The Citadel (THECITADEL) is an interesting cryptocurrency project on the Ethereum blockchain. The project likes to call itself the VC of the crypto world, which is not quite true.
Anyway, we will go into full detail about exactly what the THECITADEL is and whether or not it’s a good investment.
What is The Citadel (Cryptocurrency)?
The Citadel is an investment project on the Ethereum blockchain. It’s not quite a decentralized autonomous organization (DAO), but it does have a lot of the same characteristics of a DAO.
First of all, The Citadel is just a regular ERC-20 token on the Ethereum blockchain. It does have a 12% transaction tax, which is rather high, that is used to fund something called The Iron Bank.
The Iron Bank is a smart contract that stores the reserves of The Citadel. What happens is that The Citadel collects the transaction tax in THECITADEL, sells it for ETH, and then uses the ETH to purchase various assets that are stored in The Iron Bank smart contract.
Those assets are eventually sold for a profit and the profits are then used for token buybacks and to fund the liquidity pool.
It’s a rather convoluted process in our opinion and we do not fully understand the purpose of this cryptocurrency. We do like the general idea of this, but it certainly needs some more work to make this a functional idea.
The tokenomics are pretty simple. There’s a 12% transaction tax. 11% is used to fund The Iron Bank while 1% is redistributed to token holders.
All the tokens went to the liquidity pool and there was no pre-mine nor pre-sale. The token had an entirely fair launch, which is something that we like about the project.
Is THECITADEL a Good Investment?
We do not view THECITADEL as a good investment for a few reasons.
The first problem we have with this cryptocurrency is that it really does not serve much purpose. The only purpose of The Iron Bank is to earn a profit for buybacks, which is not a good enough purpose to warrant an investment or generate interest in the project.
An investor buys the project because the price goes up due to the investment knowledge of this one anonymous developer speculating on memecoins and other cryptocurrency?
That does not sound very promising.
Our next problem is that the project funds itself by collecting a 12% transaction tax. Taxation only works if people actually send transactions, which they have no reason to do.
It’s also rather expensive to send transactions because of the tax, especially once Ethereum gas fees are added to the equation.
A much better method to fund the treasury would be something like selling bonds (ie. OlympusDAO).
Another structural problem we have with this project is the very convoluted nature of the project. An investor buys the token and pays a 12% tax when they transfer it to their account. That tax is used to fund the treasury.
The developer then uses the treasury funds to play daytrader/speculator and attempt to earn a profit. If the developer earns a profit, then they sell the tokens and use them to buyback THECITADEL or add tokens to the LP.
There’s a lot of opportunity for things to go wrong there and the taxes to basically go to waste.
Our final problem has to do with the general lack of information about the project on the website. There is not a whitepaper nor does the website contain any technical information or growth plans.
The project lacking a whitepaper is inexcusable in our opinion. It could certainly benefit from a whitepaper that explains how the project plans to grow in the future.
THECITADEL Price History
THECITADEL has not been a very successful project. The price has mostly stayed at or around $0.0000000001 since the token launched in December 2021.
It did have one massive jump, which was likely caused by a token buyback.
The price currently stands at under $0.000000000001 per token and the 24 hour trading volume is at a paltry $700 and falling. The market cap is also around $700,000.
The token just can’t seem to gain any traction and the developer has not done any buyback recently judging by the price history.
Is The Citadel a Scam?
No, it does not appear that The Citadel is a scam. The Iron Bank smart contract still has over $100,000 of crypto assets in it, which does not appear like something a scammer would do.
The developer has also not rugged after a few months and is fairly upfront with the fact that he is the only developer working on the project.
Now, we do not believe this project is a very promising investment, but it’s not a scam.
The Citadel Has a Nice Idea
We really like the idea of The Citadel and this type of idea does have some promise in the future. But this really needs some work to make it an effective strategy.
First of all, the project must find a way to fund the treasury that does not involve a transaction tax. Some sort of bond type instrument that allows investors to purchase tokens at a discounted rate would be the best option.
Projects like this also need some sort of goal for the treasury other than just making money for investors. ConstitutionDAO had the goal of buying an original copy of the US Constitution from Sotheby’s, KlimaDAO buys carbon credits, and OlympusDAO wants to launch a stablecoin.
Of course, investors want to make money, but unless you are an actual trader or doing something like Yearn.Finance, then you will not attract many investors to your project.
And that’s why we think a project like The Citadel will ultimately fall flat – investors just don’t trust that the developers can turn a profit with the treasury funds. More importantly, investors also want a direct return on their investment.
An investor into THECITADEL does not see a direct return on their investment from the taxes collected because they first must go through The Iron Bank, then the developer must turn a profit, and then they must use that profit to inflate the price.
It’s just too convoluted of a process for our liking.
To summarize, The Citadel is an interesting idea, but it has failed at execution. We think with the right execution and a different way to collect treasury funds a project like The Citadel could really take off.
However, as it stands, the project is not a worthy investment and certainly needs some work by the developer to attract more investors to it.