Just a post about general thoughts on $zing and its price.
When we first started out to decide on the distribution, while we understood that it'd be quite complicated and have many different aspects involved which all may affect each other, we didn't think it would be this well perceived. It's been over a month now I'd say where I keep thinking the price should drop but it refuses to, so I'd wanna take the time to discuss some reasons that may be causing this.
Let's look at the basics, the one method that costs people to get involved in zing distribution is Hive Power delegation as they lose out on curation reward APR by doing so. The majority of Zing distribution goes to HP Delegators (200k daily Zing vs 320k daily total). As you know Hive Power is quite limited, only about 50% of all existing Hive is staked and people have been using it for quite some time to delegate to other favorite projects of theirs, so optimistically my thoughts were that we may reach something like 2M delegation and stay there. Although I have to say after the launch of Zing which happened around the same time as Bitcoin and the rest of market started swinging upwards hard and people shouting bull market I was a little worried that it would work against Zing delegations in case people wanted to unstake their Hive in preparation to sell some off in the near future. I guess the same market activity may also have gotten more excited about the project to delegate and participate early more, with #web3 games having quite a lot of potential this time around as the hype is emerging all over the web.
There's a few dynamics at play here the way I see it. There's some FOMO, even though the scope of people who can get involved at this point in time is quite limited (those active around Hive and interested to get involved), many want to be involved because they're "getting in early". This means that distribution has just started, so the pre-determined Zing rewards going out aren't competing against many. At the same time, though, out of everyone who's heard about it and are interested to participate, not everyone has Hive Power. There's a lot of gamers on Hive, primarily due to the ongoing success of the #web3 gaming giant (whether outsiders will admit to it or not): Splinterlands. Something I hadn't looked at before but noticed recently when I started using beeswap is that there's a significant high amount of liquid Hive and SPS in the hive-engine pools, so I reckon these players, aside from splinterlands assets, are more interested in holding liquid Hive than Hivepower. That's also one of the reasons we decided to introduce Liquidity provider rewards, since not everyone is vested in Hive but participating and using it daily, they're now also able to take part in earning daily Zing at the tune of 40k per day.
The reason staking rewards are the lowest distribution of Zing is because that's perceived as the safest method to earn more Zing. Especially when the cost to acquire staked zing isn't that high right now and somewhat safe, i.e. through delegation rewards by delegating your Hivepower riskfree and being able to stop at any time. Delegations have been an investment tool that are quite underestimated in the crypto space in my opinion and it's great to see the numbers of people participating in holozing through it already. With liquidity pools however there's a bit more risk to it because you're placing your liquid Hive as collateral in a way to farm more Zing. On top of that you're also missing out on Hive Power APR by not having it staked, this was something we wanted to combat as well to make our LP stand out and honestly seeing the amount farming trading fees in the SPS pool I'm kind of confused why they don't just stake the Hive (and/or SPS, not sure if there's staking rewards for it).
So the dynamics are, get in early and accumulate a lot of Zing to "safely" earn staked zing rewards to the tune of 20k daily. This is quite a compounding number for those who get in early as can be seen by current APR at something around 100% for staking rewards. Then you have the delegation rewards where people are competing for the 200k daily Zing rewards currently at 70% APR, this one is a bit different cause it all depends on delegations, the more you personally delegate the more Zing you earn and the % takes into effect the price of Zing and how much you're earning in value compared to the 8.5% curation APR. The more others delegate the lower amount of Zing you earn but the total amount of delegation will then also make the Zing base price worth more. For instance at the 3.15M HP delegations right now, the base price of Zing is above 0.00366 Hive per Zing, that's still only 10% of its current price but the more people delegate the higher that base value goes. This of course doesn't mean that the price of Zing can never go under 0.00366, it just means that if that were to happen, you're better off undelegating and earning curation rewards (and buying zing with Hive directly) than earning zing and trading it for Hive.
Lastly there's also POSH, which those who've acquired it early either through sharing, delegating to poshtoken or buying it off the market are now receiving a nice amount of Zing in exchange. This one I'm not going to get into much except mention that this distribution may end sooner than anticapted as we wanted to make posh whole in a value exchange of what it spent on the startup of the game in Hive, but we didn't expect the price of Zing to remain this high for this long which means that wholeness is coming closer sooner and then we'll have to stop distributing Zing to POSH holders. Zing did definitely cause some volume for POSH since its launch and will definitely cause some sell pressure when it stops but hope people won't get too burned on lack of liquidity in that market and instead take it easy and realize there's more to come for POSH in the near future with one additional smaller project than Zing about to start.
Alright so, why has the price remained this high? It's hard to give this a concrete answer but it's probably a mix of many factors. Fomo, longterm mindset of staying invested in the game and wanting to take part as early as possible, anticipating that the team is decent and the game will be great, expecting a working economy where they'll need zing to progress and compete, expecting the userbase and playerbase will grow once the game is released both within and outside of Hive, etc. There's too many factors to count but we can also look at why sell orders occur; there's quite high APR, those delegating are earning 7-9x more hive than if they just relied on curation, those wanting to make longform trades, i.e. expecting the price to go down eventually to use the same hive they are getting from zing now to buy more zing at a lower price later, some who don't believe the project will go anywhere and want the profit now.
I'm personally on the boat where I'm not trading Zing, not because I don't think the price is too high and I've been saying this for a while now, it would only make sense for it to go lower, and not because it would be "a bad look" for the founder to sell the tokens even if it would mean more tokens later but honestly it just feels like too great of a risk for me at the moment. There's no guarantee that the price will drop or drop a lot and even if it did there's no guarantee that I'll be able to buy back the amount I may have sold and the staking rewards I may have lost out on by staying on the sidelines so I'm prefering to just stay invested for now and watch the markets, with some buys here and there because, you know, it's my baby (xD) and due to the way it was launched I didn't assign a certain amount to myself just for the ideas and work that's gone into it these past few months to few years, in fact POSH or Zing won't even pay me for that in Hive like it will other developers and team members, but I'm happy nonetheless to see this project be well perceived and to eventually see it come to life and be played and enjoyed by many even if right now the only enjoyment is through the APR's it's providing.
Anyway, I'm sure I've left out quite a lot more factors but feel free to mention them in the comments if you come up with them when reading this, was just a free-write with some thoughts really but hope you enjoyed it. Thanks for reading.
Images generated with Midjourney for this post alone.