Let's Play with Fire

This is the ten minute chart for SPS on the BNB chain and as you can see, it is getting a little attention based on the announcement of the validator node requirements, where purchase of licenses will be done in SPS. The presale requires Vouchers too - so they are up 88% for the day also and I suspect there is going to be more scarcity to come on those as the presale kicks into gear.

The problem is - I am losing SPS hand over fist in the Liquidity SPS:DEC liquidity pool at the moment, because as price goes up on it, the pool balances and I end up with more DEC. But, hang on - I wanted more SPS, not DEC!

Well, there are 103 days left in the airdrop and the drop from the pools is calculated on the DEC side of the equation, not the SPS side. So, for example, if there was 1M DEC on one side worth $1670 (approximate current price) it would need $1670 dollars worth of SPS on the other - so at 10 cents, that would be 16,700 SPS. This would bring in 2M collection points for the airdrop.

However, if SPS doubles in price and moves to 20c and DEC remains the same the pool will balance, so the 16,700 SPS would be worth $3340 for a total value of $5010. This means $835 worth of SPS would be converted into DEC, meaning there will be 1.5M DEC paired with 12,525 SPS - but the collection value would be worth 3M points.

This means that the value of the total pool has gone up by 50%, the amount of SPS in the pool has gone down by 25%, but the airdrop points has increased by 50% too.

My last SPS airdrop was 908 SPS, calculated on 11.9 million points. This means that for every million points, the drop today was worth 76 SPS. This means that with the scenario above moving from 2M collection points to 3M, the extra 1M airdrop points would attract 76 SPS more a day. All things remaining equal, over the space of the next 100 days, that would be 7600 more SPS added to the 12,525 (75%) remaining in the pool, which is 20,125 SPS - a gain on the starting pool capital of 3,425.

Not bad.

Of course, this is based on a sharp drop, not a slow decline over the space of the 100 days. But, this is really just the start for SPS price movement, so if it continues to climb, even though the amount of tokens in the pool are coming down, the offset from the airdrop will make up for it, at least for the time being. However, there will still be the SPS left in the pool paired with the DEC, and that will see volatility too, as I suspect that DEC will have more utility added to it too - but even if it doesn't I haven't lost that much and as long as SPS climbs to add value to my staked tokens - all is swell.

Now, while these numbers are tell one story, there are many other factors in play here, like the cost of acquiring the DEC, the SPS and the opportunity cost of doing other things with that value, but for many people who have been playing this game for almost 3/4 of a year now, they are likely doing pretty well, depending on when they got in and, where the initial tokens came from.

However, scarcity is going to start setting in on SPS, where for example 80% of the SPS used to buy licenses will be burned. This means that in the presale where there will be 2000 on offer they are the cheapest at a cost of $1000 each + 500 vouchers, at the current price of 13.3 cents per SPS, each will require 7500 SPS for a total of 15M SPS spent and 12M of that burned. That is just the first presale. This should have a positive effect on price and make the next sales cheaper, but the price goes up.

Let's say SPS is at 10 dollars at the start of the last tranched sale of 10,000 licenses. but at $40,000 per license, this will mean that to buy one, 4000 SPS would still need to be burned and to buy them all, that would be another 40M SPS with 32M of that burned. And this is just for the validator nodes, SPS is going to be used for other things too, including for example buying card sets like Riftwatchers.

This is going to get volatile!

Hmm... but this is what is also going to be interesting, as while a lot of people are currently thinking that DEC is not going to have value, if this SPS ecosystem takes off, there will be so much value in it, that DEC can be needed in order to provide liquidity too, so some of the SPS value will be converted into DEC to hold the price of that solid also.

Interesting.

Now, the reason I am writing this is because I am trying to get my head around it also, as while I have been stacking SPS where I can, if this actually turns into something with high demand on it - the entire ecosystem of Splinterlands shifts on its axis and it becomes a highly valuable ecosystem and platform that can support the development and launch all kinds of other games and applications on it - it becomes a production house for tokenized experiences.

That would be cool, wouldn't it?

And all of those experiences can be supported on Hive too, with all of the value of decentralization that investors will rely on to keep the developers working for the community, as well as themselves. The potential of this is enormous.

Feeling bullish?

Taraz
[ Gen1: Hive ]