Musings on Splinterlands, Arbitrage, and Patience

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Not Financial Advice

It's a rare occurrence to get real arbitrage opportunities. They tend to close up just as quickly as they open. When bitcoin was new you could mine it for pennies but you couldn't sell it for enough to cover those pennies so it seemed like a loser and most people quit mining it.

If you believed in it or you just enjoyed playing around with the tech enough to eat the cost for a while, you eventually got rewarded handsomely. And that's the point.

Many of us in crypto look at everything as if its supposed to be a wide open arbitrage opportunity all the time even though that makes no sense. Like if you can't put $3 in and immediately pull $4 back out that its a scam. We see 1000% APR and think its real. If an NFT project doesn't run up like they all used to, we call them rugs. I heard a Youtuber call Splinterlands a rug pull the other day because he didn't like the staking requirements.

Arbitrage opportunities usually happen at the edges, not straight down the middle for all to take advantage of. They happen during a launch of a project or during events. They usually happen when a system is new, when its breaking down, when something major is changing, or at the outer edge of skill and resource availability.

They can usually be attributed to a lack of efficiency in a system and they usually close up very quickly as people rush in to capitalize on those inefficiencies.

During that time some people get totally screwed while other do very well. The arbitrage opportunities that stay open are those that can only be captured by a small group of people due to it requiring a large dedication of resources, timing, or unique skills needed. Like high speed trading on Wall Street where institutions spend billions to get the order a fraction of a second faster than the institution next to them. Until its instance, there's inefficiency to be arbed. But if you don't have the specialized skills, knowledge, starting infrastructure, risk appetite, and capital, you aren't getting in on it.

The Bot Farm Arb

Consider the bot farms in Splinterlands as an arbitrage opportunity. The reason I wasn't concerned about soulbound reward cards creating new bot farms is because cards aren't the barrier to entry. Making a few cents per season makes no sense if you have to pay $10 per account for the spellbook and you don't know what changes tomorrow will.

The farms started when DEC was 1.5 cents and you could make 25 cents per battle in bronze using ghost cards. That's when they multiplied rapidly because they paid for themselves quickly. Once they paid for themselves, they were almost free to keep running and arb those pennies later.

When 25 cents a battle dropped to a few cents per day, it was still a good opportunity to run 10k bots if you'd created them already. Creating new ones at that point would have been nuts. The arbitrage opportunity at that point was only exploitable by those who were already in the door.

Splinterlands has always had another arbitrage opportunity that has never closed. If you got in big during alpha and rolled your profits as the game went along, you are still very profitable.

But for those of us that can't go back in time and buy in big during Alpha, there's one big arbitrage opportunity staring us in the face. It's the opportunity to buy at the bottom.

Just like Bitcoin, as the price of SPS goes up, so do the tools to mine it. If you've ever heard the phrase, sell picks and shovels, it means it's usually more profitable to be to seller of the mining tools than to actually get out there and try your hand at mining.

But if you bought the tools when no one cared about mining and the tools were dirt cheap, thats a different story. In this case not only can you buy the tools for cheap, but you can mine like crazy before anyone even knows its here.

And here's what many people aren't looking at when it comes to SPS. With new SPS staking requirements, SPS is now a mining tool that is needed to mine more in the future. You are mining the mining tools and the gold at the same time and there's no where else to get them.

If you believe in this game and economy (and honestly I don't know why you wouldn't at this point if you believe in crypto, gaming, and crypto gaming), the arbitrage opportunity isn't to mine tools and sell them cheap. It's to mine tools and wait until other people need them badly enough that they'll pay a ridiculous price for them. It's to have all the tools you need at this price so when SPS is $1, you can profitably mine it because you spent 1/50th the price on the tools you need to mine it with than everyone else running in to try to get some.

The Edge Case

Arbitrage opportunities happen at the edge cases and you will then be the edge case. You will be one of the few who was here mining SPS no one cared about it. They won't be able to go back in time and get 2 cents SPS and you won't need to (although you'll wish youd gotten more).

