Which Seasonal Token Should I Buy?
The Principles
Suppose you’ve decided to invest in Seasonal Tokens. Then you face the problem of which token to buy. There are several things to consider, but there are two fundamental principles of Seasonal Tokens investing that can guide you to the final decision.
The first principle is that the long-term goal is to get as many tokens as possible. The different tokens, Spring, Summer, Autumn and Winter, are equally valuable in the long term, because which one is the most expensive will keep rotating. Winter is the most expensive today, and Spring is the cheapest. You can get the most tokens today by buying Spring.
The second principle is that the winning strategy to achieve that goal is to trade tokens for more tokens. This eliminates the risk of losing tokens. You’ll gain more tokens in total with every trade. If you have Winter tokens, you can trade them for Spring, Summer or Autumn, and you’ll get more tokens in total, so you’re following the strategy. If you have Spring tokens, you can’t trade them for more tokens until much later, when they become more expensive than the others.
Those principles are unique to Seasonal Tokens. Other investments don’t have a winning strategy. But there’s another principle that applies to all investments: Look at the prices to see which one gives the best value for money.
Today, we can expect the prices of the tokens to have a ratio close to 5:6:7:8. Summer tokens will tend to be about 20% more expensive than Spring. Autumn will tend to be about 40% more expensive, and Winter will tend to be about 60% more expensive. That’s because Winter tokens are about 60% more expensive to produce and 60% more valuable for farming.
We can compare the current token prices to this ratio and see which token is underpriced in comparison to the others. If the prices of the tokens are 4, 6, 7 and 8 cents for Spring, Summer, Autumn and Winter, then Spring is underpriced in comparison to the others. You can get more tokens in total by buying Spring now than you can by buying one of the other tokens and then trading it for Spring at a random later time, when the ratio will be close to 5:6:7:8.
Optionality and Volatility
From an investment point of view, Seasonal Tokens are similar to stock options. An investor can buy an option to buy a particular stock at a price of $100, at any time in the next three months. If the price of that stock rises to $120 during that time, the investor can exercise the option, buy the stock for $100, and then sell it for $120 and make a $20 profit.
An investor who buys Winter today gets the token, but also gets three options: Trade it for Spring, trade it for Summer, or trade it for Autumn. Any of those trades will gain the investor more tokens in total. Autumn tokens come with two options: Trade them for Summer or Spring.
Investors who buy Spring tokens get the tokens but don’t get any options. Spring tokens can be traded for a smaller number of any of the other three tokens, but that trade doesn’t follow the winning strategy. Spring is currently the cheapest, so you’ll have less tokens in total if you trade Spring for one of the other tokens. Maybe you can make that trade and then make another trade later that will give you more Spring than you have now, but maybe not. It’s risky.
If you want to stick to the winning strategy, Spring tokens don’t give you any options right now. Later, when Spring tokens are the most expensive to produce and the most valuable for farming, they can be expected to be more expensive to buy than the other tokens. Then investors who hold Spring tokens will have three options.
How much is an option worth? It depends on the volatility. If the prices fluctuate a lot, then the differences in the prices of the tokens will occasionally become large. Winter tokens might become twice as expensive as Spring, giving investors the chance to double the number of tokens in their investment with a single trade. If the prices stay close to the ratio 5:6:7:8 and rarely move far away from this ratio, then the opportunity to double your tokens probably won’t arise. You’ll be able to trade a Winter token for about 1.6 Spring tokens, but probably not much more.
So an investor who wants to know what token to buy should not only look at the current prices, to compare their ratio to 5:6:7:8, but should also look at the price chart, to see how volatile the relative prices of the tokens are. If the prices fluctuate a lot, then the option to profit from those fluctuations is more valuable. Winter tokens give you the most options, so volatility in the prices makes Winter tokens more attractive.
If the prices are very stable, then Winter tokens are less attractive, because the option to trade them for other tokens is unlikely to give you opportunities to get a lot more tokens than you could get by buying Spring.
Your Trading Style
Ultimately, the choice of which token to buy depends not only on the price and the volatility, but also on your trading style. If you prefer to be a passive investor who rarely checks the prices to look for opportunities to trade, then Spring will be more attractive. You won’t pay extra for the options because they’re not worth as much to you, because you don’t intend to spend the effort to constantly monitor the prices for good trades. It’s not worth paying for an option that you’re not going to use. You can buy a lot of Spring now and trade it for more Summer many months later.
If you’re an active trader, and don’t consider monitoring the prices for trading opportunities to be a big cost, in comparison to the potential profits, then Winter will be more attractive, because it gives you more chances to trade tokens for more tokens.
So the way to decide which token to buy is to look at the value for money, by comparing the ratio of the token prices to the expected ratio of 5:6:7:8, and then estimate how much more you’re willing to pay for the options that you get with Winter, Autumn and Summer.
Different investors will make different choices, based on how actively they expect to trade and how volatile they expect the prices to be. However, all investors can ensure that the number of tokens in their investment will never go down and will sometimes go up, by trading tokens for more tokens.
