Published: January 9th, 2022
Photo credits go to: @ZioAxie
This post is a sequel to my first post about AXS staking.
In this article I will compare the potential rewards of staking AXS in comparison to farming Ronin, and then explain various methods of predicting the potential launch price of Ronin.
TL:DR: Farming Ronin token is slightly better, and my price prediction is $4-$6.
Staking AXS vs. Farming Ronin for LP Token
Imagine you had $1000. Should you stake it for 88% APR or invest in their liquidity pool to harvest RONIN tokens with an unknown price?
Well, to find the answer, let’s do some quick math.
We can calculate your daily rewards by dividing your liquidity / total liquidity
Your Liquidity / Total Liquidity = Your % of pool.
Your $1000 / $686mil = 0.00000145772
0.00000145772 * 555,555 RON in daily rewards = 0.8098436346 RON rewarded daily
Assuming the price of RON will be $4, that is $3.23/per day or 117% APR
Assuming the price of RON will be $5, that is $4.04/per day or 147% APR
Assuming the price of RON will be $6, that is $4.85/per day or 177% APR
The current staking APR is 88% or 140% APY if you compound daily.
Therefore, the price of RON has to be greater than $5 to have a higher ROI of than staking.
Considerations of this strategy
– The token is rumored to launch in February 2022.
– Tokenomics: The total supply will be 1 billion tokens.
– The position is exposed to impermanent loss as the price of AXS and ETH may not change at the same rate.
– The exchange has 300k daily users which is #2 of any DeFi DApp right now.
Price Predictions on $RON token
There are a couple ways we can predict the price. One is a fundamental analysis method, another is technical analysis method.
Fundamental Analysis – Similar Market Cap
I was speaking with Andrew Young, the founder of SX Network, and one valuation metric he suggested is comparing the market cap of the platform and comparing it to it’s most popular app. There is usually a relative sizing. Let’s take a look at a few popular chains and their DEXs.
Chain (market cap) – App (market cap)
Binance Smart Chain ($73bil) – PancakeSwap ($2.7bil) = 27x multiple
Solana ($43bil) – Raydium ($430mil) = 100x multiple
Avalanche ($22bil) – Trader Joe ($232mil) = 9.5x multiple
Fantom ($6bil) – Spooky Swap ($150mil) = 40x multiple
Harmony (3.3bil) – Defi Kingdoms (1bil) = 3x multiple
Ronin (…..?) – Axie Infinity (4bil) = 1x multiple? 2x multiple? 3x multiple?
If if it a 1x multiple, then Ronin will be worth $4bil. Since there are 1 billion tokens, each token will be worth $4.
If if it a 2x multiple, then Ronin will be worth $8bil. Since there are 1 billion tokens, each token will be worth $8.
If if it a 3x multiple, then Ronin will be worth $12bil. Since there are 1 billion tokens, each token will be worth $12.
There are so many factors that could be taken into account here, as you can see the prices vary wildly. It is unclear whether Ronin will be treated as a “blockchain platform” in the same way that Solana was, because it depends on how many applications will build on top of it, and how much gas fees they can charge in relation to that.
Technical Analysis – Futures Markets
Futures contracts of the Ronin token are currently being traded on FTX for $4.20. The price has ranged from $4-$5.30, so it is safe to say this is generally what some traders think is a fair price.
In conclusion, I believe that farming RON is a better investment strategy for your AXS than staking it. My price prediction of $RON token is between $4-$6.
January 27th launch update:
The launch price was $3.73