Hello everyone!
Or should I say, holo!
Before I begin, I have to warn you that this'll be quite a speculative post, none of what's said here is meant to be taken as investment advice or make you fomo into anything. Hopefully you're experienced enough by now to know doing your research and not having to trust others is what important in this space and something that gives blockchain value.
The way we initiated the claimdrop for holozing was quite unique both in terms of Hive and the general web3 space. Naturally, there've been some inspirations to it from projects like @wrestorgonline who've been running a token issuance based on delegated HP to their project for over 2 years now so props to them for that. While this is a great way to kickstart projects there are some limitations to it, so let's look into what these could be for this part of the claimdrop for Zing.
Realistically speaking there's a limit to how much delegated hivepower @zingtoken can receive and there's many different kinds of intentions behind that. For instance:
- people who want to participate in the project and earn tokens for long term hold or usage
- people who want to participate to take advantage of the high APR to sell tokens back for hive while earning more curation rewards than if they were curating
- people who want to do a mix of the two points above
Myself for instance would fall under the first group of people, although Zing's history is short, I haven't unstaked a lot of tokens and the few I did was to enter the liquidity pool when it opened up early on. My strategy was to amass as much Zing as possible without spending too much Hive (it's a marathon, not a sprint). I also prefer to earn staking rewards over liquidity pool rewards because my gain in Zing there feels "safer", that is not to say that I think the liquidity pool is unsafe, I just don't want to risk losing a lot of Zing if the price were to suddenly go up a lot and not go back down.
On the other hand you may have people who are just looking to maximize their value which may mean either getting more Hive from the ecosystem or more usd. With the way the APR's are set up it's not a surprise that there may be many looking to double or triple their value by participating in project's claimdrops.
There's a balance between these two groups happening now and another one for those looking in without being able to participate due to not having hivepower, which is what this post was about (to remind myself not to side-track too much).
With the current distribution amount being a total of 320,000 Zing daily and 200,000 of that going to delegators you can tell that by having hivepower and forfeiting on the curation rewards APR (8.5%) by delegating it's the best way to earn Zing currently. In a little while, this distribution is going to decrease a little further, 40,000 of the daily distribution to POSH holders will be removed once it matches the hive amount @poshtoken has put into the project and another 10,000-20,000 of the liquidity provider rewards will instead go off-chain (yet to be decided fully). This means that distribution will soon drop to 280,000 Zing daily but that is also going to be temporary. Before I side-track again, though, let's think about what this means for Hive Power holders.
The main way to get Zing right now is to delegate HP, this is also one of the only ways the Zing project receives value back (through curation rewards), because from the Liquidity Pool on hive-engine we don't earn any fees (may be different on other chains). Without any NFTs out yet and trading occurring there we also don't receive any fees from there meaning we're currently quite limited to our income sources and on top of it all we have to rely on first earning the curation rewards which takes a while to then also have to power them down which takes even longer.
At current price of Zing of 0.02 hive per zing, it means that the token is currently being traded at 4x higher value than the base value of Zing from delegations. At 4M HP delegated to the project it means the project is earning around 915 hive per day, you take 200k of the daily zing distribution to delegators and divide it against 915 and you get ~0.005 hive/zing. This means that compared to the 8.5% you earn from curation rewards, you are currently earning ~34% APR instead which is reflected on the website:
Now that we got to the main point of the post, what does this mean for Hive?
Those delegating their HP to @zingtoken are earning "Hive" at a much faster pace than those only curating with it "if" they instantly sell the Zing they're earning at current price. A price which aside from initially starting to trade and going down from ~0.1 hive to 0.012 at the lowest (I believe), has been holding value quite well as of late:
This doesn't necessarily mean that if someone delegated 2 weeks ago when the price was at its lowest (~0.013 on the chart) has earned even more than current APR, because amount of delegations vary and you only earn an amount of Zing based on your delegation compared to the total amount which in and of itself has risen from 3.3M HP to 4M HP effectively lowering the amount of Zing you earn today compared to two weeks ago by ~20%.
Wow, there's so many variables and angles about this that I keep sidetracking still. Either way, for the project this is good as its receiving higher curation returns and for those delegating for a long time this is also good cause they can now not only take some profit to make up for the curation rewards they missed out on by delegating but in a way also get some "free Zing" after they've taken profit or take even more profit by selling more Zing.
Why would people buy if they could just earn Zing by delegating like most others are doing, you might ask. Well, not everyone has Hive Power and not everyone is interested in locking their Hive up for these returns. So to finally get to the point of my post:
It encourages people to stake hive even if it's mostly for selfish short term gain reasons.
This isn't all, though, similar to how HP that can be delegated to Zing is quite limited for many reasons, there's also a limit in value in our ecosystem of how much more HP could people here buy from the market to stake to delegate either for long term holding of zing or for short term profit taking.
This is why we're also planning on bridging out from Hive. We already have bridges set up which work well, we still have to include LP's and farms but we very much do intend on keeping it all inhouse, i.e. being able to do it on the website where outsiders will then also be able to figure out that there's other ways to earn the Zing they may be farming on ETH or BSC by providing Zing and the native token of the chains to earn some of the then diluted LP zing rewards. They may notice that compared to the daily 5k or 10k zing they're earning on their chain in the farms they could also take part in the HP delegation Zing, they may be interested in getting themselves some Hive, getting a Hive account, keychain, etc, and earning zing from both chains as I assume some hivers may do at that point as well when we have those LP's going. They may learn more about Hive, our platform, our powerdown timer for sure but it may get Hive into more eyes and wallets all through them having found out about this community-funded game they wanted to participate in early.
It'll definitely become interesting if, not only the price keeps staying up the way it has been lately and encouraging more delegations to be sent to @zingtoken to attempt to match it, but for buy pressure from outside on both Zing and Hive to compete for the limited distribution to delegations. That I think is quite a powerful way to give more value to Hive from a project being built on top of it.
All that said, HP delegation distribution may also limit the growth of Zing unnecessarily, while we don't have any plans on adjusting distribution at this time, except for the couple things mentioned earlier (POSH and Hive-engine LP), we may take a closer look in the future to make sure it's not stifling the project.
Either way, exciting times ahead, and for the gamers and collectors out there, it'll get even more exciting once Collection-based and Competitive Ranking-based Zing distribution starts among many more.
