SFIN: a case study in price theory

[Seoulite]

The collapse in the price of SFIN is impressive to behold. It is also interesting to deconstruct from a supply/demand/price point of view.

As I said in a different post, SFIN was designed as a kind of price meme coin. Massive scarcity which promises high individual unit price which creates buzz and leads young hopeful fools to want to get their hands on just one of these limited edition tokens so that they one day too will be a whale among plankton.

The promise of SFIN was the same as most other crypto: one day this will be worth a lot. The problem is at the moment SFIN doesn’t have anything else to promise. And so there is no reason to buy except for those who have drunk the FF kool aid or those with more money than fear.

But there is every reason to sell. In fact, we’ve entered a feedback loop. The best thing to do with rewards was sell them fast and either cycle them back into LPs or just buy other tokens. The falling price made it even more important to sell immediately because the price would be lower tomorrow and so it was. This has made the price fall faster and so here we are. We have yet to reach the prices where significant buying can support the price, again because there isn’t a lot to put your faith into. Even at these remarkably low prices the order book history is sell sell sell. 

The hope is that this will turn around eventually. If Flare and FF become successful and money starts coming in then SFIN will also be desirable. It is then that the very limited supply can start to cause price increases as people scramble to get the last scraps. But this depends on SFIN being attractive, which it might not be. 

We know no one cares about voting so is there something else for SFIN to do? There is something in Flare loans but I haven’t looked into it and won’t for a long while until the danger has passed in that corner of the ecosystem. 

So we dutifully claim our rewards and keep on. Even at these prices I am satisfied with my SFIN yield but of course I liked it better when it was four times or even ten times more, let alone more than that.

I believe prices will recover across the board, just because the market is like that, and as songbird and flare finally start doing something there will be rises there too. We need patience. We need flare to launch the damn protocols. But we also want caution. The flare loans disasters have highlighted the need for intense game theory and protection against cascades. In the meantime I am happy to be using songbird for something, and FF too. For a long time we just talked about them but now I routinely do five or six transactions a day claiming and staking and stuff. It’s fun. Crypto should be fun. And we are early. I still believe that. 

 

[brianwalden]

4 hours ago, Seoulite said:

As I said in a different post, SFIN was designed as a kind of price meme coin. Massive scarcity which promises high individual unit price which creates buzz and leads young hopeful fools to want to get their hands on just one of these limited edition tokens so that they one day too will be a whale among plankton.

Hey, who you callin' young?

I think SFIN will eventually be able to be staked in what used to be called the governance pool to reap rewards from across all of Songbird Finance's products.

[Seoulite]

7 minutes ago, brianwalden said:

Hey, who you callin' young?

I think SFIN will eventually be able to be staked in what used to be called the governance pool to reap rewards from across all of Songbird Finance's products.

Didn't know that, I suspected there was some other thing to sweeten the deal. In that case it is an attractive option. 

Also if you wear crocs then you are young, or a doctor in Korea. 

[brianwalden]

1 hour ago, Seoulite said:

Didn't know that, I suspected there was some other thing to sweeten the deal. In that case it is an attractive option. 

Also if you wear crocs then you are young, or a doctor in Korea. 

Ok I looked it up. It's Kakeibo, the APY cloud. I assume they'll have that in Songbird Finance. I don't think there's as much of a governance voting aspect in Songbird Finance, though.

I think for me at this point in life, Crocs are symbolically equivalent to white New Balances. I've gone full dad mode and just stopped caring.

[Montoya]

Is Flare Finance still run by anonymous people? For me that is a non-starter. I guess playing around with the free stuff they gave out is fine, but I wouldn't put any outside money into the system.

[JASCoder]

6 hours ago, brianwalden said:

I don't think there's as much of a governance voting aspect in Songbird Finance

Back before this EXFI/SFIN all went live, I wrote exactly what you say here - as my thinking was that the behavior we witnessed in the FF Beta testing where we say DFIN's pricing rising up, it seemed unlikely the same would apply to this canary network environment.

