Update: Removing Hivemapper (HONEY) from Cpro Picks

September 10, 2024

When we first covered Hivemapper in November 2023, we viewed it as an under-the-radar project at the intersection of AI, physical infrastructure, and Web3. Hivemapper's potential in leading the DePIN (Decentralized Physical Infrastructure Networks) narrative remains significant.

Back in December 2023, from a trading price of  ~$0.16, we anticipated the following scenarios for HONEY at the peak of the 2024/2025 bull run: 

• Best case: $3.19 (~20x)
• Base case: $1.59 (~10x)
• Worst case: $0.266 (~1.7x)

Fast-forward to today, and Hivemapper's market cap has grown by 1460%, jumping from $10m when we first reported it to $156m. However, despite this growth, the token price has declined by 62%, from $0.16 to ~$0.06.

So, what went wrong?

Poor tokenomics

One of the biggest weaknesses lies in Hivemapper’s tokenomics. Currently, only 23% of the total supply is circulating, meaning a large portion of tokens has yet to enter the market. The project’s tokenomics, designed to incentivise mappers, has created an overhang in supply that continues to weigh down price appreciation.

When we first covered Hivemapper, only 2% of the supply was circulating at a price of $0.047 per $HONEY, with a market cap of around $10m. After nine months, the market cap has grown to $156m, but the price per $HONEY has only slightly increased to $0.061.

This disconnect between the growing market cap and the declining price can be attributed to the circulating supply increasing from 2% to 25%. Despite significant capital inflows, the price hasn’t benefited much due to the overhang of unreleased tokens. 

The graphic below demonstrates this dissonance between market cap growth and token price.

Final thoughts

The image clearly shows that despite substantial capital inflow, the token has struggled to capture the benefit in its price. So, where do we go from here?

After re-evaluating $HONEY’s tokenomics, we believe the token will continue to struggle with price appreciation, even with further capital inflows. This supply overhang is too significant, and for that reason, we no longer see HONEY as a viable investment for this bull run.

We’ve decided to remove HONEY from our Cpro Picks. For those who initially held HONEY, we trust you took our earlier guidance in Q2 to rotate out of altcoins and into a barbell portfolio of majors and memes.

If you’re still holding HONEY, consider this a wake-up call to rotate out of this asset and reposition into the barbell until market conditions become more favourable for risk-on plays.

 

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November 29, 2023 

Narratives are a big deal in crypto. 

Many top-performing coins mooned on the back of popular narratives – from DeFi to NFTs and even the unpopular ICOs. Some new narratives are shaping up – AI, DePIN, GambleFi and others. These narratives will deliver some of the most exciting opportunities in Web3 as we head into the next bull run. 

Today, we present alpha on an under-the-radar project sitting smack dab at the intersection of AI, physical infrastructure, and Web3. This project has enormous potential to position savvy investors for major profits in the next bull run.

Key takeaways

• Hivemapper utilises crowd-sourced dashcam data and AI to democratise digital mapping.
• It has a solid team with the expertise and experience to deliver product-market fit.
• Proof of physical work model rewards data contributors and ensures data accuracy.
• Burn and mint tokenomics align network incentives.
• Hivemapper's innovative approach disrupts incumbent mapping giants through cost and coverage advantages.
• Risks include unknown clients, token unlocks, and big competitor dominance. 
• Gameplan: we are early in the hype cycle; start accumulating now.

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Introducing Hivemapper

The digital mapping field is currently witnessing a significant transformation thanks to advancements in technology.

Hivemapper is at the vanguard of this change, offering an innovative platform reshaping our engagement with geospatial data. Hivemapper enables contributors worldwide to gather and share high-quality, real-time street-level data using crowd-sourced data and advanced dashcams. This decentralised approach democratises the creation of maps and ensures their data is more up-to-date and extensive than traditional mapping services.

The digital mapping market has traditionally been dominated by a few key players, creating high barriers to entry and resulting in gaps in global coverage. These incumbents often rely on costly and complex data collection methods that can't keep pace with the need for timely updates, especially in hard-to-reach areas.

Amidst this landscape, the $HONEY token emerges as a compelling investment prospect. It is the lifeblood of the Hivemapper ecosystem, rewarding contributors and sustaining a vibrant, incentive-driven community of data gatherers. 

With an increasing need for precise and current geospatial data across multiple sectors, and given Hivemapper's disruptive model, $HONEY is well-positioned as a valuable digital asset in the expanding domain of digital mapping.

