Not financial advice – October 2022

Hi everyone!

Apologies for being a whole week late for this post... I'm try to have it out near the 1st of each month, but it's been a busy week, both in the markets and in my life, so here we are.

As predicted in my Not financial advice – September 2022 post, the US Fed raised interest rates another 75 basis points on September 21st 2022, and it's not going to be a shock to anyone that I'm going to predict the US Fed will raise rates again by another 75 basis points on November 2nd 2022.

The market is in almost full agreement here...

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There's almost no doubt...

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The reason we can be pretty confident about what the US Fed will do in November is because of the US Employment Report that came out a couple of days ago:

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I don't know who exactly is expecting those specific numbers... I guess the thousands of analysts that work for the large financial institutions, but basically because the unemployment rate was lower than expected, the US Fed is almost certainly going to raise rates again.

As I've been saying for months, the equity and crypto markets aren't going to start to trend upwards again until the US Fed absolutely declares it's not going to raise the interest rates anymore.

We can see it in the shares/equity market:

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We can see it in Bitcoin:

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and in the crypto market in general:

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We may see some small bounces during October since October is historically a good month (they don't call it Uptober for nothing - I have no idea who 'they' are), but we're still very much in a bear market, China and Europe are still in recessions, the US might be in a recession but doesn't know it, and I think we've still got 12 months of a bear market to go.

Next week the inflation numbers will come out, and the markets will react, of course, but it's not going to change anything, the US Fed still intends to raise rates for a while yet while inflation is so high.

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What do you reckon the next CPI will come out as? 8.1? High 7s?

If so, that'll embolden the US Fed to keep on keepin' on, and the equity/crypto markets aren't going to like it.

So... now is an okayish time to buy crypto... but it's not the best time. The crypto markets still has lower to go I think, so the best play might be to buy monthly amounts of crypto in the large cap coins, or hold onto your cash.

And by cash I mean USD.

We saw the British Pound go into free fall in the last couple of weeks after Truss showed the markets that she doesn't understand economics, and while the Central Bank of England saved the day at the last second, they haven't solved any of the problems that caused it... they've basically kicked the can down the road.

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Unfortunately, the AUD isn't doing great either...

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China also in struggle town, and unlikely to vacation anytime soon...

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I found a new macro economics blog to follow this week, and this is his plan:

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I legitimately don't know how to buy 10 year Bonds, so in my opinion it's really just the time to do nothing... or to buy small amounts of shares/crypto if you don't mind them going lower before they go up again.

The good thing is that the USD is really loving its position as the global currency, so I don't see it losing value anytime soon. I think there is far more danger the other way, where other currencies fall too quickly and all other countries stop buying US goods and services.

So if the markets are super boring and maybe even depressing, is there anything to be excited about?

Yes!

Koinos! - (Not financial advice – October 2022)

The Koinos snapshot is coming up at the end of this month, and everyone is getting very excited:

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It's looking like the snapshot will happen on October the 31st, and it's an important milestone.

If you have any KOIN on the Uniswap DEX, you'll need to get it off there and into your ETH wallet.

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If you're looking to purchase KOIN, the earlier the better my friend... as people remove their liquidity the prices are going to jump around a lot, probably not in your favour.

At the snapshot, they'll see how much KOIN is in various ETH wallets, and then that will be how much KOIN those wallets will have on the Koinos mainnet. The KOIN within MetaMask will essentially become worthless at that point, because it won't do anything, mean anything or be useful for anything.

While the Koinos Group has been busy building and getting ready for the snapshot and mainnet, the Koinos Community has also been busy building.

There is a Koinos Decentralized Exchange:

The swaps only work for the tKOINS (testnet coins) at the moment. You can follow them on Twitter.

The amazing Julian (who has been extremely helpful to everyone, including me) has made the Koinos Claiming Process for when mainnet launches:

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as well as the Kondor wallet for your Koinos tokens:

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There is also a Koinos Burn Pool:

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Koinos is really a blockchain framework, where anyone can easily build their own blockchain and configure it to best suit their own use cases. The Koinos Mainnet is essentially a public example of just one configuration of the Koinos Blockchain Framework... but anyone is welcome to use the public Koinos Mainnet if it suits their use case. The Koinos Mainnet will be a Proof of Burn system, which I don't think any other blockchain uses.