I know it seems ridiculous now but if the Splinterlands team reaches its goals for the platform of Splinterlands (not the game), SPS will not just get to $1. It will be multiple dollars. I can easily see a day when it gets to $3-5 or more, market cap be damned. Not to say it has to get there. For all we know, today's 2.3 cents is the highest its ever going to go again but the upside potential is worth the risk of holding for me. DYOR

But imagine for a second SPS gets to $5. Look at your daily SPS earnings and imagine SPS at $5, assuming you didn't sell any of it. (also, not financial advice but you should have definitely sold some before it gets to $5) How much would each of these days of winnings be worth to you? How much would the cards you have now be worth to those trying to get $5 SPS later?

For me, I like playing around with the tech. It's a game. I also believe in the project and I'm fascinated by its direction. I'm here willing to hold and reinvest and even bring in some outside funds. It may pay off and it may not but for me, this is my version of mining bitcoin when it wasn't profitable and holding it anyway.

Posted Using LeoFinance Alpha



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22 comments
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!LOL

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!WINE
!LOL

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(Edited)

PIZZA!

$PIZZA slices delivered:
imno tipped stdd
@stdd(4/15) tipped @imno (x2)
lolzbot tipped imno

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Great thoughts! I hope so in the future, as I am accumulating as much as I can now).
!PIZZA
!invest_vote

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Me too. Just stacking and waiting for better days! Thanks for the vote

!WINE
!PIZZA

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I have long liked the way you reflect in your posts. Keep it up!
!PIZZA
!invest_vote

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Nodes are paying out a much higher apr especially when you include glx drops to as i think at 600-800 the payout is like 45% then the staked sps gets the drop of glx earning at 95% right now. Also buying glx and glx nodes bc i have been funding my sps with glx purchses agian like i did when it was 500% apr i bought like 400K glx or something and earned a crap load sold it each day for sps then kept going until i hit a million sps from 500K sps. Now im back at 200K glx with 10 nodes and 1 million sps with 18 nodes. Want to get a few keeps in additon tothe one i have since there are two selling for 2500 might buy those and seeif i can sell my other plots id rather own 3 keeps and the 2 magic and 3 occupid plots and just one or two grain plots in each tract or region toput runi on them since i have 6 and that will boost my production. Also looking to possibly load a few more runi bc ppl will probably want to rent them at pretty high rates or i can use them on land to make it so i dont need to have dec and get the extra pp on it. Then ill have 8-10 runi maybe ill buy one gold one after i make additional money just so i have one. If castles come down to say 15K ill buy one of those i thinkn owning the things that collect taxes will be the best bc you just suck up other ppls production with fees and if i had a castle and 3 keeps sucking in fees that would be good. Plop a few good cards on them and let them get the point where the power diminishes and let it ride. Also load up the magic cards so i canproduce spells and sell them aswell as get the sps from occupied with runi. Have afew runi to rent out with agreements withother players withsay no runi and legendary land or epic land with magic or occupid and take a split of 50% of the runi bonus after allother bonuses are applied bc with out that they wouldnt get it so probably can askfor a high split

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Im targeting .5 for a high maybe a spike to 1-2 if it lists and other things align. But a spike beyond that wont be sustainable for long unless there is a massive influx of players or use case for sps and players or the other games bring in players bc bottom line is there needs to be more players who just play and dont care as much about the money in order for ppl to make money which is my main focus is getting the assets that make money rather than spend money to play. Im outsourcing all my play now to nfty soon where i can have many accounts with a couple with owned cards then rent for the rest and scale up and down as its profitable to rent and rent a player

