Chaos Legion: The Great Unstakening Has Commenced

This is the third post in a series on speculation of the SPS market preceding the upcoming general sale of Splinterlands Chaos Legion. Prior posts: first, second.

If you haven't been following along on my past posts, the gist is this: my hypothesis is two-fold: (1) Chaos Legion packs will sell out within a few weeks following the general sale on January 17, 2022 because there is sufficient SPS to buy up the supply and (2) holding CL packs is strictly better than staked SPS.

This post follows up on the closing thought of the last post. What is the state of liquid and staked SPS today? Can we interpret community intent based on any changes? Here is today's snapshot from the Splinterlands website:

When I wrote my previous post, the ratio of liquid:staked SPS was about 45% liquid and I believe had not shifted much in the weeks leading up to that point. Today, we can see the ratio has increased to 50.5%. That's a significant change!

I read two possibilities from this shift towards further liquid supply.

1. A portion of the player base has not been staking their daily gains because they are otherwise occupied with the end of year holidays.
2. A portion of the player base started the 4-week unstaking process to align with the timing of the Chaos Legion general sale. Also, players who have started unstaking aren't bothering to stake daily drops because they want them available on January 17th anyway.

From what I've observed about the Splinterlands player base, I'm willing to rule out the first factor as less likely than the second, but only the devs know if the daily rate of staking activities has declined as of late. (Is there some way to observe this from the ledger?)

That leaves me with the conclusion that The Great Unstakening has begun. The latest date players had to start unstaking in order to have their full balance available on January 17, 2022 was December 20, 2021. We can anticipate further 5% shifts in the liquid SPS ratio each week between now and January 17. Assuming the majority of unstake actions were taken on December 20, we can expect the ratio of liquid SPS to be about 60% on January 17 for the general sale. If other players started unstaking after December 20, we may see the ratio go even higher.

I will make three more conservative assumptions before analyzing the state of SPS on January 17. The first is that all dropped SPS is staked between now and January 17th, so another 22M SPS (1.1M/day per the whitepaper) will end up in the staked bucket. This assumption is more to simplify the math and leave us with a conservative estimate. The second is that no more SPS will be spent on packs in this phase, thus preserving the total SPS supply. The third is a guess that SPS market price will continue falling, down to an estimate of $0.10/SPS.

With these known quantities and assumptions in mind, that would set the stage on January 17 as:

• Total supply: 475M SPS
• Liquid (60%): 285M SPS
• Staked (40%): 190M SPS
• SPS market price: $0.10

285M SPS * $0.10 = $28.5M. The entire supply of 12M CL packs costs $48M, so we can see with the estimates that there would NOT be a sufficient quantity of liquid SPS to buy up the supply on day 1. That does yield enough to immediately buy up 60% of the CL pack supply!

If the SPS market value holds at $0.168 or more (it's $0.186 today), then there WOULD be enough SPS to buy every CL pack. Note that's not accounting for packs purchased with DEC, fiat/other crypto converted to credits, and free packs claimed with vouchers. There's 1.96B DEC circulating, worth a total of
~$8M or 16.7% of CL pack supply. There will certainly be a significant portion of CL packs claimed with these other mechanisms.

Based on today's analysis, I'm standing by my hypothesis that Chaos Legion packs will sell out rapidly. Fellow members of the Crypto-Gaming Guild have been asking me what I think will happen as a result if this portent comes to pass. Where will market prices trend for cards, packs, SPS, and DEC? I have some ideas, but will reserve those for another post.

I will continue to follow up on analyzing the SPS market each week leading up to the general sale of Chaos Legion. Let me know your thoughts on the analysis in the comments!