DISCLAIMER: This is not investment advice, just sharing my research in the hope of starting some discussion. Also, if anyone wants to start a Swappi trading club message me!
Swappi is the first AMM based DEX on Conflux eSpace and everything I’ve heard about this project makes me very bullish. Just this weekend Conflux announced that Swappi was going to be the first project to participate in their newly announced Liquidity Incentive Program. Liquidity Incentive Program for Swappi
Over the weekend Conflux Foundation injected 5,070,792 CFX into Swappi’s PPI / CFX LP pool, buying 3,380,528 CFX worth of PPI to stake in the pool. This will be the first of many transactions, with the next one occurring on April 30. Reading between the lines it is clear this creates some serious buy pressure for PPI - aka strong potential for price appreciation.
With this recent news, along with the great fundamentals of this project, I predict PPI price to break $1.80 by May 2.
Here is my quick back of the napkin sketch of what happened between April 21st and April 24th to demonstrate the impact the injection from the Conflux Foundation on April 22 had.
On April 20 Conflux Foundation injected $933,025.73 USD worth of CFX into the Swappi protocol, with 2/3 of the injection being used to buy PPI.
After this injection:
- Liquidity for both CFX and PPI experienced significant increases, increasing 14% and 72% respectively.
- After this injection the price of PPI increased from $0.39 to $0.84. That’s a 113% increase!
Breaking down these changes even more we can see that after the liquidity injection by the Conflux Foundation:
- Most of the jump in CFX liquidity came from the Swappi community directly, at 89%
- The substantial boost in PPI liquidity, with 45% of increase coming from the Conflux Foundation, has had a massive impact on the price of PPI.
My key takeaways from this are:
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The Liquidity Incentive Program is having a significant positive impact on the price of PPI
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There is a positive feedback loop occurring with the Swappi community creating favorable economic conditions for growth.
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Swappi users are realizing if they stake more CFX into Swappi, the injection from the Foundation into Swappi will also increase.
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These injections create significant buy pressure on PPI, have a positive impact on PPI price, and in step boost market confidence in Swappi and DEX TVL.
MODEL ASSUMPTIONS
In this model, I assume Swappi TVL growth rates continue to grow at the current growth rates of 16% per day since after the injection. If ceteris paribus, then by April 30, the CFX liquidity on Swappi will be $42,615,880.45(USD value of CFX).
CFX Liquidity Prediction = Current CFX Liquidity * (1 + TVL growth per day) ^ (number of days)
$23,625,552 * (1+0.16)^4 = $42,615,880.45
This means that the Foundation could inject $3,409,270.44 worth of CFX into Swappi, buying $2,272,846.96 worth of PPI to be staked in the CFX/PPI pool. A big jump from the last injection.
Note: this is an estimate, and the actual amount of the injection provided by the Conflux Foundation is based on weighted time calculations of CFX locked in Swappi, not a snapshot (See original post from the Foundation linked above)
PREDICTION
With the reference PPI price of $0.851, I predict that the price impact of this injection will be the same as the price impact after the most recent injection (113%), and that the PPI price May 2 - soon after the injection on April 30 - will be $1.81.
MY STRATEGY
I am obviously very bullish on PPI and see a lot of potential for this project. To leverage my analysis from this weekend, and put my predictions to the test, I have maximized my positions in the CFX/PPI and PPI/USDT pools, and continuously stake my earned PPI from farming to boost my PPI rewards.
Let me know what you think of my rough analysis and would love to start a discussion on how everyone is maximizing their rewards on Swappi!
Data Sources:
- Swappi analytics page https://info.swappi.io/home
- Conflux Forum: Swappi 的流动性激励计划
- PPI token: https://evm.confluxscan.io/token/0x22f41abf77905f50df398f21213290597e7414dd
