Airdrop Ending and LP rewards announced.
After writing my townhall recap, I went back and read it. My thoughts were a bit all overall the place but that is because Splinterlands right now has my thoughts all over the place. Once of the things announced after the townhall was the liquidity pool rewards that would be starting up after the airdrop ends. My goal in my previous post was to combine the townhall and liquidity pool rewards. So my townhall recap post was filled with townhall news but also included bits and pieces of SPS talk, please give it a read if you haven't I'll try to only talk about the relevant information here and not duplicate the data in both unless it is needed.
So lets start with the airdrop ending:
If you are not on the Splinterlands discord I suggest joining it. There is an event area at the top that shows the town hall but there will also be a Live count down with Matt, Aggroed, and Hardpoint that I am looking forward to starting at noon on Tuesday.
After the townhall Splinterlands put out a liquidity pool reward post on liquidity pool rewards that would go into effect on July 26th the same day the airdrop ends. With the airdrop ending that means the amount of SPS printed "33,333,333 tokens per month" will no longer be printed. In the white paper the SPS airdrop accounted for 13.33% of the SPS that will be printed and it was distributed over 12 months. This means the SPS airdrop is the single most SPS distribution per period of time. What I mean by that is if you look at the SPS that will be given out for play to earn (rank, brawls, etc) and the liquidity pool rewards they distributed over 65 months or 5.4 years. So both of these pools account for 60% of the SPS that will be distributed they are being distributed over a far longer period of time. This means both of pools (60% / 5.4 years = 11.111%) together for a one year period will not equal the amount of SPS from the airdrop. The other difference is the airdrop awarded players for just being present and owning assets, about half of this will continue with the liquidity pool pools though those rewards will be split between 5 pools the other half will be earned by playing the game in rank and brawls.
What does this mean
It means overall the average play's passive income is dropping significantly. When the rank rewards start I was there with everyone else renting a full deck (I was renting maxed level for silver) for my daily focus. This allowed me to keep my 70 - 75% win rating before the rank reward changes. But then I was away on vacation for two weeks during this time I wasn't renting cards and I was actually barely play but when I did play my win rate was around 50% as my cards are good silver especially modern but it's mostly in CL cards. I am losing 2 - 5 chests daily by not renting but I was paying well over 2 - 5 chest in rentals previously.
With the changes to ECR also announced in the liquidity pool reward post and the changes from 1 day to 2 day minimum rentals causing rental prices to rise combined with the air drop end, overall if you have a decent deck you will come out a head by not renting or if you do it's 1 or 2 cards that you need. You can still rent 2 decks now to play the season and break even, earn a bit more or earn a bit less with rentals but you need to start investing in some cards to reduce the rentals.
DEC, what next?
As we talk about airdrop ending everyone assumed there will be an influx of DEC from liquidity pool or just what people were holding for airdrop rewards and that DEC would end up in CL packs. While this may be the case with the price increase of rentals and card prices starting to rise slightly but the announcement (or re-announcement since it has been in the white paper) guild building will need to be upgraded. Then the liquidity pool rewards come out once of which is the DEC:SPS liquidity pool where a lot of people have their DEC for the airdrop... how many will be pulling DEC out?
At the bottom of the SPS screen it shows the total system airdrop points, over the last 2 days these point have dropped by 110 million. This mostly like means some DEC is already starting to be funneled into guild buildings or CL packs. My percentage of the DEC:SPS pool have grown slightly which means some of this DEC used has came out of the DEC:SPS liquidity pool.
Liquidity Pool Rewards
The liquidity pool rewards pulled from the liquidity pool reward post.
- 1.5M SPS / Month - SPS-BNB Pool on PancakeSwap (BSC)
- 1.5M SPS / Month - SPS-ETH Pool on SushiSwap (Ethereum)
- 1.5M SPS / Month - SPS-HIVE Pool on Hive Engine (Hive)
- 750k SPS / Month - SPS-DEC Pool on Hive Engine (Hive)
- 375k SPS / Month - VOUCHER-HIVE Pool on Hive Engine (Hive)
- 20M DEC / Month - DEC-BUSD Pool on PancakeSwap (BSC)
- 20M DEC / Month - DEC-DAI Pool on Uniswap (Ethereum)
- 20M DEC / Month - DEC-HIVE Pool on Hive Engine (Hive)
- 10M DEC / Month - SPS-DEC Pool on Hive Engine (Hive)
Neal did a spreadsheet on the APR for these liquidity pool pools and there are some definitely some big APR to be had out there but they are also shrinking quickly because they were so big to begin with.
