A Sovryn’s Journal
March 30, 2022
Hello dear Sovryn Community, welcome to part 4 of “A Sovryn’s Journal”.
First of all, i’d like to tell you that this Blog can now be found on Substack via
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$SOV had a selloff. My guess would be tokenomics as discussed in the previous part, delay in anticipated products and low dapp volume as the case for it. Some investors losing confidence. I took the opportunity to get my hands on some really cheap SOV. As always I’ll have a look at the staking stats and compare it to the current price of SOV. In addition, I’d like to discuss the following topics:
-Staking stats and revenue
-Some thoughts and feedback on Tokenomics
-Droppr, (O)Gpfp’s or (G)Gpfp’s and many new GF’s
-BTFD with the Zero-protocol
As always, I am a random pleb on the internet, nothing written down here is investment advice and these are not official numbers for Sovryn.
Staking statistics (Thank you again for providing the weekly data @CEK)
Here are the updated charts with regard to staking. With the difficult market conditions, not all info shown here is too bad. It seems that strong hands are buying the dip. But their buying power is not as high as the supply and the dapp volume simply does not justify higher $SOV prices right now. Let’s dive in.
The first chart shows how the staking of $SOV is developing. Good news: More and more SOV is getting staked. There were signs of early unstaking as $SOV stakers were rewarded with some unstaking penalty SOV, but the trend is clear: In march alone, nearly 200.000 SOV were added to the staked supply. Around 600.000 SOV were added to staking since the start of the year and with the falling prices, this trend looks like it wants to accelerate. Strong hands are locking up SOV regardless of the continued pressure on the price of the token.
The Voting power in chart 2 shows a similar picture. There is more and more Voting Power from voluntarily staked SOV. This is pretty cool, but some stakers might not like this news because it means that with stagnating dapp volume, their weekly payout in satoshis will decrease. More on that later with chart 4. I think it’s also worth mentioning that there is a new top tier staking address that has locked up more than 100.000 SOV for maximum duration in march, resulting in 10% of total dapp revenue going to that address currently. If you, Sir whale, read this: I will catch up, you won’t just take away my fair share (percentage-wise).
Chart 3 is new in this blog and it shows a very interesting development. It divides the voluntarily staked voting power by the staked SOV. This gives an indication of how long the SOV tokens are locked. Remember, the longer the SOV is staked, the more Voting power you get. The maximum is 10 VP per SOV, minimum is 1. This trend recently increased from 4.2 to 4.75. $SOV is being locked up for longer time periods. This shows conviction and long term thinking and it shows that strong hands / hodlers are stepping in. Remember the top tier staking address though? This address alone has a big influence on this chart.
Chart 4. I wish this would look better. It is what it is. After spiking at 5 sats/VP, we are decreasing ever since. The last payouts were somewhere between 1 and 2 sats/Voting power. As there is more Voting power now and dapp volume was kind of low, stakers receive less sats. As John Light rightfully pointed out on discord, this chart
is the most important one right now. How will the dapp volume develop? Will Perps, Zero, Droppr and limit orders bring more volume to Sovryn? We’ll find out very soon.
The last chart is not looking as bad. At current SOV price and current dapp volume, one can expect 0.2% return on investment WEEKLY, in rbtc. I already told you last time how amazing this is. I sometimes like to repeat myself. A weekly payout in btc that is as high as 0.2% each week. I’ll have that forever, Laura. Forever. Compare that to banks that give <1% in fiat per year.
Please note again that this is moon math though. If more SOV gets staked, this ROI chart decreases if the dapp volume does not pick up. Anyway I think there’s valuable information in this chart.
I discussed the tokenomics in my last post, but I’d like to give a small follow-up because this topic has been lively discussed on discord, telegram and in the forum and there is a lot of confusion. Of course, when the token price crashes like this, there is always a lot of criticism. In the forum, there are 3 or 4 threads in which people are looking for short- and medium-term solutions. It’s much worse on telegram/discord. There seems to be a lack of knowledge with regard to tokenomics. This leads to nothing. It seems that many in the community are unclear about tokenomics, and although the community managers and even the core team members are very responsive, always helpful and very kind, there is a lot of confusion. Sometimes it is said that the 100 million supply will only be in circulation after 7 years. But it is also a fact that 90 million tokens will be liquid within 2 years from now.
If you compare these two statements as a potential investor, you quickly get doubts. We need more clear information on the dapp and on the wiki (which is absolutely amazing) about tokenomics, the inflation rate and the staking statistics.
How many tokens are voluntarily staked until when?
What’s the average staking duration?
How many tokens are vesting due to liquidity mining?
How big is the role of liquidity mining in the overall token inflation rate?
How many tokens become liquid in each month?
Where do they come from?
And we need simple explanations of why this is all the way it is. The tokenomics are complex. A simple and preferably graphically appealing explanation is of tremendous value. Fortunately, this is being worked on. In my opinion, this feature is as important as the new products.
It needs to be there when Sovryn leaves the alpha phase. Any potential new Sovryns will look at tokenomics first because this is “crypto”. If they already give up there confused, good night. Of course, no one has to buy the $SOV token and can use all products with btc only.
But we do have a token and that is how Sovryn will be measured. The structure of tokenomics will be the same as the structure of Sovryn. I don’t make the rules, I just point them out.
I was very happy that Yago stated during a community call that changes to tokenomics are being considered and a new black paper will be released that has info’s about tokenomics in it. Hopefully this is preceded by a lively discussion and decision-making through the bitocracy. I’d be happy to help where I can. The result must be kept as simple as possible.
