Stock To Flow Model

Overview

In this model, we use a traditional supply/demand model known as the stock to flow ratio.  This assumes that scarcity of an asset increases its value.

 

The stock to flow ratio is a metric that is effectively the mathematical inverse of annual inflation rate.

We know that the maximum annual inflation of HEX is programmatically set to 3.69% on allocated supply.

This leads to a minimum annualized stock to flow ratio of about 27.1.

However, we also know that due to HEX's native staking protocol, all of this inflation hits HEX's circulating supply only when respective stakes mature. This leads to a mechanism where annual inflation on circulating supply is exported into the future and thus much lower than 3.69%

The chart below plots HEX's stock to flow ratio over time, where the annualized inflation is smoothened to both daily and weekly averages.

How To Use

Long term HEX investors can monitor the stock to flow ratio over time. Historically, we've seen that after Big Pay Day (11/19/20), the stock to flow ratio of HEX has remained between 27 and high as over 100.

Created By

Gerardo - @gerawrdog