This is a short & concise piece on how I think about the veVIRTUAL staking & how to play the points game

If you’ve been around in Virtuals trench lately, you’d probably realize that the team has just rolled out one of the biggest updates ever

• Kaito integration with full-fledged Yapper Leaderboard with points incentives to top yappers & Kaito stakers
• Tokenomics updates introducing veVIRTUAL (20% of the points goes to veVIRTUAL stakers instead of holders)

The tokenomics change now align interests between long-term supporters (those willing to lock their $VIRTUAL) and the protocols (Virtuals & agent teams)

The new dynamic reminds me of xGRAIL tokenomics (back during Arb szn) and ve(3,3) tokenomics when Velodrome & Aerodrome became prominent on OP & Base

One thing that I’ve learnt from surviving through narratives & waves since 2021 is that it’s a really bad idea to max lock your entire token stack, no matter the case (especially for veTokenomics model).

Why?

Taking a step back, $VIRTUAL accrue value from trading fee, from trading activity that’s happening on its platform, the more projects launch + the more existing projects innovate & roll out exciting features, the more people get excited and trade on Virtuals.

Then comes the points “Virgen points” which is needed to get into Genesis Launches & earned from actively trading on Virtuals, holding/diamond handing agent tokens, holding $VIRTUAL (before the latest change). $BIOS became the #1 case study, the 100x moonshot that continue to attract builders & traders to Virgen trench, solidifying the flywheel.

Virgen points is now established as digital gold with value ranging from $0.012 - $0.034 per point (if you’re earning 100k points per day, you earn $1,200 - $3,400 daily assuming you spend your points to invest in successful launches)

Now…. the reason why I said it’s a really bad idea to max lock is because

1. No launchpad last forever—hype & narratives comes in waves, they go up & down based on many factors. Virtuals team has showcased that they’re a master of narratives BUT given the competition, no one knows how long the current Virtuals wave will last
2. There’s “enough” threshold to the amount of points you should be getting per day (per one wallet) e.g. you max lock 150,000 $VIRTUAL for 150,000 veVIRTUAL = you earn 1.5-1.8mn points per day. Bro.. you don’t need that many points
3. There’s a hidden illiquidity cost. What tend to happen during a cycle is a token massively goes up (or down), when it full sends, if you don’t have an ability to take profit, you simply won’t be able to realize the gains. What happens next is the token falls, because nothing lasts forever. All good things come to an end at some point, it’s up to you to capture the most out of it.

Just wanna stress this again—If you look at this spreadsheet, you can see that the return on point spent is highly dependent on the quality of projects that you invest into as well as the hype around the project (how many points get contributed), how high can their FDV go post-launch. Project selection matters the most when playing this game. The better you choose, the higher the value that you can capture out of your points.

So, how much $VIRTUAL should you aim to lock? what should be the strategy here?

• Assuming $AXR case as the worst case (4m points required for full allo), earning 400k points per day for a week - a week and a half should be decent. This equates to 50k $VIRTUAL max lock for 2 years

• Assuming $WHIM as base case (820k points required for full allo), earning around 100k points per day should be good. This equates to 10k $VIRTUAL max lock for 2 years

Rule of thumb is to earn between 100k-400k points per day to make sure you have enough for a medium hype - max hype launch per week or a week and a half.

Whether you max lock a part of your $VIRTUAL portfolio or medium-term lock your entire $VIRTUAL stack is up to you. But, make sure to have both liquid & illiquid stacks to keep yourself flexible & allow yourself to realize profits when $VIRTUAL continue its grind upwards.

How I’m playing this?

I’ve max locked only a small part (5-10%) of my $VIRTUAL into veVIRTUAL to have enough points to get full allocation on hyped launches, keeping the other 95% liquid to realize profits when market picks up

Assuming I earn 250k points per day, I make ok decisions in selecting projects to ape in & exit at a good time, each of my point will worth $0.022 = $5,500 per day -> that’s only about 5 days till breakeven

If I assume worst case of $0.010 per point, it’ll equate to $2,750 per day -> only 9 days till breakeven

I’m planning to selectively only pick projects with optimal value per points for short-term plays while diamond-hand holding only Tier-1 projects. The ultimate goal is to accumulate more $VIRTUAL, treating Genesis Launch playground / Virgen points as a place and mechanism to generate yields on $VIRTUAL token.

For those interested in my upcoming picks, do check out my latest substack “The After Hour EP.2” where I share my analysis on the 3 upcoming picks that I plan to get into

Bottom Line

Make sure to know what you’re getting into. Do your math before making a decision. Don’t get FOMO’ed into max locking everything, that’s the worse decision you can make.

Do keep in mind that investing in Virtuals agents is more “trading” instead of investing in tech so far, you’re investing in extremely low microcaps that have high likelihood of pumping.

Personal Note: As always, thanks for reading! If you’re building something in Crypto AI and want to connect, shoot a DM!

Disclaimer: This document is intended for informational & entertainment purposes only. The views expressed in this document are not, and should not be construed as, investment advice or recommendations. Recipients of this document should do their due diligence, taking into account their specific financial circumstances, investment objectives, and risk tolerance (which are not considered in this document) before investing. This document is not an offer, nor the solicitation of an offer, to buy or sell any of the assets mentioned herein

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