Sphere Finance is going fully DEFLATIONARY — Huge Update Coming
In this article we will explain the latest update coming to Sphere Finance in which they will stop giving 99.000% APY and rebases. What will happen to Sphere and the investors?
Sphere Finance will no longer be an auto staking protocol giving 99.000% APY, as they will stop the rebases that happen every 30 minutes.
- What does this mean for the project and the investors?
- Is this good or bad for the project?
- How will Sphere reward investors for providing funds to the ecosystem?
All of this and more in this article. Stick till the end because we will explain the massive changes Sphere will have in the next weeks. Let’s get into it.
Sphere Price chart since it started
Sphere Finance started in mid-march with a price of around half a cent. Since the launch, the price of Sphere climbed rapidly because of the innovations they were building for the Polygon Network. This price rally went up to 11 cents, which is a 10x-20x for the people that invested when the project launched.
However, from that point, Sphere’s price had a major correction because the price Sphere had grown so fast in the previous weeks. and because of the inflation caused by having 99.000% APY.
At the moment, Sphere is moving around 1 cent. So after the price has bled so much because of inflation and the crypto bear market overall, Sphere has decided to remove the rebase mechanism.
How rebases inflation affects the token price
Autostaking projects which have rebases have a very big problem which is inflation, that rapidly gets to a point in which the project is unsustainable.
Sphere had a different plan whatsoever and wanted to use that 99.000% APY to attract investors during the first months and as a way of distributing the tokens initially.
But printing tokens this fast, means that the total supply of Sphere tokens doubles every 37 days, which makes the price cut in half in that same period.
Sphere plan to stop giving rebases
This is why Sphere is going to jump to the next part of their plan and stop the rebases this month of June, most likely the 8th of June, as they said in a recent AMA. This would eliminate the inflation of the Sphere token and will in turn make Sphere go deflationary.
Sphere Finance income streams to burn tokens
So Sphere will not give any more rebases, but how does that make Sphere deflationary? Deflation is, in a nutshell, raising the purchasing power of a currency over time.
In this case, Sphere’s investors will not earn any money by getting rebases but they will do so because the price of the Sphere tokens will increase.
It is simple supply and demand. When supply decreases and demand is kept the same, the price of the product rises.
And Sphere is reducing its supply by stopping rebasing and using income streams to buy Sphere and burn those tokens to effectively increase the price of Sphere.
This income steams are the buy and sell fees, Quantum Liquidity, Quantum Liquidity As A Service (QLAAS), Tetu Decentralized exchange, the Galaxy Marketplace as well as Dystopia, Penrose, and Preon. (Will talk about each of this in the future so Follow if you want to know more about how Sphere is building a real ecosystem with income streams)
With this deflationary mechanisms, the price of Sphere will increase, as there will be fewer Sphere tokens in existence overall, so each of them will be worth more.
This is called forced appreciation as the price of Sphere will increase without having to rely on new investors buying Sphere, but rather do it so because the supply of Sphere will decrease.
Sphere Finance price prediction
After this update, I expect the price of Sphere to rise steadily as it will be free of the downward pressure caused by inflation. This update will turn Sphere Finance, from an unsustainable auto staking protocol to a sustainable long-term play.
If the team keeps developing the ecosystem as it has done in the last 3 months I wouldn’t be surprised if the price of Sphere went up to 10–20 cents before 2022 ends.
And if everything goes well and Sphere has a strong burning rate, in the next bull market it could get up to $1, being one of the biggest market cap projects in the Polygon Network.
Thank you so much for reading till the end. If you found this information helpful, follow to see more honest and straight to the point crypto and investing content!
This article is not financial advice. Do your own research before investing. Some links may be affiliate links.
