Pledge PRIME or purchase PROMPT directly? Research on Maximizing Wayfinder Revenue

Author: DMD

Compiled: Tim, PANews

Note: This article is not a financial advice and is only provided for information reference.

Over the past year, I have been sharing estimated earnings data for staking PRIME tokens to obtain PROMPT, which are often referenced by the community. After actual verification after TGE, I am glad that these estimates have high accuracy:

The total number of PROMPT integrals estimated by this model = number of locked PRIMEs × duration × multiplier. The pledger will obtain the corresponding share of points based on its pledge ratio.

When comparing the model with three different wallets, including my own wallet, the estimated model's prediction of PROMPT reception is about 20% higher than the actual value. I think there are two main reasons for this:

1. I originally expected that 40% of the PRIME in circulation would be pledged, but in fact the pledge ratio was as high as 45%, which means that the total number of points exceeded expectations, resulting in a more obvious dilution effect.

2. The total number of PROMPT points is still undeterminable because some pledges may release their pledges (which will reduce the total points) or continue to expand the pledges (which will increase the total points).

In addition, earnings estimates are highly dependent on the prices of PRIME and PROMPT. When the price of PRIME falls, the yield rises and users are incentivized to buy more tokens and pledge them. Of course, the yield still depends on the final valuation of PROMPT.

With more information disclosed after TGE, I think the table below is probably the most accurate prediction of the yield on pledged PRIME. This update has considered the situation where more PRIMEs are pledged (by generating more PROMPT points), while maintaining a valuation of $500 million in FDV. In addition, a new column of data was added to exclude the 28% token share of the community airdrop when TGE was airdropped:

 Brief summary: Maximize staked PRIME tokens immediately and will receive 106% profit in the form of PROMPT within the next 797 days.

It can be clearly seen from the above table that since June 2024, earnings opportunities have dropped significantly. This decline is mainly reflected in two aspects: the multiplier effect continues to decay, while the PROMPT points accumulate over time. The later participants enter the field, the lower the proportion of points that can be obtained. This situation is particularly significant after TGE, where 28% of the total supply has been released, and new tokens will enter the circulation market every week for users to apply.

Scenario Analysis: Pledge PRIME and Purchase PROMPT

The following analysis compares the two options faced by market participants: whether to buy PROMPT directly in the open market, or by purchasing PRIME and staking (in the process of obtaining PROMPT income). To do this, we will assume that PRIME will maximize the pledge according to the 49.8-fold earnings multiplier described above, with a pledge period of 797 days.

Buy a PRIME token worth $1,000 today and you will receive about 333 PRIMEs. According to the data in the table above, if these tokens are pledged for maximum, 333×39690 points, that is, 13.2 million points can be generated.

Given that the plan is to allocate 400 million PROMPT tokens to all points stakers in proportion to 1.8 trillion total points, the current 13.2 million tokens should generate approximately 2944 PROMPT tokens. Considering that 28% of PROMPTs have been distributed, we will make equal-scale adjustments to this, that is, the corresponding token output of this component will drop to about 2,119 PROMPTs. It should be noted that this calculation is not absolutely accurate, because the PROMPT distribution mechanism actually depends on the daily points accumulation situation, but the above method provides a concise and intuitive estimation framework for understanding the returns, and its numerical range is basically reasonable.

The following table applies this number to the valuation scenarios of PRIME and PROMPT at the end of the staking period:

On the other hand, for those who buy PROMPT tokens directly, it is easier to calculate. Ultimately, assuming that the price of PROMPT is $0.5, you can get 2,000 PROMPT tokens with an investment of $1,000, which is less than what you can get by purchasing PRIME tokens and performing full pledges.

Of course, for now, the advantage of buying PROMPT directly on the open market is that you can make a profit when the local highs of PROMPT appear at any time.

Assuming that at the end of the staking activity, PROMPT is valued at US$1 billion and the price of PRIME remains stable, the value of the staking period Era coins will reach US$3118 as described above.

However, given the volatility of cryptocurrencies, PROMPT is likely to hit an all-time high in the next two years (such as reaching a fully diluted valuation of $4 billion, similar to the FDV level that the VIRTUAL project had reached during the peak of the AI ​​agent boom), and then fell back to a more reasonable $1 billion FDV valuation range.

If you buy a PROMPT token worth $1,000 today in the open market and sell it at the current local high, you will get $8,000, which is more than twice the value you get through pledging PRIME.

Summarize

Those who wish to gain PROMPT exposure, whether through full pledge of PRIME or purchase directly on the open market, should consider the following factors:

• What do you think the final value of PRIME and PROMPT will be at the end of the 2-year staking period?
• What do you think the historical highest price of PROMPT will be in the next two years? The most important thing is, can you sell it at the highest point?

Ultimately, it depends heavily on the individual situation. The undeniable fact is that most investors cannot successfully sell at market highs. Meanwhile, as many PRIME holders have experienced it personally, locking the tokens for more than two years and watching their value plummet by 90%. Of course, given PRIME's leading position in the Web3 gaming space and the multiple positive catalysts coming this year: including the highly anticipated releases of Colony and Sanctuary, it's hard for me to imagine PRIME falling more than 50% from its current price.

In addition, the team is already considering creating a new token economic regulation mechanism to achieve deflation of PRIME tokens and thereby increase value accumulation, which makes me convinced that the downside space of the game token has been effectively controlled at this stage.

Finally, I want to declare that none of the above content constitutes financial advice, and I am not responsible if any of the above calculations are incorrect.