Valuation and Business Rules

"Costaflores, powered by OpenVino" is an experiment. We do not know what is going to happen to Costaflores and wine sales as a result of implementing OpenVino. Many business rules still need to be defined and predictions made about the future valuation of the company (valuation of stock tokens) and vintage tokens (annual ICO's). 

This section lists many of these questions and brings the unknowns about OpenVino out into the open. These are the questions that the OpenVino team would most like to share with economists, business analysts, experts in digital transformation, entrepreneurship and innovation, legal experts, and others for collaborative analysis and longitudinal studies.

Additionally, we would like to crowdsource opinions on these questions, and compare those opinions, with the predictions of the experts and those of the initial wine token holders. This would be accomplished by a "Help us predict the future" campaign. The results of the crowdsourced opinions could be kept secret until the predictions of the experts are finalized. These crowdsourcing exercises could be repeated on a regular basis, to coincide with the predetermined longitudinal studies checkpoints.

Ideally, many of these questions should be answered separately by the following groups:

• OpenVino team

• Longitudinal study team

• Expert team n.

• Token holders crowdsourced opinion

• Non-token holders crowdsourced opinion (rest of the world)

Open Questions:

1. How do we set the initial token price (ICO)?

    

   Our baseline price for the ICO is the estimated cost of production of the MTB 2018 vintage, including 5 years of storage. Essentially, we will be selling the initial wine tokens (MTB18) at zero profit. This way we are not setting an arbitrary price point, and thus allowing the market to decide the real token value.

    

2. How do we determine the subsequent years token launch (ICO) prices?

   The initial idea is to split the difference between the previous vintage token average price and the cost. This would create incentives for new token ICO (i.e. MTB19) How we calculate the average price of the previous year's token has yet to be defined. 
   
   

   How many Costaflores stock tokens should be issued? 

   Costaflores Organic Vineyard produces on average 10,000 bottles of wine, and thus would distribute, at a maximum, 10,000 shares per year. A poetic number of shares would be 1.2M, which is the number grapes in the vineyard on an average year, but this doesn't necessarily correlate with the ideal number of shares, considering that the valuation of the company will ultimately be related to the value of the wine tokens and the business rules that define profit distribution (see below).
   
   

   How should profits be spent?

   What proportion should we set aside for Costaflores expansion and savings for bad years, for dividends and stock buy backs, for employee bonuses, etc.
   
   

   Should we set rules for buying back stock?

   For example, we could define that %25 of profits from the year be spent on stock buy backs, thus creating a market for stock token holders.
   
   

   What rules should be set for paying dividends?

   For example, we could define that %50 of profits from the year be paid, in the form of dividends, proportionally to stock token holders. Profits could be paid in existing or new wine tokens.
   
   

   How should Costaflores employee bonuses and salary increases be determined?

   Does it make any sense to pay bonuses in wine tokens? If so, does is fiat currency from profits spent on purchasing the tokens, and how would this inflate the market. How are employees going to react to having their salary information made public? How will the public respond to this data? What legal and tax issues will the bring up?
   
   

   What rules should apply in case of loses?

   For example, Costaflores lost the 2013 and 2015 harvests to hail and rot. Occasional bad harvests are inevitable. 
   
   

   What do we predict will happen with the wine token prices at the time of the ICO? and over time?

   Will the tokens sell out quickly?
   
   

   How will the valuation of the token over time relate to the quality valuation of the wine?

   Wine is a unique product, because it's quality valuation tends to increase for a number of years, as the wine ages, until it reaches it's peak and begins to oxidize and fall off. The value curve can be different from one vintage to the next. Customer feedback from "you drink it, you own it", could be considered a reliable quality metric, though other factors influence customer's valuations of older vintages and their desire or reluctance to cash in tokens for bottles to drink.  
   
   

   How does the minuscule size of Costaflores affect token valuations?

   With only 10,000 bottles per year from Costaflores Organic Vineyard, there is a tight restriction on supply. 
   
   

   What attempts, if any, will be made to artificially manipulate the token valuations?

   What attempts buy buyer/seller actions might skew the token values, and what bots, or other malicious tools might be used to create price volatility.
   
   

   How will very small token ICO's be receive and valued (i.e. releasing special tokens for 100 x 2016 magnum bottles)?

   The initial MTB18 token ICO will only become exchangeable for an asset (a bottle of wine) in 2021. But we could release 100 MTB16M tokens in May of 2019, representing 100x1,5 litre bottles from 2016, all of which would be immediately available for delivery. This would be a good way to test the "you drink it, you own it" app bottle serialization. 
   
   

   What correlation, if any, will we see between vineyard data and token pricing?

   Will ICO valuations change, based on weather and work variations, as registered in the daily log?
   
   

   How many fractional tokens will be in distribution, and how will this affect the token price?

   Since MTB* tokens are divisible, it is possible, and even probable, that token holders will have a non-rounded number of tokens. So, for example, if someone owns 5.925823 MTB18 tokens, but wants to purchase a case of 6 bottles of wine, they need to buy the fraction they lack from an exchange. How will this purchase demand create upward pressure on the token value? It is essential that tokens be divisible units of currency if we want to be able to spend tokens on services and dividends, for example, and if we want to be able to accept tokens for sales of other products, such as merchandising.
   
