What Is Broken-out Token? What Is the Judgment Standard?

The cryptocurrency bear market continues, the word “Broken-out Token” comes into our sights, so what is “Broken-out Token”? And what is the standard of judgment? Here is the editor of "Jinse Finance" to explain in detail.

It is necessary to understand the issuance of cryptocurrency before digging into the "Broken-out Token". Blockchain projects often issue a type of cryptocurrency to users, either to raise money for the project operation or for the use of their own ecosystem. The issue of cryptocurrency, of course, requires cost, which is usually calculated in that cryptocurrency. 

For example, the issuance of cryptocurrency A is funded by receiving ETH. If 1 ETH exchanges for 1000 A, then the issuance cost of A is 0.001 ETH.

Generally, after the launch of the cryptocurrency A, under normal circumstances, the market price will not be lower than 0.001ETH. But under the bear market, the price of A may fall below 0.001ETH even it was just released, then A is called the “Broken-out Token”.

It will be more complicated when measuring the Broken-out Token with fiat currency:

For instance, the ETH in person A’s wallet was purchased in a high price as RMB 10,000, while person B only spent RMB 100, assuming that they used this 1 ETH to purchase 1000 cryptocurrency A, which issued at the price of 0.0002ETH, however, the market price of ETH fell to RMB 2000. Practically, the cryptocurrency A has appreciated, cannot be regarded as a Broken-out Token, but for person A who bought ETH in RMB 10,000, the 1,000 cryptocurrencies A depreciated, conversely, person B earned money from it, cryptocurrency A for him/her is not a Broken-out Token. 

(cr. Jinse Finance: http://mp.weixin.qq.com/s/fQ0BRmZdzpG_RDy3fuI4CQ)

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