Understanding the Business Valuation Logic of Apron Network | Hacker Noon

@Apron NetworkApron Network

A decentralized infrastructure service for #DApp& #Defi developers and infrastructure operators.

The core of traditional business project strategy is positioning, which is the consensus of the industry. The traditional theoretical framework for positioning strategy was first proposed by Michael Porter. These strategies, which are, cost leadership, differentiation and niche market competition, have become the most important strategic thinking in the past three decades.

However, in this digital business era of blockchain, apart from the positioning of products in the market to achieve competitive advantage,
a more important strategy needs to be carefully considered – the positioning of the project itself in the decentralized collaborative network.

In the past, the quality of a product, its uniqueness, and the relationship between market demand determined the success of the product
and the value of the company. However, since the business age has entered the Internet age, the traditional business valuation system has been inaccurate. We can no longer evaluate a company by simply multiplying corporate profits by a multiple of P/E, or multiplying a multiple by P/S.

How much is it worth, and how much should it be worth?

Today, when our era enters the era of decentralized digital intelligence, the valuation methods of those traditional Internet projects will continue to fail. Because of the era of decentralized and collaborative intelligent business, new valuation methods will be constructed as the business form is deconstructed and reconstructed.

Today, we will analyze the blockchain business project of Apron Network. In the era of decentralized collaborative business, what kind of valuation system should be used for analysis and evaluation?

What is the commercial value of Apron Network?

Before analyzing the commercial value of any project, we should first understand what value the project provides? What kind of problem does it solve? What kind of business form has been created? Once such a business form is established, will its value increase linearly or exponentially. What is the basic model for its valuation?

When the valuation model is determined, the result of the evaluation is also determined. As long as the future business form does not change, the change in its valuation is nothing more than a change in the parameter numbers on the valuation model.

Below we first analyze the value of Apron from the problems solved by Apron Network and the business form presented.

The problem that Apron Network hopes to solve is to create a decentralized Service Marketplace for middleware (infrastructure services) to solve the practical problems of infrastructure service discovery, service calling, and billing in the Web3.0 world. The majority of developers are free to provide and use any infrastructure services. No longer affected by the quotation and monopoly of the centralized infrastructure service provider platform, more infrastructure service operators can build and attain their own commercial value.

Now that the problem that Apron aims to solve has been presented, what about its business model and its participants?

The first is that Apron Labs (project developer) has developed a decentralized platform, called Apron Network, which enables direct
trade and matching for all infrastructure service providers and DApp

The second is the extension of the scalability of the Apron Network. The Apron platform does not only support the middleware providers of the Polkadot ecosystem, but also serves the infrastructure services needs for other blockchain ecosystems such as Ethereum, Filecoin, BSC, HECO and Tron. The platform is the link between all participants. And with the
likely integration of the blockchain network and the Internet in the future,
the infrastructure service providers of the traditional Internet can also
migrate and settle in the Apron network to provide more capacity, in terms of infrastructure service support, for the development of the blockchain space.

As a result, the Apron Network will be the link from one “phase” to another “phase” and evolve into a fully decentralized collaborative ecosystem. This is where we think the value of Apron Network lies.

Self-fission exponential growth cycle.

How to measure the value of Apron?

Next, we will analyze how the business value of Apron is embodied from the structure of “point-line-surface-body”.

1. “Surface”: Service Marketplace platform

The Service Marketplace platform matches the needs of infrastructure service providers and DApp developers by widely connecting
different roles and reducing the possibility of centralized platform price
monopoly or service monopoly. Apron enables infrastructure service providers and DApp developers to connect and match seamlessly. After dApp developers obtain quotations, they can choose the most cost-effective infrastructure services, thereby reducing development costs and iteration cycles, and optimizing overall benefits.

The work of “surface” is to help the demand and supply side on the platform to widely connect and enjoy the benefits of network effect;
“Surface” creates value through a substantial increase in matching efficiency;

The foundation of “surface” is not the research and development of a single product or service as competence is not a scarce resource on the market, its core value is network effect and coordination mechanism.

Apron’s slogan on the platform network can be borrowed from Nongfu Spring’s slogan “We do not produce infrastructure services, we are only middleware porters”.