   

   What percentage of the tokens will remain unspent after a number of years?

   Some people might hoard tokens forever. What should we do with the bottles of wine they represent? How can we incentivize those token holders to spend them?
   
   

   What should be done about tokens (and bottles) that were held in wallets that have been lost?

   These tokens will be irretrievable, yet they represent physical bottles in cold storage. 
   
   

   What types of token buyers will we have for the initial ICO? 

   Most likely, early buyers of MTB* tokens will be more crypto-savvy investors and speculators than wine enthusiasts. 
   
   

   What will the buyer profile look like when the wines become available for token exchange?

   Once the ICO is finished, no more tokens will be available until it is registered on an exchange. Once the token is available on an exchange, will the price increase?
   
   

   What will be the impact on wine token sales on Costaflores existing wine distribution markets during the 2018-2021 period? 

   When MTB18 tokens hit the market (ICO) on May 6th of 2018, MTB wines from previous vintages will still be in the traditional marketplace. The value of these wines will be easily more than double of the price of the MTB18 tokens, but they will reflect wines that are currently available for consumption. At the time of the first ICO, the total number of bottles held by Costaflores for vintages 2014, 2016, and 2017 will be released. These are the wines that will be sold through the traditional channels and price schemes through May of 2021 or until they are sold-out.
   
   

   What will be the impact on wine tokens on the Costaflores wine distribution market once the 2018 bottles are available for delivery?

   In May of 2021, the MTB18 tokens will be accepted for delivery of MTB 2018 wine bottles. But Costaflores importers and distributors that do not hold tokens before that time will be forced to purchase wines from the token exchanges, like everyone else. Unless other promotional mechanisms are put in place, like brand promotion commissions, how will these resellers react to the lack of volume discounts?
   
   

   What percentage of wine sales, vía tokens, will be with resellers, and what percentage will be direct to consumer?

   We imagine that over time, wine sales will increasingly be DTC sales, but will this really be the case?
   
   

   What percentage of stock tokens (you drink it, you own it) will be redeemed? 

   Stock tokens will be redeemable by those people who scan the bottles and document their experiences. Of course, this will be entirely voluntary and many bottles will go in the trash without having been redeemed. We imagine that many early consumers of the MTB 2018 vintage will throw away their empty bottles, unaware of their value, because they simply didn't read the back label, but as word gets out about the stock tokens, these empty bottles would be sought out.   
   
   

   What percentage of stock tokens will be redeemed by actual consumers, and what percentage will be redeemed by knowledgeable bottle recepients, for example, by waiters who collect "uncashed" stock token bottles? 

   If you work as a sommelier in a restaurant where MTB wines are sold, you would have an incentive to recommend these wines to your customers, and keep an eye out for the empty unredeemed bottles.
   
   

   How will the stock token price affect the vintage token price, a vice-versa? 

   If I can obtain one stock token by drinking a bottle of wine that was purchased with one wine token, then shouldn't the stock token be worth the same price as the wine token? How does this then determine the valuation of Organic Costaflores S.A.? If this correlation in value does not occur, why not?
   
   

   What business rule adjustments or other measures could be taken in the future, to reduce an overly inflated vintage coin?

   We want to create a deterministic set of rules, providing transparency and predictability for our customers, but at the same time, we need to have some mechanisms to "right-the-ship" when we observe skewed and undesirable results. After all, this is an experiment, and it will be impossible to define with precision our final business rules from the beginning.
   
   

   Should the stock coins be made available on an exchange? 

   If stock coins are negotiable on a cryptocurrency exchange, how will this affect the stock coin valuation, and how will this correlate to the wine token values (see the corollary question above)?
   
   

   Could someone put the coins on an exchange without the consent of Costaflores? 

   And if so, would this be problematic?
   
   

   Will these or similar cryptoasset tokens be adopted by other wineries?

   Assuming we are successful with the OpenVino deployment, wouldn't other small wineries choose to do the same? How would similar wine tokens respond for larger wineries? How would they work for different types of commodities? We should be able to predict these outcomes with more precision, based on our own longitudinal studies.
   
   

   Will a futures market grow around the Costaflores vintage tokens? Is this a good or bad thing?

   Futures markets could arise, yet it would be more interesting to foster a decentralized predictability market. Such market would not only fulfil a similar function as that of a futures market, but would be instrumental in reducing price volatility of existing MTB* tokens. 
   
   

   What will be the reaction from the Argentine government, specifically from AFIP?

   There are so many questions here. We hope that by being so excruciatingly transparent with OpenVino, our innovative actions will be less subject to arbitrary scrutiny by authorities whom are understandably skittish about setting precedents in the cryptoasset arena. The existing mechanisms for company stock disbursal becomes arcane when we use the blockchain for exchanging values. However, the government regulators won't see it that way.
   
   

   How will other government regulators react, if at all, to wine token sales and exchanges?

   How will MTB* token sales and Costaflores stock token distributions be seen by regulators in the US, Europe, India, and in other countries?
   
   

   How will high-tariff countries, such as India, react to Costaflores wine tokens being used? 

   Using MTB* tokens might be perceived as a way to circumvent the high tariffs and excise on wine imports in some countries, but will it be considered illegal? And if so, what measures will need be taken to export to those countries, and how will that impact the token values?