SGB FTSO delegation rewards compounding, weekly vs four weekly

[PunishmentOfLuxury]

I'm trying to work out whether it's worth collecting FTSO rewards every week and wrapping and delegating them vs every four weeks.

For this I used a power calculator: http://www.csgnetwork.com/mthpowers.html

Assuming the rewards are about 0.4% per week:

1.004 to the power 52 is 1.2307, so 23.07% annually.

1.016 to the power 13 is 1.2292, so 22.92% annually.

That seems like a pretty minor difference. Are my calculations correct?

With the FLR token in future, epochs will be twice per week. Assuming the same rewards rate, 0.4% weekly or 0.2% twice-weekly:

1.002 to the power 104 is 1.23095, so 23.095% annually.

Thoughts?

[BillyOckham]

1 hour ago, PunishmentOfLuxury said:

I'm trying to work out whether it's worth collecting FTSO rewards every week and wrapping and delegating them vs every four weeks.

For this I used a power calculator: http://www.csgnetwork.com/mthpowers.html

Assuming the rewards are about 0.4% per week:

1.004 to the power 52 is 1.2307, so 23.07% annually.

1.016 to the power 13 is 1.2292, so 22.92% annually.

That seems like a pretty minor difference. Are my calculations correct?

With the FLR token in future, epochs will be twice per week. Assuming the same rewards rate, 0.4% weekly or 0.2% twice-weekly:

1.002 to the power 104 is 1.23095, so 23.095% annually.

Thoughts?

Due to my math-amnesia I can’t confirm or deny your calcs.  But I do know that over time small percentage gains accumulate and the difference can be significant over time.

 

I do think the claim and wrap procedure will become automated at some point so there’s that to look forward to…

But it’s a simple thing to do so unless your time is worth a fortune I’d fit it in if possible….   just my two cents worth.  
 

[BillyOckham]

Having said that….   probably a far bigger factor is ensuring your delegations are to providers not slipping too far down the performance list.

So if you want max returns it’s important I think, to be familiar with how the FTSOs are performing.  I try to keep some loyalty, but I can’t actually support that logically.    

On the other hand, chasing the highest providers will likely result in lower performance since delegation changes are at best an epoch behind as it were.  
 

No charge for those thoughts….  probably not worth the two cents.  

 

[Guest]

4 hours ago, PunishmentOfLuxury said:

I'm trying to work out whether it's worth collecting FTSO rewards every week and wrapping and delegating them vs every four weeks.

For this I used a power calculator: http://www.csgnetwork.com/mthpowers.html

Assuming the rewards are about 0.4% per week:

1.004 to the power 52 is 1.2307, so 23.07% annually.

1.016 to the power 13 is 1.2292, so 22.92% annually.

That seems like a pretty minor difference. Are my calculations correct?

With the FLR token in future, epochs will be twice per week. Assuming the same rewards rate, 0.4% weekly or 0.2% twice-weekly:

1.002 to the power 104 is 1.23095, so 23.095% annually.

Thoughts?

One important note. Remember that these are not rewards. These are distributions. Assuming your calculations are correct, you are getting 23% more SGB/FLR. You are not getting 23% more money. 

This is important 

• If you need to pay taxes on that 23% worth of income at the time you receive it
• If you have purchased SGB rather than received it as an airdrop.

My recommendation is to look at these numbers with the value of holdings in fiat and see if that tracks with your expectations.

[Montoya]

Anyone know if bifrost or metamask has a function to allow for tracking taxable value at the time of receipt and calculating taxes? Would be a great idea.  I love the thought of delegating but this is going to create a tax nightmare. From what I understand, one would need to keep track of the value of SGB at the specific time of receipt for every epoch. And this would need to be aggregated and taxes paid on it quarterly.  *In the US*

Edited December 12, 2022 by Montoya

[Gringo]

Quote

With the FLR token in future, epochs will be twice per week. Assuming the same rewards rate, 0.4% weekly or 0.2%

 You shouldn't assume the same rewards rate for FLR. The inflation rate will be much higher for FLR (doesn't matter if the "proposal" is aproved or not).

I still find no "logic" for the price of FLR to be greater than the price of SGB so I will act accordingly.

Currently 1 FLR (Bitrue IOU) buys you more than 33 SGB. Wish it stays the same at distribution time 

 

[Guest]

4 hours ago, Montoya said:

Anyone know if bifrost or metamask has a function to allow for tracking taxable value at the time of receipt and calculating taxes? Would be a great idea.  I love the thought of delegating but this is going to create a tax nightmare. From what I understand, one would need to keep track of the value of SGB at the specific time of receipt for every epoch. And this would need to be aggregated and taxes paid on it quarterly.  *In the US*

Neither do, to my knowledge. You can always get your transactions from the explorer but if you want to keep track of taxable value, it's easier to just use Koinly. I'm not aware of others who support Songbird as well as Koinly does. 

That said, if you have participated in DeFi on Songbird, you have your work cut out for you. If that's the case, I'd highly recommend that you get on with tracking your income and transactions on Koinly asap. 

[ftso_au]

12 hours ago, BillyOckham said:

I do think the claim and wrap procedure will become automated at some point so there’s that to look forward to…

There will be some advances in this area on Flare. 

[ftso_au]

4 hours ago, Ripley said:

I'm not aware of others who support Songbird as well as Koinly does. 

I trialed Koinly and Cointracker in parallel for a few months, the former was by far superior.

I don’t know why anyone would even consider trying to track this info themselves, with spreadsheets, from the transactions on block explorers.

[PunishmentOfLuxury]

@BillyOckham Thanks, yes it's more important to keep an eye on which FTSO is performing well, week by week. Generally I split my WSGB three ways, but often I don't bother to change delegations every week as long as my chosen oracles are currently in the top half dozen or so. 

You speak of automation, but it seems to me that selecting the FTSOs is something that needs to be done by the WSGB holder - difficult to automate that effectively (in a maximally profitable way) if the rankings jump around a lot.

@Ripley The US tax situation looks like a nightmare. Thankfully I live in a jurisdiction that does not levy taxes on airdrops or distributions or anything extra-territorial.

@Gringo Agreed. My assumption was for illustrative purposes only. There's no telling how the relative token values or FTSO reward rates for SGB and FLR will compare.

Now, please will anybody confirm that my calculations of compound interest were correct?

[Gringo]

Quote

Now, please will anybody confirm that my calculations of compound interest were correct?

I can't, It sounds counterintuitive to me too. But I'm lazy to do the maths since FLR will shield more nominal units per Epoch anyway (because of the "proposal").

 

Quote

@Gringo Agreed. My assumption was for illustrative purposes only. There's no telling how the relative token values or FTSO reward rates for SGB and FLR will compare.

The only negative scenario for SGB compared to FLR that I see, is if Hugo considers Songbird as a "threat" to Flare and tries to deprecate it. (i.e. not using it as a test network and implementing directly on Flare, etc.).

There is no way I can concur with the idea that the most inflationary chain can sustain the larger price/unit on the long run. I will act accordingly, I don't mind "losing" 200% APY NOMINAL "rewards", I'm fine with a more normal and down to earth APY  (that anyway so far means a 90% destruction in real value, lol)