There are solid catalysts and lingering headwinds, but before we get there, let's dive into the protocol.👇

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Who is behind Hivemapper?

Let's keep this section short and sweet. The leadership in San Francisco has experience working for major Web2 companies. 

The Hivemapper Foundation is registered in the Cayman Islands, which is a good thing ~ less regulatory concern. The team is doxxed, a trend that continues in Solana and one that we like. 

Furthermore, we have noticed a significant increase in publications from the team's blog. This is important, as it tells us that the team hopes to capitalise on recent Solana sector successes: DePIN and OPOS.

After having a conversation with CEO & cofounder Ariel Seidman, we have determined two very important facts:

1. The team has been extremely busy with business development lately
2. The team plans to showcase the client (demand) side on a new analytics page 👈 we found their Dune Dashboard (more below).

These hint toward signs of market fit. If the data painted a bad picture, Hivemapper would not want to show it.

 

 

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What is driving the protocol? 

“Previously, only a few major companies could afford to bootstrap global network infrastructure. Startups like Hivemapper are now showing a different path. Known as Proof of Physical Work (PoPW) and Decentralized Physical Infrastructure Networks (DePIN), these projects motivate individuals to contribute hardware and build infrastructure quickly and affordably.” - Hivemapper

Hivemapper harnesses advanced technologies, including state-of-the-art dashcams and sophisticated Artificial Intelligence (AI), to create a decentralised physical infrastructure (DePIN) network for data creation. This DePIN model disrupts traditional mapping methods by collecting high-resolution data (2k-4k at 10 fps) from a global network of contributors rather than relying on centralised data sources.

AI is critical in the subsequent data processing and quality assurance stages. Upon upload, images are filtered through AI algorithms to exclude data that fails to meet predefined quality standards, such as poor lighting or imprecise locations. The AI then verifies the integrity and authenticity of each image and its associated data. Contributors play games to train the AI, ensuring the network's reliability and accuracy. 

Hivemapper also employs GPS, LoRaWAN (from Helium’s tech stack), and Map Image QA. These are integral to the accuracy and reliability of the data. Learn more.

Currently, two models of dashcams are available, one for $300 and one for $649.

Source: Hivemapper

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How the token economy works

At the core of Hivemapper's model is the $HONEY token, a digital asset that serves as the primary incentive for participants in the Hivemapper network. This token creates a unique economic ecosystem that balances the needs of two key groups: map data contributors and data consumers. 

Incentivisation and token distribution

$HONEY tokens reward individuals who contribute to the Hivemapper Network by submitting imagery, completing AI Trainer tasks, and editing map data. This incentive structure is crucial for encouraging widespread participation and data collection across various locations.

The Hivemapper network operates on a system of fixed tokenomics, with a maximum supply of 10 billion $HONEY tokens. The initial allocation of these tokens was carefully planned to ensure the long-term sustainability and growth of the network.

Key tokenomics

1. Current MCAP is roughly $10M with an FDV of $300M (as of Nov 29)
2. That is an extremely low 2% circulating supply
3. The trading volume for this #1000+ ranked token is almost $300k, which is phenomenal.

We will substantiate our thoughts in the “Headwinds” section below.

 We rate this distribution as good, not excellent.

The most crucial section 👇

Rewards are distributed weekly, with each contributor’s share relative to their contributions' utility within their specific region. This system incentivises widespread and regular data collection and ensures high data quality standards. You earn more for new roads mapped.

A distinctive feature of Hivemapper’s tokenomics is its burn-and-mint mechanism. When enterprises and developers consume map data from the network, $HONEY tokens corresponding to the value of the data purchased in USD are burnt.

Simultaneously, an equivalent amount of $HONEY is reminted and redistributed to contributors, aligning with the network’s Net Emissions Model. This cycle ensures a dynamic balance between supply and demand, continuously rewarding contributors while managing the total token supply.

Source Dune

As you can see, a much more significant percentage of tokens are minted to contributors than are burnt by consumers. However, we are seeing a continuation of use, which is encouraging. Keep reading down to the “Tailwinds” section for more context.

Contributors (Supply side)

The community has created a calculator to help determine the amount that can be earned. Several factors go into the rewards weighting, which is good. As it stands, these are determined by Hivemapper. However, they are taking feedback from the community. Here are the factors:

1. Number of contributors and average KMs submitted
2. Reputation score and average days of freshness
3. Whether or not a boost has been added 

To give an example, we have selected a contributor driving in Singapore with the most average inputs (see calculator), and this is what you can expect to be paid out each week.

