$SPS vs $DEC - where should you put $1000 today? Data & sensitivity analysis.

in #splinterlands8 months ago (edited)

spsvsdec.png

With the recent crash of $DEC, I'm seeing lots of comparisons between $DEC and $SPS these days and questions about which one is the better investment now. On the one hand, $DEC provides airdrop points which give you $SPS, but on the other hand at the end of the airdrop (just over 120 days from now) there will be much less value in holding $DEC and the Splinterlands team have said pretty loud and clear that they intend to put more effort into keeping $DEC at the originally intended peg of $0.001 (1000 $DEC for a dollar).

To answer the question "should I invest $1000 today in $DEC or $SPS", I wanted to make an objective comparison with a sensitivity analysis to help you decide, based on your own assumptions of where $DEC and $SPS will be at the end of the airdrop.


Assumptions

  • Amount invested: $1000
  • Average $SPS staking APR until end of airdrop: 25% (over 120 days equates to ~8.3%
  • Price of $DEC for this analysis: $0.002, which means your $1k buys 500k $DEC
  • Price of $SPS for this analysis: $0.11, which means your $1k buys 9090 $SPS; including staking APR, this would be 9848 $SPS
  • Average total airdrop points between now and end of airdrop: 14.5B, which would imply 4620 $SPS earned from the 500k airdrop points you would have if you bought $DEC (this is lower than what you see on Splintercards because their calculator doesn't assume an increase in airdrop points); including staking APR (assuming you stake every day), this would be 4812 (FYI the total APR will be lower as you'll be getting the $SPS linearly over the period)


To summarize, factoring in airdrops and staking,

  • If you put your $1k into $DEC you would end up with 500k $DEC and 4812 $SPS
  • If you put your $1k into $SPS you would end up with 9848 $SPS

Sensitivity analysis

Here's the sensitivity analysis table. The way to read it is the number in the cell is the difference in what you would have at the end if you put your money into $SPS minus what you would have if you put your money in $DEC today.

  • A negative number means that based on those prices, you'd have been better off buying $DEC
  • A positive number means that based on those prices, you'd have been better off buying $SPS

Example 1 (cell with green border): if you believe that at the end of the airdrop $DEC will be at its peg ($0.001) and $SPS will be at $0.3, then investing in $SPS would earn $1011 more than investing in $DEC.

Example 2 (cell with red border): if you believe that at the end of the airdrop both $DEC and $SPS will be roughly at their current prices ($0.002 and $0.1, respectively), then investing in $DEC would earn $496 more than investing in $SPS.

image.png

Use the table above and your own personal projections to decide whether to put $1000 into $DEC or $SPS. Personally, I believe that $DEC will likely go down and be between the peg and current price, and that $SPS will 2-3x by the summer (see my range in the table below). If that's true, then I am better off investing in $SPS.

image.png

Summary

  • Whether it's better to buy $DEC or $SPS now depends entirely on the price of $DEC and $SPS at the end of the airdrop
  • If you believe prices will largely remain where they are today, you are better off buying $DEC
  • If you believe $DEC will remain where it is while $SPS will grow >100%, you are better off buying $SPS
  • If you believe $DEC will drop by 25% and $SPS will grow by >50%, you are better off buying $SPS

In a nutshell, if you're more bullish on $SPS than $DEC, you should invest in $SPS for the sake of $SPS, not $DEC as a vehicle to $SPS.

Remember, make your own price predictions based on what you know and/or believe, and only invest what you can afford.

Hope this helps and let me know if you have any questions in the comments.

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Thanks for the insightful analysis. Especially appreciate the table!

Glad you found it useful!

Yes I agree with you on that and I believe Dec will defiantly meet its peg value and for SPS they will keep doing some news and updates after airdrop to make it valuable not financial advice. !PGM

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SPS 100% !PGM

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Very good analysis. I'm personally more bullish on SPS, which is what I want to buy in the coming weeks.

Yay! 🤗
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