Does holding DEC always give higher APR vs. Staking SPS?

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(Edited)

Earthly Match with Centauri.png

From my previous post, we have focused on the airdrop points acquired per dollar spent on different Splinterlands in-game assets. It was pretty conclusive that buying card skins and holding DEC give the best value for SPS airdrop points at the moment.

In this post, we will be taking a closer look on the forecasted APR of holding DEC for SPS airdrop, while factoring in the additional airdrop points from the much anticipated Chaos Legion release.

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Staking SPS APR vs. Holding DEC APR

After the announcement of Chaos Legion presale, the amount of staked SPS has increased on a tremendous pace. In fact, the amount of Total Staked SPS has already exceeded the amount of Total Liquid SPS. This has brought down the APR of Staked SPS to 71.47% (still a good one).

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Total liquid and staked SPS as of writing

While most people would not want to miss out on the voucher airdrop, I believe that it is still important to understand the trade-off between Staking SPS and Holding DEC in terms of APR from the SPS airdrop.

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Source: PeakMonsters SPS Airdrop board

As of writing, DEC APR from SPS airdrop outperforms SPS Staking APR by 171.7%.

If you are not into calculating APRs, @peakmonsters made an awesome tool called SPS Airdrop board. With the SPS Airdrop board, you can easily check all the SPS-related information in just few clicks. To access this feature, simply hover over your username in the PeakMonsters platform, and click on the "SPS Airdrop" button in the dropdown list.

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DEC APR forecast: factoring in Chaos Legion release

Now that we have already established that the APR from holding DEC is much better than staking SPS, the question that we have to answer now is: Will DEC APR always outperform SPS staking APR?

To answer this question, I forecasted the APR of DEC, factoring in the average daily increase in total system airdrop points, as well as the airdrop points uptick coming from Chaos Legion packs.


Computing DEC APR forecast assumptions

For this forecast, the following assumptions were made:

  • The average daily increase in total system airdrop points is assumed to be at ~26.2M.
    • The range for the average daily increase is 25-28M, using any end of the range wouldn't yield much difference in the computation. The 26.2M was derived from the most recent total system airdrop points vs. the previous month total system airdrop points.
  • For the entire duration of the presale, it is assumed that 33,333.33 packs (.33 is needed to make it total to 1M!) will be sold each day (total: 1M packs).
  • All the remaining packs are assumed to be sold during the remaining duration of SPS airdrop (~7 months).
    • This is unlikely to happen since the devs are targeting for the packs to last a year. The upper-bound assumption is made as an attempt to factor in any unexpected increase in total system airdrop points during those 7 months.

All in all, the assumed increase in total system airdrop points, brought about by the Chaos Legion packs is 15M packs x 300 airdrop points = 4.5B airdrop points.

DEC:SPS conversion used:

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DEC:SPS conversion used for the model

For our forecast, the DEC: SPS conversion that was used is ~59.76 DEC : 1 SPS. This is the most recent value in TribalDex that I got prior to working on this post.


Forecasted DEC APR

As we come closer to the end of SPS airdrop, the APR of holding DEC diminishes. This is an important aspect because it could potentially put selling pressure on DEC, as staking SPS will then have a higher APR.

Important note: The selling pressure aspect is only true if DEC holders prefer to look at the APR difference over the actual SPS airdrop per day.

DEC APR lineplot.png
Forecasted APR of DEC until the last day of SPS Airdrop (start: today's airdrop)

Let us take a look on the forecasted DEC APR as shown above. From there, we can see that if the SPS APR is maintained at the current value of 71.47% (of course no one knows if this will be the case), the DEC APR for SPS Airdrop will become lower on Day 215 of the airdrop. This simply means that from Day 215 onwards, Staking SPS now gives a higher APR.

Does this mean that Staking SPS will give me more SPS than holding DEC on a per day basis?

No. What this simply means is that on an annualized basis, staking SPS has a higher rate compared to holding DEC. Which makes sense because by Day 215 of the airdrop, you only have 150 days left to earn SPS from holding your DEC.


What will happen to DEC APR if Chaos Legion airdrop points are included today?

Scenario:

  • Initial SPS: 1,000
  • Converted DEC from 1K SPS: 59,759
Without CL packs airdrop points
Including CL packs airdrop points
Total system airdrop points (in mn)
7,907
12,407
Daily SPS
8.28
5.28
Total SPS until end of airdrop
2,434
1,551
APR
243%
155%

If the Chaos Legion packs total airdrop points will be added today, our Daily SPS airdrop would decrease by 3 SPS, diminishing our APR by 88%.

