Tlon is getting ready to roll out a layer 2 solution for the Ethereum PKI.  This will make gas prices go from $300 to basically zero.  So we will have a full free market in planets.  I predict that with the supply planet prices in the near future will go very low...$3-$5.  

However, if a full permanent identity on the Urbit network isn't worth $20 for you, you're not really interested anyway. And for most people $20 is an incidental expense. It's four Starbucks coffees.

So, the true price of planets in the future will be somewhere in between the oversupply price of $3 and the utility value of a planet at > $20.

Stars

Stars are the vehicle to invest in the Urbit network. A star is a bundle of 65,000 planets, with the added bonus that star owners will have some control over their child planets. So, the value of a star is the value of all the planets plus the value of the star privileges.

If we assume that the floor price for a planet is $20, then the ultimate value of a star if you sell all 65,000 addresses is $1.3M.  At a $3 planet price, stars are worth $195,000.  

The average star price seems to be between $25k and $10k, depending on how ETH is doing (I think they will decouple in the future). So what is the downside risk? Well, it's not really 100%, because you're basically guaranteed to be able to sell a few planets to someone. 

Your breakeven point if you pay $10k for a star is 3300 planets at $3 or 500 planets at $20.  And that's not counting that you can sell the star itself for something even if all of the planets are gone...$3000? 

Further, one must assume that the network will continue to be developed, Garner increasing network effects, and increase in value according to Metcalfe's law.  Also, presumably, it will have more value to people, leading to higher prices.  

Galaxies

A galaxy is a bundle of 256 stars, so roughly valuing a galaxy on the top end is just multiplying star value times 255, plus privileges, plus the value of the Galaxy vote. Galaxies get to vote on what happens to the network.  Galaxy owners get 1/256 of that vote. 

Current galaxy prices are very illiquid.  They go for whatever people will sell them for, and a lot of people have a lot of different reasons for selling, but mostly the price hovers around the above formula...if you can find one.

I have a galaxy available for sale at the right price. Contact me if you're interested.

Wildcards

There are many things that could affect the value of all these assets that have not fully been determined.  Both galaxies and stars will be able to provide some services and have some privileges on the network.  Presumably, these can come with a fee (someone is already working on an in-network payment system for such things).

In the same way that early Internet service providers also often were your email providers and your web host, Galaxies and stars could conceivably provide similar services like storage, access to bitcoin full nodes, CDN, etc.

There is talk of someday moving the PKI from Ethereum to Urbit, and Galaxies and/or Stars would manage the nodes.  That may or may not come with recurring revenue.

As the load on nodes becomes larger, and the capability is there to take payments, there is also the possibility simply for charging for routing...maybe a few dollars a year per address.

And finally, there will be some value for reputation.  Since Urbit is a completely open network, anyone, for example, can host an app store. Well, how do you figure out which app store that you can trust?  It's likely to be the same trusted party that you get other services from, and that trust has some amount of value.

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About the author

Jeremy Tunnell
I study Integral Theory and Zen Buddhism at Integral Zen.

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You can reach Jeremy at [email protected]