2. “Line”: Platform service provider

“Line” refers to the service providers (traditional e-commerce platform merchants) on the Apron Service Marketplace. The providers of these services can also be the builders of the Apron Network. They overlap, so they are not “point” positioning but “line” positioning.

For the holders of the Apron token and Pillar Node, the “face” is the aggregator of various services and products. On the platform built by the “face”, the real service provider is the “line”, which is a large number of infrastructure service providers.

The primary role of service providers positioned as “line” is to create and provide good cost-effective infrastructure services for dApp developers. All service providers belong to the category of “wire”.

The “line” market depends on the competitiveness of the product itself, which is cost-effectiveness. In order to gain a better market share, service providers must continuously improve and optimize their middleware performance to meet the performance requirements of developers. Due
to development difficulties or development efficiency requirements or
development cost considerations, middleware service providers will be able to also reach some cooperation or service procurement collaboration with each other, forming new infrastructure service provision or improving existing service performance .

A “line” strategy is to use the various basic services and capabilities of “surface” to develop rapidly with lighter assets. In other words, one is to make full use of the network effect of “surface”; the other is to make full use of the  resources and capabilities, rather than spending huge energy and costs on repeated development; the third is to be adept at integrating the opportunities created by “points.”

Obviously, the distributed and decentralized nature of Apron Network has greatly empowered the collaboration and link between the lines. The relationship between lines and lines is no longer a competitor relationship in the traditional business model, but has become a mutual collaboration. In this way, problems such as repetitive construction and cost waste in the traditional business model are avoided; at the same time, due to the collaborative relationship, it plays a great role in the optimization and
improvement of performance, thereby reducing waste and improving efficiency.

3. “Point” represents each service participant

The rise of the “face” of, which will inevitably give birth to a new “point”. On the Apron Network, when middleware service providers are treated fairly by the market and stimulated by demand, it will surely attract more service providers to join Apron Service Marketplace.

At the same time, because Dapp developers can access more cost-effective infrastructure services in the Apron Market, the development cost and technical difficulty are greatly reduced, and this will also drive more developers to join the Apron Network.

Therefore, when the “face” effect gives birth to the “point” explosion, the network value of Apron Network will truly begin to enter the exponential growth cycle.

4. “Body” is born from the expansion and fusion of “Face”.

“Face” is the most fundamental element of the “Body”. In the process of “face” expansion, if there is a strong enough foundation, other things may evolve, which then form an increasingly perfect “body”.

In the future vision of the platform, Apron not only satisfies the “point-line-plane” link and empowerment in the Polkadot network, it also plans to connect with Ethereum, BSC, Filecoin, Helium, and multiple “planes” such as Layer 2. In this way, more types of infrastructure services can be built and provisioned to meet the use of the entire blockchain ecosystem, and developers who use Apron can access multiple blockchain ecosystems for cross-chain innovation at a lower cost.

In effect, the “body” generated by the integration and expansion of the “face” links of these different blockchain networks will form an “ecological body” that entrenches collaboration, interoperability and mutual empowerment.

The “point-line-surface-body” ecology formed will deal a dimensionality reduction blow to all single-dimensional, single-line and even single-sided commercial forms. In the ecology of “point-line-surface-body”, the point has an exponential network effect because it serves different lines and different surfaces; and with the cooperation of lines and lines, the coupling of lines and points, and the line-to-face, the service has formed a larger exponential network effect. Simultaneously, due to these network effects and collaborative optimization advantages, the cost reduction coefficients of these internal “points”, “lines” and “surfaces” are also exponential.

Such positive exponential growth and negative exponential reduction have formed a strong “point-line-surface-body” ecological” commercial value. This value effect will be exponentially increased with the participation of a participant. Obviously, the value generated by these network effect enhancements will also be mapped to the price of each Token.

“Surface” is the most fundamental element of the “body”. In the expansion process of the “face”, if it is strong enough, may also give rise to other “surfaces”, and then form an increasingly perfect “body.”

In the future vision of Apron, Apron not only satisfies the links and assignments of the various “point-line-surface” in the Polkadot network, but will also connect with Ethereum, BSC, Filecoin, Helium, including Layer 2 and other “faces”, so as to build more types of service provisions to meet the use of the entire blockchain ecosystem. With such development, developers and dApp users can access multiple blockchain ecosystems for cross-chain innovation at a lower cost.