I'm glad I acted accordingly, heh.

[Seoulite]

It’s been a while so let’s return to the SFIN story.

The token appears to have found a soft bottom around 10k CAND (which I believe amounts to around 7-8k USD) because the peg is off. Anyway let’s just talk in CAND terms because it’s easier.

The price has been falling for the same reason it was before: an endless trickle of small sells (with a few large ones every now and then) as people claim their rewards and run. Buying pressure was basically nothing, a few here and there but not enough to move the needle.

The volume has been so small that any significant buy or sell has moved the price 5% or so. In the last few days there has been a few amount more buys and so the price has climbed, hitting 15k at one point.

it is difficult to say that there is even a market for SFIN at the moment. Volume is so low that the price could go anywhere. However the same I said above still applies: until there is a reason to hold SFIN beyond speculation then people will just be selling. Speculation in terms of FF has taken a huge hit because of the recent events and controversies. I said in another thread that if flare is successful then some of that success will filter down to FF (assuming they still exist) and I still believe that. A return even to 40-50k range at this point would represent a good return on essentially free tokens. The only thing I’m doing here is risk, because FF is such a risk and because SGB is still not off the ground. But risky investments should have a higher risk reward and I am comfortable with the stuff I’m playing with. 

I am guessing that Patty XRP got significantly more burned by FF and that’s one reason he is so quiet these days. If you went all in on SFIN hoping to get a head start in the LPs then you got wrecked, no two ways about it. Basically any price you bought at except for like yesterday was a losing trade, some to the tune of 99%. 

[JASCoder]

From the very beginning of this canary network, I've been ignorant of what possible value the governance token (SFIN) can yield in the context of this, a test network. 

Is there any possible ROI reward achievable based on utility vs the market gamblers ?

[Seoulite]

5 hours ago, JASCoder said:

From the very beginning of this canary network, I've been ignorant of what possible value the governance token (SFIN) can yield in the context of this, a test network. 

Is there any possible ROI reward achievable based on utility vs the market gamblers ?

This is what Brian said up thread:

“I think SFIN will eventually be able to be staked in what used to be called the governance pool to reap rewards from across all of Songbird Finance's products.”

I also wouldn’t be surprised if they announced something like holders of SFIN will get some automatic YFIN when the main platform launches.

[JASCoder]

40 minutes ago, Seoulite said:

I also wouldn’t be surprised if they announced something like holders of SFIN will get some automatic YFIN when the main platform launches.

Thanks for the helpful feedback, friend Seoulite !

The cynic in me feels it makes sense to monitor the trade volume for SFIN now; for signs of any concerted accumulation  behavior from potential insiders - whom have gotten the early scoop on future new plans...

[Seoulite]

38 minutes ago, JASCoder said:

Thanks for the helpful feedback, friend Seoulite !

The cynic in me feels it makes sense to monitor the trade volume for SFIN now; for signs of any concerted accumulation  behavior from potential insiders - whom have gotten the early scoop on future new plans...

I’ve been looking a little but it’s hard to follow. I saw a few weeks back someone drop 40k on SFIN, but now of course the price is lower so who knows if it was just some rich kid putting some money down. In the last couple of days there was a consistent bot buying around 250 dollars at a time but again, the numbers are so small that this kind of activity could be one of our guys. 

The only thing I know is that the SFIN price is about as low in the range as anyone could reasonably expect, seeing as it was trading hundreds of times higher than this when it launched. 

But like I said any huge buys right now would just send it rocketing. Even steady accumulation would push the price up eventually. I don’t know. In terms of a value proposition I think SFIN is the weakest right now. But for me the fact that it traded 5x higher than this in the last month or two, and 10x, 50x, 100x higher than this on the chart, makes me believe it could go there again. Not financial advice, in fact I would advise people not to put any extra money into it, simply because it is such a flimsy bet at the moment. As soon as a different option for yield farming comes along on Flare or SGB I might give up on SFIN, not sure. I plan to just keep it as a Hail Mary investment that could pay off years down the line.