In my latest video I wanted to talk about the SPS token which is a part of the multi token ecosystem in Splinterlands. This token could very well go parabolic if a combination of these circumstances materialised over the coming months, so I wanted to share those with you and go into more detail to explore the possibilities of SPS's future value.
At it's all time high's a few months after the token was deployed last year, SPS had a market cap valuation of nearly 170 million and a price of $1.12. At this point in time there were only 150 million tokens in circulation. Consequently this meant that the price action could quite easily be pushed higher.
If we fast forward to now, the current market cap of SPS is 46 million with a price of $0.0579 cents with roughly 800 million tokens in circulation instead of the 150 million tokens in circulation at SPS's previous highs.
The last time SPS actually had a market cap of 46 million was back in September 2021 at a price of $0.34 cents. And the reason why SPS had the same market cap valuation back in September but was worth nearly 6 times the current price of $0.0579 at $0.34 cents is again because back then there were far less tokens distributed and in circulation (135 million to be precise), so we can see that as a consequence of more tokens being distributed, a dilution in the overall value of the token becomes apparent too.
This dilution is made clearer if we take today's price of SPS of $0.0579 cents and we saw a rally up to $0.21 cents, if this price was reached, the token would actually have the same market cap valuation that it had at it's all time highs (change to 0.21 cents earlier chart). back up here in October last year when it was priced at $1.12.
The question is though, how do we remedy this?
Well, the easiest way to increase SPS's value would be by decreasing it's supply. But this would have to be in a substantial way.
On July the 26th of 2021 when the token was deployed, 50 million SPS was added into the foundation treasury. This foundation is controlled entirely by the staked SPS token holders through the DAO, Once the DAO is live, token holders will be able to submit proposals on how they want these tokens to be used, and if the proposal is passed based on a vote of staked SPS token holders, then the tokens will be distributed accordingly.
In total over the 65 months of SPS distribution, 300 million SPS or 10% of the total ever max supply of SPS will go into this foundation treasury. Currently there are still 53 or so months of SPS distribution remaining.
From this total 300 million going into the foundation treasury over the 65 months, we can estimate that nearly 4 million SPS is being added to the foundation treasury per month. Meaning that in total, so far, the foundation treasury currently has around 100 million SPS in it.
In my eyes, the most prudent thing to do with this SPS would be to just burn it all as this would reduce the current total SPS supply by 12% which would allow more breathing room for SPS to increase in value.
Secondly, as seen on the latest road map, we aren't too far away from the release of Riftwatchers which is the next mini edition of booster packs to be sold in the Splinterverse and will only be able to be purchased using SPS tokens - all of which will go directly into the SPS foundation treasury. In total there will be 3 million Riftwatcher boosters sold at an estimated value of $5 dollars worth of SPS per pack. At current prices 260 million SPS would go into the treasury from the Riftwatchers sale.
If we were to combine the Riftwatchers sale with what is already in the foundation treasury leaving that 70% price increase buffer to cater for less SPS going into the treasury if SPS increased in price between now and then. This would equate to nearly 250 million SPS tokens available to SPS holders to do with what they please. If we were to burn 250 million SPS, that would be 30% of SPS's current supply. Which starts looking increasingly enticing to SPS holders.
If somehow SPS price stayed at it's current value of $0.0579 cents up until and throughout the Riftwatchers sale which is unlikely, this would equate to 260 million SPS going to the foundation treasury which if combined with the current SPS already in the treasury would be a total of 360 million SPS. If THIS amount was burned, that would mean a 44% reduction of the total token supply currently.
When we start getting into these type of amounts and talking about over 40% of the supply of a token being burned, large price movement would follow.
For more detailed information on this, check out the video.
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