As a result, the “body” generated by the integration and expansion of the “face” links of these different blockchain networks will form a fusion of collaborative and mutual empowerment.

The “point-line-surface-body” ecology formed will deal a dimensionality reduction blow to all single-dimensional and single-line and even single-sided commercial forms. In the “point-line-surface-body” ecology, because points serve different lines and different sides, they obtain exponential network effects; while line-to-line cooperation, line-to-point coupling, and line-to-side services form a larger exponential network. At the same time, due to these network effects and synergy optimization advantages, the cost reduction coefficients of these internal “points”, “lines” and “surfaces”
are also exponential.

This way, the positive exponential growth and the negative exponential reduction have formed a strong “point-line-surface-body” ecological commercial value. This value effect will be exponentially amplified with the increase in the number of participants. Obviously, the value generated by these network effect enhancements will also be mapped to the price of the APN token.

Apron Valuation Prospects and Potential Risks

It cannot be ignored that the development of a platform like Apron Network needs to go through certain stages. The likelihood of successfully realizing each step is used as the basis to adjudge Apron’s value growth over time.

1. The attraction of “points”, that is, the attraction of service providers, ecological builders, and node maintainers to provide high-quality infrastructure services. And for more service providers to enter the network, there must be a good incentive and retention mechanism. This
can be seen in the recent frequent partnership deals between Apron Network and various blockchain projects, which shows that Apron is already making advances to attract and onboard a large base of providers and service users.

2. When service providers are attracted to the platform due to a good incentive mechanism, developers will begin to throng to the platform one after another. At this time, the cost performance and quality of the products and services provided by the service providers will become another growth “hub” for “face” expansion.

3. When the “face” ecological effect and the token growth effect start a positive growth cycle, the “dot” explosion phenomenon will appear. At this time, it is necessary to continuously improve and optimize the carrying capacity of the platform to avoid the emergence of another Ethereum Infura which would be a return to centralization. If this situation occurs, the
value growth model of the ecological “body” will change. Although it will also grow, the growth rate will be distorted and slowed down.

4. If the platform is fortuitous to be optimized and able to avoid the problem of relapsing to centralization, then the network effect of the real ecosystem will have an effect. However, this may still pose difficult to attain due to the current development trend of the blockchain. For example, the development trajectory of the DeFi market is such a route. In itself, it is a technical problem, but the other dimension is also the business model.

True decentralization is not only a technical issue, but also has the dimensional issue of business models, economic models, and governance mechanisms.

So whether Apron Network can get to this point depends on whether there are any new breakthroughs (technical breakthroughs, breakthroughs in business models, economic models, governance mechanisms, etc.) in the process of self-evolution of Apron. As far as the current governance mechanisms are concerned, there is a great need for further improvement.

But even if the fourth step is not achieved, and Apron successfully achieves the first three steps, it is a significant leap to becoming giant a middleware platform.

“Middleware” Ecological Outlook

When we take a look at the “middleware” platforms in the current blockchain ecosystem, we cannot but mention existing middleware projects like ChainLink and The Graph. Of course, one is an oracle and the other is an indexing protocol, according to cryptocurrency data search, the market value ranking of the former is currently hovering at 12th position, and the latter is hovering around 60. From the market value alone, both projects are the current representatives of middleware, but as mentioned above, the valuation of Apron Network may need to be changed from another perspective to take a shot at the top.

We think that the valuation model of Apron Nework is more like a platform, rather than a simple valuation of a single project. This is the reason why we choose “point-line-area-body” for overall analysis. Looking at its valuation from one angle, if it is a platform that aggregates all middleware projects, Apron is essentially worthy of our attention. After all, the logic of “being a platform” itself is more popular and its value is even greater.

However, middleware platform projects like Apron Network have chosen a business logic that is more in line with the development of the blockchain, and in terms of middleware development, it is also congruous with future expectations.

Of course, the current blockchain middleware landscape is still relatively nascent, and the development and valuation logic of any project is also time-sensitive. We still need to look at Apron’s development dialectically. Time will tell of Apron’s real business value.

Reach us on:

Twitter: https://twitter.com/apronofficial1
Github: https://github.com/apron-network
Telegram: https://t.me/ApronNetwork
Discord: https://discord.gg/Bu6HzJP2YY
Website: https://apron.network


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