According to Michael Parenti (our OG Exiledsurfer), there is some very interesting news about Droppr. Droppr is a chain-agnostic NFT project and will first launch on Sovryn/RSK in April. More chains will follow in the next months. First Avalanche (June?), then others (BSC, Matic, Near, Polygon, …). Droppr will launch 10,000 so-called Gpfp NFT’s on each Chain. Each of these NFT’s is entitled to 1/10,000 of Droppr’s revenue on that chain and also gives perks when using the platform.
The interesting part: “God-tier” NFT’s which I’d like to call GGpfp’s or OGpfp’s will be sold at the Droppr launch on Sovryn. If you own such a NFT, you will also get a Gpfp airdropped with every new launch on another chain. So you not only get exposure to the revenue on RSK, but also to potential revenue on other chains. If you own 1 God-tier NFT on RSK, you are entitled to 1/10.000 of the total Droppr-Revenue on all chains. All Droppr Gpfp’s are tradable from the beginning and are not subject to vesting. Of the total 10,000 RSK gpfp’s, 3,000 are God-tier NFT’s. At the pre-sale to Sovryn-stakers, 1000 of these are being sold. After that sale, there’s another sale for VC’s.
So the question is not whether to buy one, but how many to buy. Personally, I am looking forward to see how much liquidity I can bring to Sovryn by selling my altchain gpfp’s later on. This is the way. And it’ll be interesting to see if Droppr can get some publicity for RSK/Sovryn on other chains.
I have prepared some questions for the AMA between @exiledsurfer and the Sovryn trading dojo telegram group hosted by our great @LukaGrunt this sunday. If you’re interested in Droppr, please participate there. You don’t want to miss it. Here are some questions:
-Will the second sale to VC’s be on RSK or on Avalanche?
-Where/when will the remaining God-tier NFT’S be sold?
-Will the initial Sale of the God-tier NFT’s always have a price of 2500$ or will that change on later sales?
-Will Sovryns that got their hands on God-tier NFT’s already profit from the fees generated on the VC-sale and potential additional pre-sales?
-Are there already confirmed plans/launch dates on other chains?
I am very excited for Droppr. Also, because we can have some great Sovryn Comic NFT’s and go crazy about them. I’m sure they will be amazing.
BTFD with Zero
There are a few woke people like @sovereignorigin on twitter who did some extensive calculations/algorithms on how the zero protocol can be used to maximize the gains by leveraging your bitcoin with a minimum chance of liquidation. And indeed, there are very exciting things to do with it. I did some calcs myself and found several interesting ways to use Zero. But for this post, I’d like to just show a very simple method on how to use Zero. Use Zero to Buy. The. Fucking. Dip.
Here’s the thought:
-Take out a loan against your bitcoin with high collateral (200%-300%) depending on your risk tolerance.
-Earn interest on those ZUSD and just hold them. Wait for the Dip. There’s always a Dip. If there’s no Dip and it’s going up forever, Laura, keep taking more loans but stay at the desired base collateral (200%-300%).
-Once it Dips and your collateral gets lower, buy btc with a part of your borrowed stablecoins. Increase your collateral with the newly bought btc to the base ratio again. You now have more btc and bought the dip.
-If it dips more, buy more btc with your borrowed stablecoins and use it again to fix your collateralization. You now have more btc and bought the dip.
-If btc rises again, pay back some part of your loan and take profit.
If this sounds complicated, have some numbers.
BTC price 50.000 USD
You put 1 btc into Zero and take a 200% collaterized loan. You now have 1 btc collaterized at 200% and 25.000 ZUSD that you earn interest on. You wait for the Dip.
Bitcoin dips to 40.000 USD.
Your collateralization is now 160% as you still have to pay back 25.000 ZUSD. You buy 0.25 btc for 10.000 ZUSD. You put it into Zero. You now have 1.25 btc in Zero and a collaterization of 200%. You also have 15.000 ZUSD left and you owe 25.000 ZUSD.
Bitcoin dips to 32.000 USD.
Your collateralization is again 160%. From your remaining 15.000 ZUSD you take 10.000 ZUSD and buy 0.3125 btc. You put that into zero to increase your collateral to 200%. You now have 1.5625 btc, 5.000 ZUSD and need to repay 25.000 ZUSD.
Bitcoin dumbs hard to 17.600 USD.
Your collateralization is 110% and you are on the edge of being liquidated. You take your remaining 5000 ZUSD, market buy 0.2841 btc and put it into Zero.
You now have 1.8466 btc at a collateralization of 130%. Your liquidation price is 14.900 USD. You could add additional btc collateral to not get liquidated but your ZUSD are now depleted.
Btc rises back to 50.000 USD.
You now own 1.8466 btc worth 92.330 USD. You need to repay 25.000 USD. After repaying the loan, you have 1.3466 btc left. If btc goes higher, you have more profit.
If you are scared and exit before it goes back to 50.000 USD, 40.615 USD is your break-even point. You can pay back the 25.000 USD there and exit with 50.000 USD, you dollar nominated starting capital. Or you keep the 1.231 btc for a 23% profit in btc terms. Magic. That’s the power of Zero. Please note that there’s a 0.5% fee on taking a loan that I ignored. I also ignored the potential yield that you can earn on the ZUSD though so it should be fine.
The Q1 was very difficult. I am neutral on Q2 and bullish on Q3. Adoption takes time, even if the first new products launch within Q2. Might be be a good time to dca into some more SOV. Watch out for the 14-day cycles where new SOV supply from liquidity mining and staking rewards gets sold on the market every 2. Friday and the following days. The next dates are April 8, April 22, May 6. Also watch out for the protocol revenue chart on the wiki. Let’s hope for the best. Maybe the world is too stupid for Sovryn. I don’t know.
I don’t have any rumors to share, it’s pretty silent right now. Especially with regards to this new community driven DAO around marketing and adoption that seems to have very big influence behind them. The calm before the storm?