MOBOX MOMO Cycle Top
This popular NFT game market may be peaking for now.
In mid-July I wrote about how to valuate MOMOs, with some concrete examples. Even when prices had already risen quite a bit at the time, their valuations (measured in by yield and ROI) had stayed pretty stable, justifying holding them longer… That is, until recently.
Some theory
I explained how rising MOMO prices don’t make them more “expensive” as long as the price of $MBOX goes up as well. That’s because you can “stake” your NFTs in MOMO Farmer (the DeFi half of MOBOX’ ecosystem) and earn $MBOX rewards. And risen it has! From around $1 to over $9 (800% or so):
But what has happened to the price of MOMOS in that same timeframe?
As shown above, they’ve gone up a lot as well. Based on my previous post (and memory) over 10 x or more on avg. That looks like a proportional increase to $MBOX price, so why worried? Let’s look at more factors.
I also explained that mining rewards are based on the total hash power (THP) staked by all MOMO holders, and that it pretty much always increases, as more MOMOs are minted. This means your rewards in $MBOX are always lower, but this can also be offset by rising a $MBOX price.
However at this point it’s clear that $MBOX has to go up A LOT more than either MOMO prices or THP in order to keep valuations steady. And this, it has not done. With THP being nearly double that of a month ago (currently standing at over 16M), $MBOX would’ve had to go up over twice as much as it did to *really* keep up with MOMO market prices.
Some numbers
Let’s do a quick example. According to my own valuation methods published earlier, here is a very well valued rare MOMO in the market today:
It’s hash point cost (HPC) is $5500/137 or $40.15. Using the bonus hash power method (see previous post), the HPC can be optimized to around $5800/437 = $13.27. Much better, but still over 4 times more expensive than the the $2.84 in my previous post (already an updated number from August, before Binance listed $MBOX).
Before, each mining power point would yield .02 $MBOX or around 4 cents USD. Now they give out .012 $MBOX or 10 cents (2.5 x) more or less. So is it justified to pay over 4 x more now for mining power, to receive only 2.5 x more? That’s up to you to decide, but let’s look at it in another way.
The optimized investment example before($2.84 HPC) would yield roughly 4 cents per hash point per day. That’s a 71 day ROI (assuming prices remain stable). Today’s example ($13.27 HPC) at 10 cents per day gives us a 133 day ROI (almost twice as much).
Are you willing to bet that the high prices of MOMO NFTs and of $MBOX will stay stable enough for another 4 months and two weeks? If so, this investment is for you.
A word of caution: MOMO Farmer currently lives under the constant threat of over 21,000 MOMOs from Binance NFT (sold as mystery boxes in July) finally being allowed to transfer into user wallets. That would mean they can be staked and traded in the MOBOX platform, which currently holds around 20k staked MOMOS plus 4,000 or so listed in the market. Could that be a catalyst for a correction or downturn?
More factors to watch & Conclusion
In summary, investing in MOMO Farmer has become roughly twice as expensive after Binance listed $MBOX (and the Binance NFT threat may imply another quick profit halving). In addition to that, a tall barrier to entry has risen, from a few hundred to a few thousand dollars, leaving out many small investors.
While naively projected ROI is still great (even if halved) compared to traditional finance, in my experience this is a space where people shoot for even shorter ones (under a month if possible).
Additionally, the use base has already grown to become a top-3 largest BSC p2e games. And early players have incredible profits that are ever more tempting to realize. Given all of this, can growth continue at this pace?
Maybe, but to me the apparent risk at the time is starting to exceed the foreseeable potential. So (since I was lucky enough to get in early) I’m selling most of my $MBOX and MOMOs at this point.
I should note that importantly and unlike games with poor economics that have a very hard time bouncing back after a bust (looking at you CryptoBlades 👀), I think MOMOs can easily recover from a potential downcycle, as there’s nothing fundamentally wrong* here, so I may come back in if there’s a nice pullback (once panic sets in).
*Well there is one thing but probably not a problem for MOBOX yet, and that is intellectual property rights — Many MOMO are very obvious rip-offs of Disney characters (e.g. Marvel superheroes). In the future this may become a big headache as NFTs are forever (supposedly).
Good luck out there!