1/7 The SparkDAO (a subsidiary of MakerDAO) SPK pre-mining phase does not seem particularly attractive from a mathematical perspective.
2/7 According to MakerDAO's economic model, all of its subsidiary DAOs (SubDAOs) are expected to issue 2.6 billion tokens each, with 500 million designated for mining and an additional 100 million for sale in the first year. https://endgame.makerdao.com/tokenomics/subdao-tokenomics
3/7 However, in this pre-mining phase, only 6M $SPK tokens have been allocated to the $ETH pool, and 24M to the $DAI lending pool. This accounts for only 5% of the first-year issuance and a mere 1.15% of the total supply.
4/7 Assuming that $SPK can reach 15%-20% of the FDV market value of $MKR (taking an optimistic view), then one $SPK token would be valued at around $0.1 USD. This implies a market capitalization of $3 million for 30M $SPK tokens. PS: Considering the presence of six other SubDAOs, 15%-20% is already quite promising.
5/7 So, how will this $3 million be distributed among participants? It will be divided among assets with a total locked value (TVL) of approximately $250 million (191M DAI and 56M ETH). Rough calculations suggest a yield slightly above 1%.
6/7 According to the plan, the pre-mining phase might not conclude until as late as May 2024. This means that, over approximately six months, the expected yield will only be slightly above 1%, which is less competitive compared to holding $sDAI. https://forum.makerdao.com/t/proposed-spark-pre-farming-airdrop-formula/21786
7/7 Of course, if one argues that FDV is merely a meme, for instance, starting with only 30 million $SPK tokens in circulation and a unit price based on 1 USD (i.e., ~2X FDV of its parent DAO $MKR), then that's a different story 😂.
Certainly, we should exercise caution, and if MKR demonstrates exceptional performance in the future, $SPK will undoubtedly benefit as well. However, as of the current situation (as of October 2023), from a static standpoint, the attractiveness of $SPK appears relatively limited.
Author:
@0xTodd | Nothing Research Partner
Nancy Lin | Nothing Research Analyst
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