$RSWP and the importance of reinvestment
Just in case you had not done the maths, I did it all for you! Lets look at the power of reinvesting your $RSWP earnings!
TLDR; look at the pretty graph — you get the idea.
First and foremost, when talking about ‘compounding’ RSWP we are compounding our stake, or reinvesting our earnings. By reinvesting our earnings in total we should (in theory) maintain our ratio of ‘personal stake / total pool’ which we will express as a percentage.
Variables for the scenario:
- Emission rate per day = 63,360 RSWP
- Total Pool size = 5,600,000 RSWP
- Personal Stake = 10,000 RSWP
- Stake/Pool Duration = 300 Days
So knowing that the emission is a fixed rate per day of RSWP then we are ‘competing’ with others for a slice of the 63,360 RSWP. Our slice is simply our stake divided by the pool size, so, 10k / 5.6Mil = 0.1786% for the example (Day 1).
We have 2 options:
- Reinvest our earnt RSWP which would be 113.1419 per day
- Withdraw the RSWP, gamble it, sell it who knows. Just know we did not reinvest it.
Leap ahead to day 100:
- Reinvesting is still earning us 113.1419 per day. Because you now have 21201 RSWP as your personal stake and 11,872,640 in the pool. which still equals 0.1786% of the emitted RSWP
- Withdrawing the RSWP to use/sell. Your personal stake is still at 10,000 however the total pool size has not grown to 11,872,640. Your cut is 0.0842% or 53.36 RSWP (you have lost over half the daily amount compared to the reinvestor above).
Jump forward to day 300:
- Reinvesting is still earning us 113.1419 per day. Because you now have 43829.31 RSWP as your personal stake and 24,544,640 in the pool. which still equals 0.1786% of the emitted RSWP
- Withdrawing the RSWP to use/sell. Your personal stake is still at 10,000 however the total pool size has not grown to 24,544,640. Your cut has now reduced to 0.0407% or 25.8 RSWP (you are now down 75% compared to the investor that reinvested). Unless buying RSWP there is no way to regain lost ground and the loss is compounding.
From the graph for a 10k original stake:
- Reinvesting in blue
- Not Reinvesting in red
NOTE: This article is theoretical, with multiple variables in a constant state of flux which I have assumed are constants for my sanity. Nothing I say here should be construed as a guaranteed future outcome or financial advice. I am an internet stranger with a giant bag of $RSWP. Use this information only as _part_ of your due diligence — DYOR in detail.