The Voucher:Hive liquidity pool has already had it's APR cut in half by people adding to the pool. I myself have put a little bit in already.
As you can see from the SPS page I have some of my SPS unstaking to add to the SPS:Hive liquidity pool.
During the Monster Maverick on their twitch channel Splinterlands TV Neal mention he set the cut off values in his spreadsheet at 50% this is because APR for staking SPS is usually around 50% from the SPS page right now it's ~36.5% so if you can get more APR from the liquidity pool then from staking this is where you want to put your assets. One thing to consider that isn't part of the APR is fee that will be earned in the liquidity pool and if there are any other rewards associated to the rewards.
The number one caveat to using an liquidity pool is impermanent loss. I highly recommend looking up impermanent loss and reading about it or watching a video. I watched this on liquidity pool when I first wanted to understand them, the also has couple videos on impermanent loss which I also suggest watching here is one video. I also keep this impermanent loss calculator page bookmarked to help understand how the tokens will be effected by growth or loss.
Even with there being impermanent loss associated with liquidity pools the liquidity pool rewards given by Splinterlands will more than off set any impermanent loss as these rewards are designed to get people to put their assets in these pools. I highly suggest you at least find out and understand how liquidity pool and impermanent loss works before investing in liquidity pools.
Thoughts all over the place
I started this post by saying Splinterlands has my thoughts all over the place. Well my plan was another license, I've bought some SPS while it was low in the hope when it returned to .10 - .12 and above this meant I could buy another license. But with these liquidity pool rewards the APR are above that of the license. The license have a 60 - 70ish percent APR which a lot of the liquidity pool rewards are above that and on top of that you don't need $3000 dollars to actually earn rewards in the liquidity pools. That said the more liquidity you have in the pool the more you will get. I also wanted to pull some more to get some more CL packs for better chances at the remaining legendary summoners but not I'll end up keeping my DEC in the liquidity pool. I have and will continue to go over the options, license, liquidity pool rewards, spending DEC for CL and guild, and cards. This also means how to handle the different assets, renting cards, DEC, SPS, and Vouchers.
I started today to slowing put vouchers into the hive:voucher pool. You can see my unstaking on the SPS page some of this will end up in the sps:hive pool. My DEC is staying in the dec:sps liquidity pool.
Overall the rewards for liquidity pool highly incentives players to add to these liquidity pool especially on the heels of the airdrop ending to help keep their passive income which is need along side the play to earn income if players want to be able to grow their accounts without a constant influx of fresh fiat. If you have the assets I suggest looking into which will benefit you the most. Though if you are worried about liquidity pools and impermanent loss over time the APR of these LP will be roughly the same as staking so you will never go wrong with just staking your SPS, there is how ever higher rewards available from the liquidity pool until the APR equals staking and even then you'll earn a bit more from fees.
Come join the Splinterlands community.
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Smashing it with these posts, you're more of a content creator than me lately! haha
Haha, a new job and a kid will do that to yeah. Hopefully life balances back out for you and you can start streaming again more regularly.
Thank you, I learned a lot from this article and your links! I was wondering if, just like any other passive investment, Dollar Cost Averaging helps take the sting out of Impermanent losses, or if it actually compounds the problem?
Posted using 1UP - Play2Earn & NFTs
The number one thing I would say is liquidity pools are a whales game. So in order to take the sting out of impermanent loss is having enough percentage that the fee earn from the pool help off-set the loss. That said you can still earn with smaller percentage so as long as your not putting in more than you can afford over time (years or even years) the cost is off-set. Then liquidity pools are actually a little backwards in thinking in my mind. If you have 10 of a token and put it in when it's a .01 then it goes to a dollar you'd only have 1 token in the pool with a dollar value. But if you put that same 10 in the pool at $1 if it dropped to .01 then you have 1000 tokens. At which case you could pull the out of the pool and wait for the token's price to go back up if you think it will. When it hits a dollar again you then made you $10 into %1000 but this is very long term thinking and it needs to be on a product you have faith will be around long term to survive the drop and grow back up. This applies to splinterlands for me.
But with these pools because of the LP rewards SL is offering I'm putting into these pool without worry of the impermanent loss because if the token rise I am getting paid out in the token so I have recovered my loss. This is the primary way to combat impermanent loss.