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if it hits .5 im selling half of the million i have and probably a node or two depending if it hits the next price floor and if there selling ill deff be selling half to take out say 50K from the nodes and 250K from the sps which will be pulled out and invested in non splrelated cash flow so i have a steady stream not related to gaming probably in wbtc btc eth weth mkt makers with short futures contracts so i can just collect fees and hedge the price fluctuations. Then some traditional assets like 50-100K in the voyager pacific tax lein fund which will give me about 16K a year in steady passive income and more once i add my own leverage to it since the fund has no leverage and 50% leverage is what i want so ill borrow money from my brokerage to buy half of it and make sure the leverage doesnt go over 15% in my brokerage that will get me like 24% a year on the 50K and 50K of debt. Then the rest will goto operating various nodes like possibly 32 eth , have some pools like matic x matic that give 40% apr , buy into some smaller start ups and look at other daos and defi positions to manage. Plop them all in my LLC and raise capital once the performance is documented for 6 months as a e sports focused fund that runs the games collecting fees from nodes, market making, asset rentals, flips from group buys, organizing group buys using my store for the fund and mark it up like 10% to sell from my flipping entity to the fund, start a node shards fund and offer better terms than all the current node services and ensure all the fees and splits are clear same with my curation services which willpay much more since ill be posting on about 20 other sites to boost the rewards and convert into sps, glx, hive/hbd and nodes for both and take my sps to delegate it out amoung many good players to get a good roi on my investment. Now is deff the time to get more nodes and sps bc many will need to rent it oif they want to play once it runs out and also get a bunch of rented decks to play with rented players and also use the 4 bots i have to compare nfty and kapital dao with the various bots. Also going to develop my own sort of bloomberg terminal for all the assets on spl , td and glx as well as spt and a few other tokens. Going to have analysis and detailed history on all of the large accounts and audit the freaken hive watchers group to see how many times they break there own rules. Write ideas for posts about my battles and have ai write the rest so i can plow out at least 100 posts a day from various accounts hope to get it to 1000 if i can get .1 a post plus add it to 20 other similar sites say i get .5 all together per post at 1000 thats 500 bucks a day. I want to use zapier to post to my blog then have it autometed to post right to the 20 other sites and have the articles that i wrote just re worded by jasper and that can just be done daily to really suck in money to plow into sps glx and keep half to invest in other things so if ican invest 250 a day into the main assets of spl , glg , soulkeep and then take 250 a day and invest in real estate syndications ill never need to pay tax bc the real estate will offset any passive income from the game and as long as i keep investing and using the distributions to live on ill look broke on paper but get cash flow that is never taxed by fica or income taxes so if i get up to say 200K thats like making 400K in a w2 job. like last year my real estate gains were 100K ish and no tax bc of passive loss carryovers. beautiful bc if it was taxed like a w2 id end up with 50K not 100K. The source of the income matters and if you can get non fica income and have it be a business you can basically never pay any tax if you know all the loop holes to write off as much as is allowed by the tax law but make sure to leave enough taxable income to use the standard deduction up but not over 17000 bc you lose free healthcare , discounted rent , fee cell phone, cablee, internet etc. Its crazy how much you can legally plan for your income to be at x level and keep it there while growing cash flow and basically defer taxes until you die. Your income will grow somuch faster without paying like half to the govt. If yourincome ever gets to high just stop earning in the taxable accounts and flip all the operations to the non taxable and use a 401k loan to pull money out to use if needed until the year ends and then you can make sureto invest more in tax friendly investments and keep that income in the sweet spot to get the savers credit , medicaid , low rent in nice buildings, possibly food stamps but i think they look at assets so i dont think i can get them the only reason i get medicaid is ny doesnt look at assets just income on your tax return lol. There are more loop holes and things i can find to but i havent had the time like start up ny tax credits are ones im looking into for my spl business if i can get those and say operate that out of a office in the basement of a smaller apt building in a opportunity zone ill get to not pay real estate taxes for 10 years , no income tax in ny for 10 years so in this case the bonus depreciation is great for federal and for ny its not allowed so you get todeduct alot fd and ny no bonus so you stretch it out and after a few years you will have a profit in ny but pay no tax and since this is a on the edge industry can probably get qualified as a qetc company and that means i get a 20% credit on my investment in it if i hold for 10 years but you get it right away so you get 20% instant return and then you have 80% left when the operations are just starting , r and d credits likely can get those, and some of the activities wont be subject to fica like market making and trading and staking if you dont sell and borrow against it you wontpick up gains until its sold if you take the postion staking is not really income until sold. The opp zone classification will let you notpay any future tax on the appreciation of the businesss or building for federal purposes so its like a retirement account you can use a loc against the appreciation to keep refinancing it and pulling out money tax free to invest more. Once you get that going thre is no stopping it like a snowball just need to get one done and make sure its a success then hyou canattract investment and really make money on the real estate. I love the tax law here its complex but allows you to never pay tax if you know the loopholes.

