I hacked together some data that may be insightful. Keep in mind this is all very rough analysis, but I think it shows how valuable the SOV token can be.
tl;dr - The SOV token can (and already has) generated a lot of revenue. Our top priority should be passing the SIP’s that adds this revenue to stakers. Particularly, revenue share on swaps and removing vesting (meaning still locked) shares from staked SOV fee share. I know these are under development and have been discussed, but the data analysis I did only hammers this point home even more.
I also would really like to see if we can hold off or postpone BabelFish sale until these two changes are implemented.
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From my analysis, during the protocols peak months (May and June 2021) the 0.3% fee on swaps earned nearly $500K each month. If we cut 15% of that fee (similar to what SushiSwap does), then those proceeds were allocated to voluntary stakers only; the APY would range from 13% - 20% depending on individuals stake length. That’s pretty solid considering the protocol is in it’s infancy and this doesn’t include any of the other revenue generating activities. This is alone is a worth reason to purchase and stake SOV. This shows the power these fees can generate. Anyone not staking SOV once these all take into effect are losing out on some bueno cash flow.
Here’s the analysis:
- We had to first get a rough idea of how much voting power you receive per $ depending on your staking length. So the table below is data I manually pulled from the staking tab that calculates how much Voting Power we would receive at different stake lengths, then how much that is in dollar terms according to the current price which at this time is $9.70.
| SOV Price: | $9.70 | ||
|---|---|---|---|
| Stake Length | Months | VP / 1 SOV | VP / $1 |
| Max Stake | 28 | 9.60 | 0.9897 |
| 2 | 24 | 9.00 | 0.9278 |
| 1 | 12 | 6.00 | 0.6186 |
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Next I identified the Swap Contract (AMM) 0x98aCE08D2b759a265ae326F010496bcD63C15afc from the Wiki. I also confirmed this by tracing my own personal swap. Question for the team: Are there any other contracts that collect swap revenues that weren’t accounted for in this contract?
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Then using Covalent Blockchain Data API Reference I wrote a loop that pulled all historical data for this swap contract and consolidated it into one giant file. This data shows a ton, but the most important figures were the conversion fee charged (the 0.3% fee charged on all swaps) and the token that was being swapped to. The conversion fees are denominated in the token user is exchanging to. So rBTC to SOV would pay out a 0.3% fee in SOV. Which means I added up all these fees and converted them to US using the exchange rate on the token being swapped into.
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Next we had to estimate the total Voting Power of voluntary staked SOV. I leveraged @CEK 's work here. So this is a major assumption. But assuming his calculations are correct he’s showing that there is approximately 4M worth of voluntary voting power at the moment that would be eligible for fee share after this change is made to the protocol.
- Then using the data from Covalent, the following table is a breakout of revenue collected by protocol by month. The depressing news is swap fees fell off a cliff, but frankly not all that surprising given price action. The interesting part is if we back-tested this data and said for the peak months during May and June what would the APY be for stakers if our proposed changes went through? What I found is very encouraging. The total fees earned since inception through swaps appear to be $1.4M (Column B). If we took 15% of that to stakers it would’ve been $225K (Column C). If we calculate the $ amount of fees earned by month per 1 Voting power (using CEK’s 4M estimate) we get a price per voting power unit (Column D). Columns E then just takes the Voting Power received depending on stake length found in Step 1 multiplied by the $ Earned per Voting Power share in Column C then multiplied by 12 months to get annualized and comes up with the projected APY.
| A | B | C = B * 15% | D = C / 4M | E = D * .9897 * 12 Months | E = D * .9278 * 12 Months | E = D * .6816 * 12 Months |
|---|---|---|---|---|---|---|
| Month/Year | Sum of USD Token Fee | Proposed Swap Fee Share | $ Earned Per Voting Power | APY - 1 YR Stake | APY - 2 YR Stake | APY - Max Stake |
| 2021_08 | $113,716.13 | $17,057.42 | $0.00426 | 3.2% | 4.75% | 5.06% |
| 2021_07 | $219,822.90 | $32,973.43 | $0.00824 | 6.1% | 9.18% | 9.79% |
| 2021_06 | $480,816.34 | $72,122.45 | $0.01803 | 13.4% | 20.08% | 21.41% |
| 2021_05 | $491,468.10 | $73,720.22 | $0.01843 | 13.7% | 20.52% | 21.89% |
| 2021_04 | $182,697.87 | $27,404.68 | $0.00685 | 5.1% | 7.63% | 8.14% |
| 2021_03 | $6,856.44 | $1,028.47 | $0.00026 | 0.2% | 0.29% | 0.31% |
| 2021_02 | $2,717.98 | $407.70 | $0.00010 | 0.1% | 0.11% | 0.12% |
| 2021_01 | $52.51 | $7.88 | $0.00000 | 0.0% | 0.00% | 0.00% |
| 2020_12 | $20.14 | $3.02 | $0.00000 | 0.0% | 0.00% | 0.00% |
| 2020_11 | $28.16 | $4.22 | $0.00000 | 0.0% | 0.00% | 0.00% |
| 2020_10 | $20.33 | $3.05 | $0.00000 | 0.0% | 0.00% | 0.00% |
| 2020_09 | $0.19 | $0.03 | $0.00000 | 0.0% | 0.00% | 0.00% |
If we had a 15% fee on swaps to stakers and removed vesting shares from revenue then max stakers would’ve been earning comfortably double digit APY’s over the past few months.
I feel like this is some pretty solid alpha and we should be stacking and staking. But not many of us read these forums, so hopefully this is some good alpha for those of you that do 
Again keep in mind this is a super rudimentary analysis and there definitely are some errors, so please give feedback if the logic and analysis checks out. The intent is just to open up the conversation. We can perform similar analysis on the other revenue generating activities like trading, lending, etc.