Tomb Fork REX
According to WhatTheFork.xyz, there has been at least 479 Tomb Forks around. Almost all of them are failures after maximum one month. Scanning through the whole Tomb Fork list, I could only see 3 of them reasonably floating around peg after more than one month of life. Two on Cronos and one on BSC.
Probably time to have some kind of Return of EXperience on all these attempts at building a lasting algo-stablecoin, because you might not have realised it, but Tomb Forks are a great invention, and will become an important foundation of Web3 as we don't know it yet.
Classic Tomb Fork life cycle
First, Tomb Forks start with a Genesis, made of a few genesis pools that are supposed to muster the starting liquidity for the system, while providing the first emission of the base and share tokens.
The Genesis is tailored so that the game starts at peg, and the goal is to stay pegged as long as possible.
If peg is maintained, or if the base coin is even above peg, you can get a very nice frenzy, or bubble, call it the way you want. For the luckiest Tomb Forks, there is a moment where participants are so confident that they take no profit and immediately re-invest all their rewards into the system. What happens then could be called a compounding loop, and even though the shares print like crazy, the base coin stays well above the peg. Liquidity inflates like a ballon but it does not matter: when you get base coins as rewards, you put them back in the LP, and when you get shares as rewards, you do the same, and most of the participants completely forget about regularly taking profits, because they are too confident in the protocol.
The share price goes parabolic, and the TLV of the fork can reach 7 figures, if not 8, and sometimes even 9 :
As you can see in the two charts above, in the case of Tomb, TOMB market capitalisation neared 500 million dollars, and TSHARE market cap went above 800 million $.
Pretty good of a coin that is absolutely useless.
But every party come to an end. This state of upward instability never lasts very long, and when the music's over, the lights are turned out pretty quickly. The most clever of the participants realise that this whole house of cards is just built on over confidence.
For many tomb forks, confidence just lasts a few days and the game is over in less than a week. For others, confidence seems to vanish in waves. The peg is lost, then reclaimed, then lost again, then ... it can last quite a while. The game can carry on as long as the basis coin does not fall below 0.8 or 0.6 of its target. Below that point, all hope is generally useless.
It does happen that some tomb forks unexpectedly raise back from the grave though.
It mostly happens for the forks that really flat lined to almost zero. What happens is that you can start buying massive amounts of basis and share tokens. Because the whole protocol collapsed, they are dead cheap and you, and some of your buddies, quickly become the whales of a dead protocol.
What you can do at that point, is to hope for, or encourage people to dry up the liquidity pools. Tell people to break their LPs, or simply wait for the last participants to eat their impermanent losses and break their LPs until the liquidity pools reach very low liquidity levels.
At that moment, it does not cost too much to buy a massive amount of base coins and pump the price. Wait for people to notice this unexpected price jump (time to do some Twitter / Discord / Reddit shilling) and if you're lucky, a lot of people will come back to that tomb fork.
If you managed to pump the basis token price up to 0.9, then it's only a question of whether you managed your social media shilling campaign properly.
My personal rule of thumb is that, during a repeg, the share token price reaches at least a hundred times the price of the base token.
Then what you do is sell back the shares you got for pennies, with a nice x100 profit.
That kind of circus worked a few times. Setting up a discord server is a good starting point if you want to start this kind of market manipulation activity. (And I really don't write these lines to encourage you to really do that. No. I'm writing these lines for the guys that would ape in recklessly because he suddenly sees a tomb fork raise back from the grave and start a gig. If you see a dead tomb fork suddenly come back to life, don't think it's your lucky day. There are just smart players fiddling in the dark. Just spot the whales: it's them.)
Death at last
99% of the tomb forks end up dead. I cannot write a 100%, because there are still 3 or 4 of them that haven't died yet. But my opinion is that they will eventually all die more or less quickly.
Did you know? Tomb hardly invented anything, as it is itself a Basis Cash Fork. It's great genius was to launch on Fantom blockchain where fees are so cheap that it could attract a huge crowd of retail traders. All the pre-Tomb Basis Cash forks failed because these idiots launched on Ethereum where the gas prices are so high that your user base never can reach critical mass. That is also why, out of the 479 Tomb forks listed on WhatTheFork, I can only spot 4 of them launched on Ethereum.
That is why innovation is dead on Ethereum. That is why the future web3 killer-apps, that still don't exist yet but will bring us a glorious web3 era that will crush the web2 behemoths we know today, will appear on fast, reliable and cheap blockchains like Fantom.
Share price pattern
The price of shares usually follow the same pattern. When the base coin is well above peg, shares print like crazy. As such, they represent a very efficient passive income source, and they worth a lot.
When the price of the base coin starts to go down in the direction of the peg, share holders start to panic about the money printing being stopped. Shares get a first drop in price.
Going just below peg is the first real stress test: the money printer has stopped, the shares are only worth the confidence the actors have that they will start printing again some day in the future.
When the base coin crosses the 0.8 peg level to the downside, most of the participants think the game is over, and just dump all the shares they have as soon as they can, bringing their own self made prophecy into reality.
This is an obvious pattern that we all can see in the dozens of tomb forks, at least for those who passed the genesis pool rug joke. (This joke pattern being quite common among Tomb forks as well).
. . . . .
Thank you for reading that far. I simply hope you enjoyed this story and that it made you smile a few times. It's quite long already and I really need to get my breakfast or my stomach will digest itself.
In my next article, I'll explain the obvious design flaws these tomb forks all have in common. I'll propose improvements, and explain that this improved tomb fork version could be used as the foundation of web3 project financing.
Next story in the serie: Tomb forks: flaws and improvements