An analysis as to why I think land v1.5 is a bad investment

Anyone who follows me will know I am highly focused on evaluating multiple options and choosing the most lucrative one. My most recent post was on how to place workers on your land to maximize their efficiency in terms of production points per dollar (articlelink here here).

Today I want to zoom back out a bit and ask: is it worth investing in land v1.5 at all given the current tokenomics?

Tl;dr: No, it is not.

The setup

To address this question, I will take everything from the current white paper along with current prices of various things on the market, and determine an expected SPS return on land. We can then calculate an ROI for the assets placed on land.

The assumptions

Because we are not yet in land v1.5, a lot of assumptions will be made. I imagine there will be disagreement about some of what I'm assuming here, but I've tried to be as optimistic as possible, making the values likely an overestimate of what you'll get in practice.

Total SPS per month from land at time of Land 1.5 release: 5.5M

Total utilization of plots of various rarities (for farming SPS):

Rarity	Utilization %
Common natural	10%
Rare natural	10%
Epic Natural	10%
Legendary Natural	50%
Common Magic	0%
Rare Magic	0%
Epic Magic	0%
Legendary Magic	0%
Common Occupied	10%
Rare Occupied	10%
Epic Occupied	10%
Legendary Occupied	50%

As you can see, I'm assuming no one uses magic lands to farm sps, and other than legendary lands, only 10% is being used (the rest is either unused, or used for grain/research).

Total PP per utilized plot: A sliding scale from 5k (maxed common CL RF cards) to 100k (the max amount allowed per plot; 1 GF Alpha Legendary). So a common natural plot would be 5k pp, and a legendary occupied plot will be 100k pp. For this, I assume NO titles, totems, or runi. This reduces the total pp being produced, increasing the expected sps generation per plot (so again, real numbers are likely to be lower than what is shown here).

The results

When this is calculated using the above assumptions, 1 total of 1.5B pp is being used to harvest SPS.

With this, a single plot filled with 5 common RL CL cards (5000 pp) will generate 18 sps/month. Given that this will cost $100 in plot+cards+DEC, and that you'll need to either buy grain or spend another $100 to have a plot to make the requisite grain, this has an APY of 2%.

So that seems a little low, but we all know using common RF CL cards is not efficient. As I showed in my previous post (link here), the most efficient use of cards and plots is putting rare beta GF cards on a common occupied land with a runi and an epic totem. This produces a total of 250kpp. Those 250k pp generate 917 sps per month, which results in an APY of 5.5%.

This is bad. Just spending that money on SPS gets an APY of 15%. Putting it into a liquidity pool can yield 40%+. Even parking your fiat in a regular bank account will get you close to this without any risk (other than the general systemic risk of the entire system collapsing).

Conclusions

As you can see, with the current tokenomics of land v1.5, and the current cost of assets, putting value into harvesting land at this time is likely not a good investment. There are much better things you can do with your assets.

Importantly, this says nothing about land v2.0. I imagine/hope that the tokenomics will significantly improve with the next release and that the output of land will be much more valuable. I hope it is clear that my recommendation from this article is not that to not invest in land, but to not invest in land right now.

If these numbers are anywhere near correct (and again, I have done my best to make them overly optimistic), people will see how low the return is shortly after land 1.5 releases and will either 1) stop using land as much for sps production, which will push up the value for those who do or 2) asset prices currently propped up by land will drop. My guess is that 2) will predominate, and low rarity plots, and bad alpha/beta cards whose only current value is as landfill will drop in price.

Based on this, I'll be holding off on land v1.5 until it releases, when I hope to see a price correction, at which point I will buy into the system. We'll see how it goes.

The YGG Ecosystem

If you're interested in participating in land on a larger scale, I highly recommend checking out the YGG group of guilds. We collectively manage a DAO which owns 2 regions of land and significant other assets. Managing it is a ton of fun, and is what prompts me to do some of these analyses. Come check out my guild or any other guilds in the alliance!

Interested in more?

Interested in this kind of analysis? Did I get something horrifically wrong? Shoot me a message!

Interested in the splinterlands game? Use my referral link (here), shoot me a message, and I'll send you some cards to get you started.