One of the questions I’ve been asked the most since I began my Youtube venture is: Should I swap my PLSX for PLS when Pulsechain Mainnet (finally) goes live? Before we can answer this question, let’s review why this question is relevant in the first place.
Pulsechain, a fork of the renowned and highly successful blockchain Ethereum, is expected to launch in the coming months and bring about a brand new ecosystem brimming with opportunities. When Pulsechain goes live, users of the Ethereum blockchain that own any tokens on the network will get a 1:1 copy on the Pulsechain Network. This means that if a user had 10,000 Hex on Ethereum (either staked or sitting in their wallet – liquid), they would get 10,000 Hex on the Pulsechain Network automatically in their wallet as soon as they switched to the Pulsechain Network within their private wallet.
When Pulsechain was first announced, approximately only 40,000 users participated in a Pulsechain ‘Sacrifice’ for Freedom of Speech, where users received points per dollar sacrificed. The points received are anticipated to be the amount of PLS (the blockchains native token) that a user will receive for sacrificing when Pulsechain finally goes live. On the other hand, a second Sacrifice for the Pulsechain native Decentralized Exchange called PulseX began in December 2021 and saw about 140,000 users send money to the Sacrifice address. Many users who missed the Pulsechain Sacrifice saw this as a chance to get in on the ground floor and have tokens on the new network ready to swap for PLS before the network opens its bridge to the Ethereum Blockchain. But what does a bridge have to do with any of this?
When Pulsechain goes live, there will be a 24–48-hour period where the tokens on the chain will not have a dollar value and will only be tradeable using ratios. All swapping in cryptocurrency using a decentralized exchange is in ratios, however most often we see just the dollar figures associated with the trade and not what the ratio is, ie if I want to trade Hex for PLS, the ratio might be 1 Hex:100 PLS tokens.
This time before the bridge opens and allows the dollar value to come onto the chain could cause inexperienced and experienced users alike to make a swap that sets them back thousands of percent in future price performance, as it will be impossible to know for sure if a swap you made was a good one or a poor one until the bridge opens and the dollar relativity joins the network. The question then becomes, how bad could one swap really be for your portfolio? This question ties into our original question stated in the beginning of this writeup and is critical to understand when it comes to answering the original question as well. Let’s look at some math and see just how quickly things could go both well and poorly.
In the above Excel Spreadsheet, we can see Ratios 1-5 in the columns. The prices and ‘Moon Math’ dollar amount in this spreadsheet are not important, as they are merely a starting point of relativity that gives us our percentages in price movement based on the metrics we use in this model. The obscenely large dollar values are just for fun.
We are setting an “expected” price movement of 100x (completely theoretically and not an actual price prediction) for PLS, followed by 3 different price scenarios for PLSX: 30, 50, & 100x in price increase. Within these different price scenarios for PLSX, we have the ‘Gains from PLS Swap’, where we can see the percentage gains you would get if you swapped. Green signifies profitability, yellow signifies a break-even swap, and red signifies a loss. So, how do we use this model?
To make use of this model, you need to have an anticipated price performance that you think is realistic for both PLSX and PLS. Let’s say you believe that PLS will do 100x and PLSX will only do 50x in price performance over the first two years. By setting this as the expectation, we can see in the chart that we would be in profit swapping 1:1 at 100% gain, but a break-even trade at 2:1, and a loss at anything greater than that ratio. If we increase the expected performance of PLSX to 100x, then there are no anticipated gains to be made at a 1:1 ratio and nothing but losses as we descend into higher ratios.
This model is made for swapping PLSX for PLS, however the same logic applies if you plan on swapping PLS for PLSX inversely.
The important take away here, is that your expectations need to be clearly laid out in front of you before ever considering swapping PLSX for PLS and only ever attempted based on your own findings. It is even important to consider what time horizon you are expecting the predictions you must take place, as PLSX or PLS could outperform one another depending on what your time horizon is and how expect the tokens to perform. As you can see in the model, you can quickly get burned if you do not know exactly what you are doing. As always, do your own research, ask plenty of questions and continue to prepare for the launch of Pulsechain.
- CRYPTOGRFX
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