NMR earned: logical to sell or hold?


#1

I cannot find substantial objective/factual information on the below:

NMR trading price is highly volatile in the ‘digital/crypto currency’ markets - converting NMR back into USD raises an interesting challenge:

  1. What logical reasoning is there to either immediately sell or hold the NMR earned in a tournament? (over & above the amount of NMR you hold to stake on the next tournament).

  2. If holding, how do you assess the intrinsic value of an NMR token beyond simply speculative demand i.e. assuming you aren’t just speculating, why else would you hold onto NMR?

To provide context, my concern is that NMR is at the mercy of the highly irrational ‘digital/crypto currency’ market (with associated speculative risk leading to boom/bust cycles) - what ‘fundamentals’ (for lack of a better term) would make NMR worth holding onto?

I appreciate any views/information.


#2

NMR has the ability to generate USD by being used in a stake. When successful, both cash payout and NMR are returned (like a dividend). When not successful, NMR is destroyed. Over the last few tournaments, the average for success rate is 79%. The current value of NMR on bittrex is around $35.

So we want the payout from staking of 79% of a NMR to equal $35, otherwise it is better to sell on the markets. This equation is 0.79 / Y >= 35 which becomes Y <= 0.023 where Y is the confidence we need to stake at. In the last tournament the lowest confidence was 0.053.

This makes it seem like selling is the better choice, except the above equation assumes you want to make that full value in a single week. Since NMR is returned on a successful stake, we can add the variable X to our equation to represent the number of weeks we want to take to earn as much as we can make by just selling (0.79 / X >= 35 / Y). Below are the results of Y for various X:

  • X = 1; Y = 0.023
  • X = 2; Y = 0.045
  • X = 3; Y = 0.068
  • X = 4; Y = 0.090
  • X = 5; Y = 0.113

So clearly if you’re willing to wait a few weeks to earn the cash (and then more) it is better to engage in stakes. However if there are changes in the accuracy of your model, the amount you can get out of stakes, or the price of NMR, this equation changes.