At the current price of $HONEY, which is roughly $0.05, you are earning $37.50 per week. If your reputation as a contributor is high, the map freshness is near the top, and you are putting in more than the average of 750 km per week, then you can expect this amount of HONEY to do multiples. You can expect to pay back your device in roughly eight weeks.

Reminder: These weekly earnings are for $HONEY at current prices.

Source Hivemapper Foundation

Consumers (Demand side)

There are many real-world applications for Hivemappers data: Governments, insurance agencies, autonomous car manufacturers, and delivery and logistics companies, with plenty more to come. 

Another consideration is the likelihood of dApps building on top of Hivemapper. Think localised users of decentralised map data. 

Under the Net Emissions Model, you can understand demand-side consumption costs. This table gives you an idea of the costs businesses must factor into their models.

Cost Type	Cost Per HEX	Example	Cost Calculation
Map Imagery Cost	$0.005 worth of HONEY redeems a week's worth of imagery for one map hex.	For about 50 hexes (1 km of road), the cost is 50 Map Credits.	50 x $0.005 = $0.25 per km per week
Map Features Cost	$0.005 worth of HONEY redeems all Map Features from imagery for one hex.	For example, data on 1,000 speed limit signs, each in a different hex.	1,000 x $0.005 = $5

For example, mapping New York City would cost roughly 10,000 km × $0.25 = $2,500 for magnitude.

The bullish case for Hivemapper

Market disruption

Hivemapper is a potential disruptor in the digital mapping industry through its innovative use of artificial intelligence, Proof of Physical Work (DePIN), and cryptocurrency incentives. It challenges traditional mapping services, often limited by high operational costs and logistical complexities, offering a scalable and cost-effective alternative. 

Timing

Given the early stage of this product in its lifecycle, it's too soon to predict its success, as emerging technologies often need years to develop a stable financial model. 

The current imbalance in the supply and demand ratio, favouring contributors, is not a major concern at this stage. 

Crucially, the low market cap of the $HONEY token, combined with the unique mix of narratives, sectors, teams, and growing interest, presents a rare opportunity in the market.

Source Coingecko

Media and institutions have arrived

This summer, VanEck, the investing giant, announced a 1-year token deal, which is essential for market validation, capital influx, and increased visibility. Couple that with the backing of VCs like Multicoin Capital and the earlier research from agencies like Messari, and you set the stage for an exciting opportunity.

To top it off, we have recently begun seeing Hivemapper mentioned by prominent figures on Twitter. We don’t like shills, but it always pays to take note when they come from respected accounts.

Hivemapper's Bullish vs Bearish TLDR

The bearish case for Hivemapper

While Hivemapper's potential is clear, the path to market dominance is not without its challenges and risks. 

Unknown clientele

We need to determine who uses the data and how many customers are in the pipeline. We have to trust that as the protocol grows and so too does its product offering, that business will get in line. You can expect more information from us as the storyline continues to evolve. 

Poor Tokenomics

$HONEY is currently 2% circulating, which could be better. The VC tokens have also begun to unlock, which will continue for the next 12 months. 

Although given where we have found this token, the upside potential is far greater than the downside and will update this investment in terms of duration as the information begins to be revealed. 

Competition

The initial cost of dashcams could pose a barrier to the widespread adoption necessary for comprehensive global coverage. 

In a market dominated by well-established players, Hivemapper must strategically navigate to gain a competitive edge. 

Additionally, like any tech-centric venture, Hivemapper faces technological and operational risks that must be managed to ensure innovation and efficiency continue at a pace that secures long-term success and growth.

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Cryptonary's take

When this report was first started a week ago, we noted the increasing frequency of posts within the Hivemapper blog, from 4 posts per month to 5 to 6 and now 7 in November. 

Couple that with the notable uptick in Twitter activity, and it's confirmed our suspicion: the team is ramping up their efforts in line with the recent DePIN and AI narratives we’ve discussed.

So then, what is the plan?

Very simple. Accumulate now. 

The Solana ecosystem is having a moment, and this token will not remain at this market cap for long. With BTC and SOL this strong, the timing is perfect. Is there risk associated with this trade? Of course, but the risk-reward is excellent.

Then, we will adjust after we learn more about the company's consumer (demand) side and can see how the market perceives this information. With any luck, this short-term play will turn into a long-term play. 

Stay tuned to Cryptonary with ‘Valuation’ and ‘Price’ targets to follow.