Turning down the ILV Staking Hopium. Deraji’s Illuvium Staking Calculator Version 1.21 - Minor update with major impact

By Deraji | ILVFi | 28 Aug 2021


Hi all.  I have another quick update today with major impact.  Thanks to Xaster’s Illuvium blockchain data, I applied a new factor for our estimates - pool volume increase over time.  This is an absolutely critical value, as staking rewards are fixed per fortnight (currently at 88,529 ILV distributed per 14 days, or 6,323 per day). If pool volume increases, these rewards are divided across more people, so each individual staked ILV or SLP earns less.

For an analogy, think of the staking pools as a pitcher of water.  Each fortnight, the pitcher is filled with 3% less water.  Every day, people staking ILV or SLP put their cups out, and the water is distributed equally across the number of cups available.  If the number of cups increases, each cup gets less water, and the pitcher itself is being filled less every two weeks.  In short, this is a big deal.

Running average of Fortnightly growth rate of staking pools

I had included a factor before, but grossly underestimated pool growth.  Previously, I had applied a 3% fortnightly growth rate to the ILV pool and a 2% fortnightly growth rate to the SLP.  In reality, the most recent fortnight saw an 18% growth in the SLP and a 9% growth in the ILV pool.  I do expect this factor to decrease over time (similar to the trend seen above in the ILV pool rate), as currently there are more than 629,000 staked ILV, and 63,000 staked SLP, so increases at the recent rate are unlikely to continue without continued major influx of investors.  To increase by 18% in the next fortnight, we would need to see a new $30 million in liquidity enter the SLP.  For now, we’ll go with the more conservative number.  I did make this an editable cell, shown below.  If you would like to adjust your growth factor, always feel free to make a copy and try your own inputs.

Pool volume input addition

Regarding the ILV pool, I expect this number to stabilize somewhat, as all claimed rewards are added to the pool, both from the SLP and the ILV.  On average, about 5,000 ILV are added to the pool daily in this manner in addition to people directly staking on the protocol.  

I’ll update the calculator with this value periodically, so check back often to see if this value has moved significantly or feel free to calculate it yourself from Xaster’s data.

For those of you who have tried my calculator previously, I encourage you to copy it again and determine the impact of the recent pool dilution factor.  I know personally I’ve seen this in my SLP staking with the number of reward ILV decreasing, while the APY has stayed relatively constant.  The critical factors that affect APY are:

  • The number of rewards distributed daily (the amount of water in the pitcher)
  • Number of tokens staked (more cups for water)
  • The price of ILV (the value of the water)

The growth factor and fortnightly decrease in rewards put negative pressure on the APY.  The third factor, ILV price, helps to push APY up as the token appreciates.  As of today, the price is back at $530, nearing an all-time high again.  Since you are paid rewards in ILV rather than dollars, the more valuable the “water” in your “glass” the higher your rate of return.  As an Illuvium bull targeting the long term success of the project, I could care less about value of my water, I just want more water!

This update may swing things dramatically in the other direction from hopium to fear, and while these calculators are for entertainment purposes only, and big numbers are more fun, it feels appropriate to try to keep it realistic with the best data currently available.

Comments are always welcome here or message me on the Illuvium Discord.  Happy staking!

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Deraji
Deraji

Crypto curious thinker, amateur economist, geriatric millennial gamer passionate about Illuvium. Happy to share my economic and financial assessment of this unique blockchain NFT Play-to-Earn project. patreon.com/ilvfi


ILVFi
ILVFi

ILVFI focuses on the upcoming P2E game, Illuvium, the first proposed AAA-quality video game based on blockchain technology and NFT ownership. We'll focus on both the game play, as well as the in-game and ILV governance token economics.

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