dCity Investments - Is a low SIM price bad?

Most Hive-engine tokens are either tribe tokens, like Leo, Pal, CTP etc. Or they are investment tokens like SPI or BRO. But SIM is a utility token, used to trade dCity cards or buy new random dcity cards for 800 SIM a piece. It is this 800 SIM for a random card that gives SIM its realitvely stable price.

The reason for this is that you can buy random cards for 4 Hive or for 800 SIM, this should normally peg the price of SIM at 0,005 Hive or 1 Hive at 200 SIM. In the ideal efficient market this would indeed be the case, however because of the relatively small number of people involved in trading SIM, the SIM price goes up and down.

But especially if your purpose is to grow your dcity, which means you want to buy random cards, since that is the most efficient way to grow. Then you can effectively use it when the price of SIM is either too high, or too low.

When the price of SIM token is above 0,005 Hive, then you should sell your SIM to get 4 Swap.Hive for less than 800 SIM. So you will effectively get a discount on the purchase of your next random card. You should then not withdraw that 4 Swap.Hive from hive-engine, but send it straight to @dcitycards. You will then automatically get your new random card.

If you still want to buy the card with Hive, then you should withdraw the Swap.Hive through beeswap.dcity.io or through de.leofinance.io, because there you will only pay 0,25% fee for withdrawl. If you use the standard hive-engine withdrawl, then you pay 1% fee for withdrawl. This means that to make this route profitable for you that the SIM price needs to be at least 0,0050125 Hive for beeswap and leodex to make the withdrawl profitable for you. For hive-engine due to the higher fee this is 0,00505 Hive.

Anything above that will save you some Hive or SIM when buying cards and in the long run this adds up and help you to make a better profit than other people who don’t pay attention to this.

But, what does it look like when SIM is priced too low?

When the price of SIM is low enough, you want to buy SIM with your Hive. Perhaps you are in the top300 of the dcity rankings and you get daily Hive rewards or you want to use your Hive rewards from curation and blog posts to invest some more in dcity.

In the ideal market situation you would not buy SIM, but instead simply buy random cards with your Hive in the game. Depositing Hive to Hive-engine costs you 1% if you use the standard deposit and 0,25% if you use beeswap.dcity.io or Dex.leofinance.io. So the price of SIM then needs to be lower than 0,0049875 in case you use beeswap or leodex and 0,00495 in case you use the standard deposit from hive-engine.

The added benefit for the game and the SIM token economy is that you will help stabilize the price by acting this way. You can even set buying and selling orders for prices a bit higher and lower than the prices I calculated for you. This way you can make a nice profit when a big sale clears out the order book.

Every once in a while a big player will decide to sell or buy a big chunk of SIM because they want to buy 100 Basic Homes from the market using Swap.hive or SIM. When they sell or buy enough they will trigger your order and you will make a profit.

Ofcourse, the tax system also helps to stabilize the price, as the average SIM price over the last 3 days determines the Income tax. This adds another reason why you would want to help stabilize the price of SIM, as you will be paying less tax when the price is higher.

As dcity grows and more players arrive I hope that the buy and sell-wall on hive-engine will get closer and closer, so that the SIM token is nicely pegged Hive. Ready to go to the moon ;)

So, is a low SIM token price bad? Yes, it is because taxes will get higher. But you can make a profit when the price gets low enough and get a bit of discount on buying new random cards in the game.

This game is decentralized and so is the market for its token. So together we need to make it work. Let’s make dcity grow and stabilize the token while we are at it!

Thank you for reading this post. Do follow me if you want to read more about dcity and about investment opportunities.

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