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May also start looking in countries that the usd goes really far in and have access to a phone and internet if i can find one that it goes farther in than any other i can pay less but the player gets more value in there country and i can make a bigger margin as well. Do that on 50 accounts and harvest soulbound cards , have a specific tournament team to play tournaments with all the accounts and have a team to play forge and glg but i will likely only have a 100 packs i open the rest ive sold or will be selling or holding for way later to buy more nodes bc those will keep producing after glg staking stops and then buy stadiums as well in the pre sale or promo sale when ever that comes out to get a few depending on how much like if there 500-1000 ill probably buy 20 if there 5000 probably like 1-2 and maybe another 2 later if more prob one and hold off and see

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Nodes sps and glx and glx nodes are the play i think right now i have a keep and some land so thats prob enough for me for land im waiting and going to see what happens with it before i sink to much in i think 30 plots and a keep is good enough when i am more focusing on getting a massive human farm to play my accounts more efficiently anf when i get a good player they can play like all the accounts in the guild then have not as good ppl play the ranked battles daily and separate single team play all the tournaments and get them really good at tournaments. Hoping then with 25-50 accounts i can suck in the soulbound cards and gladious cards for adelayed payout and also create full decks just of those which ill bot with one or all of the bot services in wild and see what they do if they do ok and make money ill keep doing that and have a page listing them for lease , lease to own and for out right sale of the acount to ppl on a market that ill make up to sell them bc ppl will want to skip earning some of them and will pay for the accounts and ill price them based on mkt prices of the card or probably 2-10X the cp or power value of the card and for gold ill probably double it and see if i can sell accounts early when there are no prices and hopefully get a bunch more than they sell for

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Unless the money comes into the dao through new fee mechenisms and the fly wheel starts that is when sps will move until then if it stays the 20millon to 30 millino range the price will dec by 66% over the next few years so the most important thing now is getting the fly wheel going by not giving out alot of dec at all i would take that shit off the leader boards and just give out merits or something for leader boards and dont give much outin land either just a minimal amount enough to get dec for pplwho need it to run there land then all ofthe sudden pplwillburn sps for dec and i wont be one of them unless there is a real arb opportunity bc i wont need it for land bci only plan on using my runi on it and jacking up the plots i have then for non runi plots use dec b or buy more runi if i can get a few more for 500-600 my others cost 200 ish due to the cost of flipping the packs neeeded to win them

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Unless the money comes into the dao through new fee mechenisms and the fly wheel starts that is when sps will move until then if it stays the 20millon to 30 millino range the price will dec by 66% over the next few years so the most important thing now is getting the fly wheel going by not giving out alot of dec at all i would take that shit off the leader boards and just give out merits or something for leader boards and dont give much outin land either just a minimal amount enough to get dec for pplwho need it to run there land then all ofthe sudden pplwillburn sps for dec and i wont be one of them unless there is a real arb opportunity bc i wont need it for land bci only plan on using my runi on it and jacking up the plots i have then for non runi plots use dec b or buy more runi if i can get a few more for 500-600 my others cost 200 ish due to the cost of flipping the packs neeeded to win them

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Unless the money comes into the dao through new fee mechenisms and the fly wheel starts that is when sps will move until then if it stays the 20millon to 30 millino range the price will dec by 66% over the next few years so the most important thing now is getting the fly wheel going by not giving out alot of dec at all i would take that shit off the leader boards and just give out merits or something for leader boards and dont give much outin land either just a minimal amount enough to get dec for pplwho need it to run there land then all ofthe sudden pplwillburn sps for dec and i wont be one of them unless there is a real arb opportunity bc i wont need it for land bci only plan on using my runi on it and jacking up the plots i have then for non runi plots use dec b or buy more runi if i can get a few more for 500-600 my others cost 200 ish due to the cost of flipping the packs neeeded to win them

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