Proof of Burn is an interesting consensus algorithm.

If you want to earn KOIN by being a block producer (known on other blockchains as miner, witness, etc) then you have to burn your KOIN tokens. For example, you might burn 10 KOIN to receive 20 KOIN as a reward... so you're up 10 KOIN... but someone else might burn 12 KOIN so they'll have a better chance (it's random but it's like you have more lottery tickets). I imagine in the early days there will be plenty of KOIN created for all the block producers to do very well... but if it gets too popular then people might find they are burning more than they are earning.

At that point people will drop out, which will then increase the odds for the people that stay.

I think it'll likely take years to get to that point, but I guess we'll see.

To be honest, I really need to spend a lot more time on all of this to truly understand it, but if it sounds interesting definitely check out the Koinos Whitepaper.

Splinterlands

There is so much happening in Splinterlands from an economics point of view.

Tokenomics is endlessly fascinating and it's something that the Splinterlands team is pretty good at.

At the moment there are 4 currencies related to the game:

Credits - The only wholly in-game currency (these aren't tokens) that you can buy with crypto or Paypal/credit cards and you can purchase cards, potions, Chaos Legion packs and Tower Defense packs.

DEC (Dark Energy Crystals) - Can purchased in-game or outside the game with crypto or credit cards (not PayPal). Can be used for DeFi (liquidity pools) or to purchase cards, potions, Chaos Legion packs, Tower Defense packs.

SPS (SplinterShards) - Can purchased in-game or outside the game with crypto or credit cards (not PayPal). Can be used for DeFi (staking/liquidity pools) or to purchase node licenses and Riftwatcher packs.

Vouchers - Can not be purchased in the game, but can be purchased outside the game on Hive-Engine/TribalDex from other players. Can be used on special promotions, to lower the price of node licences, bonus packs of Chaos Legion upon purchase, to purchase Riftwatchers (which also needs SPS) and to lower the price of Tower Defense packs (plus receive bonus packs).

You cannot earn credits.

You can earn DEC by selling cards, renting out your cards or participating in liquidity pools.

You can earn SPS by winning games, staking SPS or participating in liquidity pools.

You can earn Vouchers by staking SPS or owning node licenses.

Interestingly with DEC, the prices of the Tower Defense packs and Chaos Legion packs aren't the market price of DEC whereas SPS for Riftwatchers changes constantly.

So, for example, the price of a single Riftwatcher pack is always $5 USD and 1 voucher. However, you can't buy them with USD, you have to buy them with SPS, and the market price of SPS constantly changes:

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Although, note that CoinGecko gets it's price information from the big registered exchanges, which doesn't include Hive-Engine and TribalDex which is where the majority of SPS/DEC/Voucher transactions are done.

Even within a couple of minutes, the price of one pack has changed from 68.722 SPS to 68.706 SPS:

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However, a Chaos Legion pack is $4 USD and a Tower Defense pack is $5 USD + 1 voucher or $8 USD... except you always pay the price as if 1000 DEC equals $1 USD:

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At the moment, 1000 DEC is not equal to $1 USD.

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1000 DEC is worth $0.66:

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What this means is that Chaos Legion $4USD packs, for example, will only cost you $2.64 at the moment:

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If you were to purchase, say 2000 Chaos Legion packs, it would cost 8,000,000 DEC and with 400 vouchers you'd get 2400 Chaos Legion packs.

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2400 packs costs you $5314 USD, which means each pack actually cost you $2.21 USD. In addition, it also gives you 2400 more eligible packs towards the Chaos Legion airdrops (which is an extra 4 guaranteed cards for the next one plus the usual percentage changes of getting them naturally).

So you can see why people are selling Chaos Legion packs for $2.15 on the secondary markets:

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Riftwatchers, on the other hand, can only be purchased with SPS (and vouchers) and the market price is updated continuously, and so you can see above, the secondary market price is $4.56 which is = 2400 packs costs $9584 which is $3.99 per pack (then add in $0.39 per voucher and some profit).

Ironically, if I bought my Chaos Legion packs now instead of when they first came out, I would get 40% more packs now... but I would have missed out on the first 10 CL airdropped cards.

