As I explained in the previous article, with the launch of the new Multistrategy SPU (Staking Powe Unit) licenses, which will replace the current kuias, Kuailian will make changes to the calculation base.
The participation percentage and returns will no longer be calculated based on ETH, as was the case with kuias, but will be calculated based on USDT (which in practice is like saying based on dollars).
This change in the calculation basis directly affects the pool’s participation percentage, and consequently, the distribution of returns and the recovery of collateral at the end of the contract.
As part of this transition process, Kuailian offers LR and MR kuais holders the possibility of exchanging them for Multistrategy SPU licenses (later, HRs may also be exchanged for HR SPUs).
The change is 1 to 1, that is, a person who has, for example, 75 LR and 25 MR can exchange them for 100 Multistrategy SPU for free.
The change is not mandatory. Whoever prefers to keep their kuais can do so.
How does the change work?
When a user decides to exchange his kuais for SPU, his percentage of participation in the pool is recalculated.
The formula is very simple. You look at the USDT that that person contributed to the pool for the purchase of the kuias that he wants to exchange (which is equal to the number of those kuias multiplied by the 100 USDT that each kuai costs) and is divided by the total USDT that the pool has received for total licenses sold.
However, this does not affect the total value of the pool. The pool is what it is, and its value does not change. Therefore, it is a question of distributing it in a different way.
Logically, for some people to benefit from the change, there must be others who will lose out.
Who is worth changing?
The answer is not simple and many variables come into play, so what I explain below are the conclusions that I have reached personally. They involve simplifications, approximations and inaccuracies, so they cannot be considered as 100% accurate. Therefore, they should not be taken as a recommendation. They are just a few guidelines for each one to do their own analysis and decide accordingly.
That said, the answer seems to be directly related to the percentage of participation.
People who see their percentage of participation increase with the change will benefit. And the other way around (with nuances).
To try to mark a point from which it is interesting to change, we are going to do some simple calculations.
Total invoiced by the pool in ETH:
The total invoiced by the pool for the sale of kuais is approximately 1.3 Million ETH. I calculate this data from the ETH that I contributed to the pool and my % of participation before the appearance of the SPUs. In addition, this value has been communicated in some corporate call.
Total invoiced by the pool in USDT:
This data is much easier to calculate. It is enough to multiply the total of kuais that are in the pool (6 million approx) by the 100 USDT that each one costs. That gives a total of 600 Million USDT.
Average ETH price:
Dividing the two previous values, it is obtained that the average price of the ETH that the pool has received for the sale of kuais is 600 / 1.3 = 461 USD / ETH.
Taking into account that, for kuais, the pool share percentage is determined based on the number of ETH contributed, my approximation is that those partners who bought kuais with ETH below USD 460 currently have a higher share percentage than average.
Therefore, they would be harmed by the change to USDT, because they will lose participation (which let’s remember is the basis for the distribution of returns and for the recovery of collateral at the end of the contract).
In contrast, those who bought kuai with ETH above this price currently have a lower% stake than they would in the new pool. Therefore, they will clearly benefit from the change.
ETH broke the $ 460 barrier in mid-November, which can be taken as a simple time reference.
In the case of having bought kuais at different times, the average can be calculated in a very simple way: Number of licenses * 100 / ETH contributed (all these data are available in the Quick Statistics section of the web)
Remember that the change is optional and that different decisions can be made for different types of kuais.
The calculation of daily returns is another indicator that can help us make a decision.
The exercise here is also very simple. You just have to look at what you are receiving with the kuais and compare it with what you would receive with the new Multistrategy SPU.
How much would you receive with the new SPUs:
The first thing to do is to know what is the contribution on which the returns will pay me. And that is very easily calculated.
As each LR is equivalent to one SPU, my contribution will be equal to the LR that I have multiplied by the 100 USDT that each one is worth.
On that, we apply the profitability, which is currently 5 or 6% per month (say 0.2% daily to round up) and we will obtain the total USDT that we will receive each day.
For example, if I exchange 10 kuai LR for 10 SPU I will get approximately 2 USDT per day (10 SPU is 1000 USDT, and by applying 0.2% daily we get the value of 2 USDT).
We can compare this with what the LRs are currently generating for us (on Kuailian’s website, in the daily payment reports, this information appears in USDT).
The cheaper ETH was at the time of acquiring the kuais, the more difference there will be in favor of the kuais compared to the SPU, with the nuance that the SPU incorporates HR, which makes them increase their profitability.
This same exercise can be repeated with the MR.
In this way it will be known if the change is favorable or not.
Inaccuracies of these calculations:
As I have explained, there are several simplifications or other factors that have not been taken into account.
First, the calculations have been made on the basis of estimates. Therefore, they must not be considered exact.
Second, many of the kuai holders will move to SPU and the product itself will be retired from the market in March (only the kuai of current customers who do not switch to SPU will remain). This means that the pool of kuias will get smaller and smaller and perhaps its performance will be affected.
Third, Kuailian’s focus is going to be on these new products. That does not mean that they will neglect the kuai, but logically, it will not be their number one priority.
My conclusion is that the new SPU configuration is something very positive and necessary.
In principle, as a general rule, the preferred option should be to switch to this product, especially for those users who purchased their kuais with ETH at very high prices, as they will see their returns grow considerably.
But the general rule does not apply to all cases, so before making the decision it is convenient for each one to make their own analysis and act accordingly.
If you want to join Kuailian, you can do so through this link.