The validator nodes are precious NFTs that can be seen as miners of Bitcoin. These nodes are traded on Hive-Engine open market and they can be purchased on Splinterlands. For now, they are tradable assets which can be transferred to Splinterlands to get daily Validator Node reward distributions or the owners may try to make gains from their trades on the market.
For now, it might be a bit hard to understand the important role of these validator nodes. However, they play an important role in terms of providing security of the Splinterlands' "side-chain" and the process of approving Splinterlands transactions.
As of writing, the validator nodes have not started their mission because the update has not been implemented. However, it is coming!
When the mainnet is launched, the validator nodes will require active staking and operations to get rewarded by the DAO. The nodes that are not actively used for their mission will receive rewards as they do now. Thus, either the node NFT owners will trade it or choose to run a node (can be on Cloud) for that.
The Price Speculations for Node Mainnet
I've been asking the question to myself as this drastic update will definitely have a huge impact on the price, too. However, the question is: is it going to be a positive or negative impact on the price?
Actually, we may need to look deep into some numbers so that we can speculate on that.
As of June 9, there are only 5008 validator nodes being purchased. In the current trench, it takes $2,530 to have a brand new validator token. As long as the price of the node tokens on Hive Engine does not exceed $2000, I do not expect more than the current supply.
3.375M SPS per month and 20000 VOUCHER per day are distributed equally among all license holders by keeping their licenses in their Inventories.
So, the current distribution is calculated based on around 5000 nodes in the inventories of Splinterlands. When the mainnet is launched, the number of nodes being operated my drop if the node NFT owners do not want to run their real node systems.
Node Revenue Projection with Numbers
If the 5000 current supply drops by half (2500 Nodes), then the node owners will start receiving 8 Vouchers and 44.4 SPS with 20% APR as of now. (Voucher is traded for $0.058 and SPS is for $0.019)
If the supply drops to 1250 active nodes, then the rewards quadruple with that. So, 16 Vouchers and 88.8 SPS with a 40% APR according to the current prices.
What about the node NFTs / tokens that are not staked?
Most probably, they will create a huge sell-pressure on the market if the owners are not interested in running a node.
Let's remember, the first node sale happened at for $1000 - $1200. Since then, the node owners have already reached the break-even point. So, they will not be as hesitant as the ones who bought from higher levels. The higher trench stages were way more expensive. Trench 1 buyers paid around $1700 $1900 for their purchases and they may not have tested the break-even.
Even in the worst-case scenario, the node owners would not be eager to sell their node licenses below $400 - $500 by accepting more than a 50% loss in the trade that costs thousands of dollars. Rather, the current node owners will be eager to buy more as 1 node can stake several licenses to yield rewards! There will be a competitive market for both sides.
IMO, the current prices of Voucher and SPS will also be way more than the current levels. I'm writing this post at the all time low prices in which the node licenses bring only $0.7 per day. Yet, if the prices of tokens double, it will be $1,40 and in a scenario that the price goes 10x (which is pretty likely for SPS to be traded for $0.20 and Voucher for $.5) then the daily revenue will be $7 for the validator nodes.
In an ideal case, in which we may assume the prices go up 5x and the market stays at higher levels, then the monthly revenue will be around $105 for a node! I do not think anyone will be eager to sell their node for $500 - $600 while they can make that money in a half year.
So, in a reasonable projection, node owners will be able to sustain the operations as the market and rewards will find an equilibrium in time. In case the crypto market is green, then the price of validator nodes and the return of investment can be way higher. All we need is a recovering market when the mainnet comes.
Under any circumstances, I want to contribute to the game as a validator and keep making gains from this exclusively fun and rewarding game.
What about you? Have you got any node licenses?
Share your strategy with us below.
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