If I sold all my airdropped CL cards today, I'd make back 7.5% on my initial investment, so that probably doesn't make up 40% difference, but I've won so many more games in the last year because of those cards, I use at least one of them in most games... so it honestly breaks my brain to think about. If I sold the CL packs I'm still holding today, I'd be down 46.25% on my initial investment (not including the CL airdropped cards) so it's been a terrible short and medium term strategy, but my hope still is that once Chaos Legion packs sell out, they'll rise in price in the secondary markets in the same way you can see the Dice pack and Untamed pack above. They originally sold for 2000 DEC (Dice) and 2000 Credits (Untamed).

So the tokenomics of these 4 currencies is so interesting. It's taken a couple of years to get to the point, but I think we have an extremely dynamic ecosystem here.

Players have ways to earn DEC, SPS and Vouchers. In the last month Riftwatchers and Tower Defense packs have been released while the Chaos Legion sale is only 2/3rds completed. This means there are lots of exciting packs to buy with DEC, SPS and Vouchers... and lots of new cards on secondary markets to purchase with Credits or DEC.

The interplay between the 4 tokens is truly interesting, and the ultimate goal by the Splinterlands company is to increase the value of the SPS currency. There are mechanisms in place to bring 1000 DEC to eventually equal $1 again and to keep it there forever:

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This conversion tool will prevent DEC getting too much higher than 1025 DEC = $1 USD. If DEC gets to say 1200 DEC = $1 then people will burn their SPS to get more DEC to sell... and that sell pressure will bring the price of DEC back to equilibrium and reduce the overall supply of SPS.

I've mentioned this a few times already, but the Splinterlands company doesn't earn anything from the Riftwatchers edition. The 45 new cards (39 cards and 6 airdropped cards) were all designed, balanced and implemented by the Splinterlands company for free... as a way to give players something to spend their SPS on... and that SPS goes straight into the Splinterlands DAO (which the community will vote on how to spend - and votes are weighted by how much SPS you have staked).

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It's been working well. 44 million SPS is off the market and sitting in the Splinterlands DAO from Riftwatchers and a further 15 million SPS has been sent to DAO from Node Licenses (with 62 million burned forever).

Don't get me wrong, there is still the majority of SPS to be minted:

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... but with the various sinks in place (Riftwatchers, Node licenses, Tower Defense via DEC, whatever else is coming) the price of SPS should generally trend upwards as long as Splinterlands continues to be engaging.

In the last month, Splinterlands has released the Riftwatchers packs, the Tower Defense packs and Runis. They all bring more enthusiasm to the game, they all target totally different audiences, they all give players something to spend their rewards on (Runis not so much, but still a little) and they all add some excitement.

The Tower Defense game (I think it'll sit within the Splinterlands website) could add a bunch of new players who prefer that game style over the card game style of gameplay (and is an additional way to earn SPS from wins):

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I'm currently earning SPS through staking, liquidity pools and wins. I'm currently earning vouchers through SPS staking and earning DEC through liquidity pools.

For the last few weeks I've been converting my DEC to SPS and then purchasing Riftwatchers packs. I want to get at least 300 packs to ensure at least one guaranteed card for each of the 6 RW airdrops.

Once I've achieved that... I think the smarter play would be to take advantage of the discount while 1000 DEC = $0.66 (or while it's under 1000 DEC = $1) and buy CL or TD packs with DEC and RW packs with SPS.

The hope (again) would be to hold those packs until after they're sold out and that the secondary market prices for those packs rises over what I paid.... and then sell and direct that money into the Untamed, Beta or Alpha cards that I need. Essentially never having the latest and most exciting cards, but having a solid collection built on value.

The danger is that I'll struggle to win games without the latest cards (which I've already been noticing without using CL cards or RW cards) and lose out on all the elevated rewards in the higher leagues.

I could instead be reinvesting my SPS and DEC into the liquidity pools to earn more SPS and DEC, that could be the smartest play of all, or I could be spending it on cards I need so that I could win more games, earn more rewards and maybe even get competitive enough to do well in tournaments and win more rewards that way.

I love that there are so many paths to earn value in this game, people can pick whatever path suits their strengths... but it does make it hard to know which is the right path for me to take.

Let me know in the comments what you like to do with your rewards within Splinterlands. I'd love to know.

Thanks for reading this way too long Not financial advice – October 2022 post. I hope it wasn't too borzo!