Good thing that the addition of Chaos Legion packs will be gradual. Looking back at our line plot data, the 155% APR for holding DEC is still 58 days away from now.


Looking at various SPS APRs

Since it is very likely that the APR for Staking SPS won't remain constant at 71%, let us take a look at different scenarios for SPS APR.

SPS APR
Expected airdrop day that SPS APR > DEC APR
100%
180
80%
204
60%
233
40%
268

From the table above, we can make an estimate as to when we should expect the SPS APR to be greater than DEC APR. All of these are dependent on how much SPS will be staked moving forward.

Example:

If a lot of people eventually unstake, and the SPS APR stays at 100%, we can expect SPS APR to be greater than DEC APR by Day 180 of SPS airdrop.


SPS Staking APR vs. Total Staked SPS

To have a rough idea on the pace of decline in SPS Staking APR, as the Total Staked SPS increases, let us take a look at the graph below.

SPS APR.png
Rate of change in SPS Staking APR with respect to Total Staked SPS

What this graph simply tells us is as we move to a much larger amount of Total Staked SPS, the rate of decline in Staking APR also decreases.

To better illustrate this, let us compare the change in Staking APR between the following:

  • 100M -> 110M total SPS staked
  • 210M -> 220M total SPS staked

For 100M to 110M, the SPS Staking APR decreased from 91% to 83% (8% difference), while the SPS APR for the 210M to 220M scenario decreased from 43% to 41% (2% difference).

This means that even at 300M Total Staked SPS, we will still a get a decent 30% APR from Staking SPS.

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Key ideas (TL;DR)

Here are the key ideas from this post:

  • DEC APR for SPS Airdrop is much greater than the APR of Staking SPS.

  • The DEC APR for SPS Airdrop declines as we move closer towards the end of SPS Airdrop. Assuming that DEC and SPS price remains at this level, we can expect SPS APR to be greater than DEC APR by Airdrop 215 out of 365.

  • Gradual selling of Chaos Legion packs is beneficial to us on the SPS airdrop point of view. If the 15M Chaos Legion packs is released and sold today, DEC APR for SPS airdrop will decline by 88%.

  • At 300M SPS staked, we will still get a decent 30% APR from Staking SPS.

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CREDITS

  • SPS and token conversion screenshots are taken from Splinterlands and TribalDex, respectively
  • PeakMonsters for constantly making amazing tools such as SPS Airdrop board
  • All the cool-looking dividers are made by Flauwy
  • Charts made with Seaborn/jupyter
  • Cover photo made in Canva

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17 comments
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Very interesting. I wondered if this was the case, glad I'm getting to see the actual numbers now.

Posted Using LeoFinance Beta

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Does this mean that we'd be better off selling SPS for DEC until Day 215 (assuming all the figures worked as you've shown)?

It's not something I'd do. Too complicated for me but it's an interesting idea.

I think I'd rather stake and get the vouchers. But I'd be interested to see the figures once the presale is over. 😁

!PIZZA

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generally yes, you are better holding dec for airdrop than SPS for APR assuming prices are steady. That said, this doesn't account for Vouchers as that is really quite impossible to guess. Will they be $1, $2, or $10? It also doesn't account for the fact that SPS has much greater potential to increase in value compared to DEC. DEC is more or less at the top of its potential value AND is at its ATH.

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!PIZZA

Posted Using LeoFinance Beta

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Sorry just saw this now! Fully agree with all that @kotenoke said. Even with the higher DEC APR, I still prefer staking SPS because of the vouchers. The price range that people are willing to pay for it is quite high.

To add, if DEC's price continue to increase, DEC's APR will generally go lower. My expectation when this happens is that people with huge bags of DEC for airdrop will be "pushing and shoving" to convert their DEC to SPS. I'd rather hold onto SPS where the risk-reward is assymetric at this point.

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It's all very complicated. So many factors to consider. I'm just taking the simplest route and staking. 😁

!PIZZA

Posted Using LeoFinance Beta

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Me too! After doing all of this, I also ended up taking the simplest route and just stake SPS repeatedly throughout the day! 😄

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I'm only doing it once a day since, in the UK, everytime you claim is a taxable event! 😱

Posted Using LeoFinance Beta

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What?!?! That's shocking and frustrating. Now you have to consider the tax from claiming too. 😬

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Ask and ye shall receive. :D

Thanks for the write up.

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I think this is not one of my better works, but I hope this somehow provided some applicable insights.

Thanks for reading and recommending it bud! :D

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