This is a brief and concise article sharing my thoughts on veVIRTUAL staking and how to navigate the points game.
If you have been active recently in the trenches of Virtuals, you may have noticed that the team has just launched one of the most significant updates ever:
Integrated Kaito, launched a comprehensive Yapper leaderboard to incentivize top Yappers and Kaito stakers to earn points.
Updated the tokenomics, introducing veVIRTUAL (20% of the points are now allocated to veVIRTUAL stakers instead of holders).
The changes in tokenomics have aligned the interests of long-term supporters (those willing to lock $VIRTUAL) more closely with the protocol (Virtuals and the agent team). This new dynamic reminds me of the xGRAIL tokenomics (during the Arb season) and the ve(3,3) tokenomics that emerged when Velodrome and Aerodrome made their mark on OP and Base.
Since 2021, through various narratives and waves, one lesson I've learned is that regardless of the situation (especially in veTokenomics models), locking up all your tokens to the maximum is very unwise.
Why?
Looking at it from a broader perspective, the value of $VIRTUAL comes from transaction fees generated by trading activity on its platform. The more projects that launch, and the more existing projects innovate and roll out exciting features, the more people will be excited to trade on Virtuals.
Next is 'Virgen Points', which are essential for participating in the Genesis launch, obtained through actively trading on Virtuals, holding/diamond-handing agent tokens, and holding $VIRTUAL (before the latest changes). $BIOS became the number one case, as this hundred-fold surge star continues to attract builders and traders into the Virgen trenches, solidifying the flywheel effect.
Virgen points have now been established as 'digital gold', with each point valued between $0.012 and $0.034 (if you earn 100,000 points daily, assuming you successfully invest points in launched projects, you can earn $1,200 to $3,400 daily).
Now... the reason I say maximum lock is a bad idea is as follows:
No launch platform can remain hot forever—trends and narratives ebb and flow like waves, influenced by various factors. The Virtuals team has demonstrated they are masters of narrative, but in the face of competition, no one knows how long the current Virtuals trend will last.
There is a threshold of 'sufficient' points earned daily (per wallet). For instance, if you max lock 150,000 $VIRTUAL and receive 150,000 veVIRTUAL, earning 1.5 to 1.8 million points daily is excessive. Brother, you don’t need that many points.
There are hidden liquidity costs. During a cycle, tokens may rise (or fall) significantly. When it is soaring, if you cannot take profits, you cannot realize gains. Subsequently, tokens will fall because nothing is eternal. All good things eventually come to an end; the key is whether you can extract maximum value from it.
Again, I emphasize—if you look at this table, you will find that the returns on points spent are highly dependent on the quality of the projects you invest in, the hype surrounding those projects (how many points are invested), and how high the FDV (fully diluted valuation) can rise post-launch. Project selection is crucial in this game. The better you choose, the higher the value you can capture from points.
How much $VIRTUAL should be locked? What is the strategy?
Assuming $AXR as the worst-case scenario (requires 4 million points for full allocation), earning 400,000 points daily for a week to a week and a half should be sufficient. This is equivalent to locking 50,000 $VIRTUAL for two years.
Assuming $WHIM as the baseline (requires 820,000 points for full allocation), earning 100,000 points daily should suffice. This is equivalent to locking 10,000 $VIRTUAL for two years.
The rule of thumb is to earn 100,000 to 400,000 points daily to ensure you have enough points to participate in medium to maximum heat launches within a week or a week and a half.
It is up to you whether to lock a portion of $VIRTUAL or the entire mid-term lock, but be sure to hold both liquid and illiquid assets simultaneously to maintain flexibility and realize profits as $VIRTUAL continues to rise.
Specific gameplay
I only max lock a small portion (5-10%) of $VIRTUAL as veVIRTUAL to ensure I have enough points to gain full allocations in high-heat launches, keeping the remaining 95% liquid to realize profits when the market warms up.
Assuming I earn 250,000 points daily, I make reasonably good decisions when selecting projects and exit at the right moment, with each point valued at $0.022 = $5,500 daily -> I can break even in just 5 days.
If assuming the worst-case scenario of each point being $0.010, that translates to $2,750 daily -> only 9 days to break even.
I plan to choose only projects with the best point value for short-term operations, while only diamond-handing tier one projects. The ultimate goal is to accumulate more $VIRTUAL, viewing the Genesis launch platform/Virgen Points as a venue and mechanism for generating returns on $VIRTUAL tokens.
Friends interested in my future choices can check out my latest Substack article (The After Hour EP.2), where I share my analysis of three upcoming investment projects.
Make sure you are clear about what you are doing. Calculate the numbers before making decisions. Don’t max lock all assets due to FOMO; that's the worst decision.
Remember, investing in Virtuals agents is more like 'trading' rather than investing in technology (at least for now); you are investing in low-market-cap micro-projects that have the potential for explosive growth.
Currently, in a bull market, with opportunities arising every day, we have password sharing.
