How the Prices of Seasonal Tokens are kept in Equilibrium
If you have Seasonal Tokens, you can get more tokens over time by trading. The basic strategy is simple: Always trade tokens for more tokens of a different type. Trade 3 Spring for 5 Summer. The total number of tokens you own will increase with every trade. They’re equally good in the long term, because which one is the most expensive will keep rotating.
Even though they’re equally valuable in the long term, they have different prices today. Winter is the most expensive and Spring is the cheapest. Winter has tended to be between 40% and 60% more expensive than Spring.
That’s because Winter is 60% more valuable for farming than Spring is, and it’s 60% more expensive to produce. So we would naturally expect it to cost 60% more to buy. It tends to be a little bit less than that, because traders occasionally trade Winter for Spring, pushing the prices closer together.
They do this when the Winter/Spring price goes significantly higher than 1.6. If a trader can get 2 Spring tokens for a Winter token, that’s a great deal. They’re equally valuable in the long term, so traders have a chance to double the long-term value of their investments with a single trade.
If the price goes down to 1.4, traders will stop trading Winter for Spring, because they know that they can get a better deal if they just wait. So the downward pressure on the Winter/Spring price stops.
At the same time, Winter becomes more attractive to investors because it’s comparatively cheap, and Spring is comparatively expensive. Instead of buying 1.4 Spring tokens, an investor can buy 1 Winter token, and trade it for 1.6 Spring tokens later. This puts upward pressure on the price of Winter relative to Spring.
The incoming supply to the market from mining also tends to push the price back towards 1.6. Miners create and sell 60% more Spring tokens than Winter tokens every day.
These forces keep the prices of the tokens close to their ideal ratio of 5:6:7:8 for Spring, Summer, Autumn and Winter. Winter is the most expensive and will stay that way, until later this year, when Spring takes its place as the most expensive to produce and the most valuable for farming.
The economics is working: The market forces are keeping the prices of the tokens separate from each other. This means that investors can trade tokens for more tokens today, and will continue to be able to do so in the future.
