Staking SPS is the main and only means to increase multiplier on battle rewards. This multiplier levers not only towards the Glints earned but also on the SPS rewards. We could easily purchase SPS through secondary market, or for the hard way is to plough back the SPS rewards gained from battle. But now Splinterlands has introduced an alternatives to rent the SPS from other players which will add to the staked SPS and raise up the multiplier. The only differences is these incoming SPS is not owned by you, so it will not generate the staking rewards.
With the current shift of rating system from Elo Rating into fixed rating; it has been become much easier for any players to quickly rose up in ranks. Because losing a battle only deduct 20 points while winning add 20 points and an additional 20 points for consecutives wins starting from the third going forward. At the end by maintaining 50% wins rate, a players will always have better chances to increase their rank due to the additional points from consecutive wins. In a sense, the entire players in the whole leagues would most probably rose up their rank alltogether.
The fixed rating system will compensate players to actively participate in battle, because they will rise up in rank in fixed points, rather than a stark jump or dive when facing against higher or lower ranking players. When the whole players increase in rating and leagues, there will be much higher demands for SPS to gain better multiplier (which supposed to create uptrend on the price of SPS). But players will need capital to purchase and stake SPS. Therefor renting might be an alternative solution, which us not only for those with limited capitals, but for all players!
How The Calculation Works
Consider these:
- The SPS prices has been depressed very much recently. And the current price is at $ 0.0128 / SPS.
- The current market price to rent SPS is between 0.004 to 0.005 DEC / day / SPS.
- The current price of DEC is $ 0.0007631 / DEC.
Then We could calculate the cost of renting SPS to be $ 0.0007631 / DEC x 0.005 DEC / day / SPS = $ 0.0000038155 / day / SPS.
My current rating is 3,040 which is closing to the Diamond II. And with around 41,000 SPS being staked, I could gained around 1 - 1.5 SPS per win. Adding another 10,000 will boost my multiplier from 6.79x to 7.50x which means a 10% increase. If we expect 50% win rate from daily battles which is 24 battles based on the daily refreshed energy, then we should gained 1.25 SPS x 10% x 12 wins = 1.5 SPS which equals to $ 0.0192. Now compare this with the cost of renting the SPS equals to 10,000 SPS x $ 0.0000038155 = $ 0.03815.
Its clear there's a deficit between the income versus the expense. But lets take another perspective from a lower initial SPS, lets says starting at 10,000 SPS being staked, which give 2.68x multiplier. Now with additional 10,000 SPS being staked, the multiplier will increase to 4.47x. This means the SPS gained from this increase could be calculated as 1.25 SPS x [(4.47 - 2.68) / 6.79] x 12 wins = 3.95 SPS which equals to $ 0.0506. So now we saw a surplus form our renting. But this surplus-deficit difference happen because the exponential effect with the increase of the number of SPS being staked (you could simulate the multiplier calculation using this tool https://www.splintercards.com/tool-ranked-rewards.html).
But this deficit are expected and controlable depending on certain factors which must be weighted in, which is
- The price of DEC per SPS to rent the SPS.
- The peg price of DEC towards USD.
- The future price of SPS itself.
The increase in those factors could easily widen the deficit gap. But even so, the deficit must weighted with glints gained which also benefit from the multiplier increase.
But rather than focus on the cost and gain of renting SPS, it might be better to weight the total return between owning SPS and renting SPS. Lets say previously renting SPS cost $ 0.0000038155 / day / SPS; which if we calculate $ 0.0000038155 / day / SPS x 10,000 SPS x 365 days = $ 13.92. Meanwhile the cost of purchasing 10,000 SPS will be $ 0.0128 x 10,000 SPS = $ 128. While staking own SPS will generate 13.94% APR, the total gain from staking own SPS compared to renting SPS will be equal to 13.94% + ($ 13.92 / $ 128) = 24.815%!
In the end owning and staking your own SPS seemed to generate the best return after all. Not only that the actual APR return of are higher compared to renting SPS; but also consider these things:
- The cost of renting SPS will run for period of days, which means for each days where you didn't play any battle, you will still at loss for the rent already paid.
- Renting might be good for starter players. As previously mentioned renting SPS give surplus return at lower intial staked SPS. The surplus are good to accumulate staked SPS quickly.