Yesterday, the Conflux Foundation announced that Swappi was going to be part of the Liquidity Incentive Program. This is great news for Swappi
Let’s do run the numbers.
- The next liquidity injection window will run from 4/20 - 4/30.
- Let’s assume that the TVL of CFX in Swappi keeps increasing and that the price of CFX stays constant.
- If the TVL of CFX keeps increasing, that means that the highest amount of CFX from 4/10 - 4/20 will be the lower bound of the next window (4/20 - 4/30). The highest amount of window from 4/10 - 4/20 was 115,196,744.74 CFX locked in Swappi.
- 115,196,744.74 * .08 = 9,215,739.5792 CFX that will be injected on 4/30 or 4/31.
- At the current price of CFX ($0.16), this would be around $1,474,518.33 USD of liquidity that will be injected into the CFX-PPI LP.
- Out those CFX, 2/3 of that (or $973,182.10) will be used to buy PPI.
- $973,182.10 / $0.8 = 1,216,477.62 PPI will be bought.
- 1/3 of the CFX will be added to the CFX-PPI LP, or $491,506.11 USD.
- Since CFX and PPI need to be injected in equal parts, they’ll need to buy another $491,506.11 USD worth of PPI. $491,506.11 / $0.8 = 614,382.6375 PPI that will be added to the LP.
- The remaining (1,216,477.62 - 614,382.637 = 602,094.9825 PPI) will be used for boosting the rewards.
- The total market cap of Swappi is currently $3,094,561 USD.
- $973,182 / $3,094,561 = 31.44%
- This means that there will be a buy pressure of $973,182.10 USD, so we can expect at price increase of 31.44%, which will bring the price of PPI to $1.05 USD.
Since many users will expect this price increase, so many will try to buy more PPI. There will be a lot less pressure from holders to sell PPI, since it will increase in price. Also, keep in mind that some of that PPI is staked in boosted farms, which will further reduce the available supply of PPI. This could bring a supply shock akin to a halving in Bitcoin.
Feel free to find any flaws in my model. Also if you have any other price predictions please share them here along with the rationale.
