Two Factors

One Result

The USD APR ( Annual Percentage Rate) earned when staking THETA is connected directly to the price of TFUEL in USD

The USD APR earned when staking TFUEL is connected directly to the Total amount of TFUEL Staked

Enter the Golden Ratio

As TFUEL is bought and Price is raised, it also increases the Theta stakers APR. As that TFUEL is then staked, it increases the Total TFUEL staked, lowering the Tfuel stakers APR. You could Plot this relationship as a Slope on a graph.

Dig Deeper

What we find when running exploratory models, is that when you Balance (both matched) the Total Supply Staked (53% in this example) the APRs Balance (match). With a Price Gap (ratio) of 1 THETA equal to 6.25 TFUEL. In the above when Supply staked in both is 53% the Balanced APR is 7.547% with a Price Gap of 1:6.25, so when THETA is priced at $14, TFUEL needs to be $2.24. If anything changes to this, the APRs fall out of balance and the markets will have an Arbitrage opportunity to bring it back to its Balance.

Out of Balance

Here we see how out of balance the APRs are if the Supply remains Balanced, but the Price Gap is too wide.

So with a Balanced 53% staked and a Price Gap of 28 TFUEL to 1 THETA, the APR is now higher on TFUEL. To balance this, TFUEL would be bought and staked.

Here we see how out of balance the APRs are if the Price Gap remains Balanced, but the Total Supply Staked no longer matches.

So with a Price Gap of 6.25 TFUEL to 1 THETA and only 23% of the TFUEL Supply staked, the APR is now higher on both, however TFUEL is still the highest. To balance this, TFUEL would be bought and staked.

Here we see how out of balance the APRs are if both the Price Gap and the Total Supply Staked no longer match.

So with a Price Gap 28 TFUEL to 1 THETA and only 23% of the TFUEL Supply staked, the APR is now wildly higher on TFUEL. To balance this TFUEL would be bought and staked.

Liquidity Leveling

We know that TFUEL will be used in many areas of the ecosystem, Staking for one, also as the Native Liquidity token for ThetaSwap LPs, as well as Streaming Platform rewards. So we must look at how it could balance if Liquidity is needed more in other areas of the ecosystem than staking, as we might never get a balance of both coin Supplies staked. Here we see the 53%/23% from the 2nd image of the above “Out of Balance” section. We see that APR balances now at 17.39% and the Price Gap is now 2.71 TFUEL to 1 THETA. So in an unbalanced Supply, the APR and Price Gap can still find an equilibrium.

100% on Board

One final thing we should look at is what if 100% of both coins are staked. As we can, see the Balance is reached at 4% APR. This has to do with the Tfuel inflation rate assigned to Tfuel staking rewards in the Theta core code. As all these numbers in all these charts are based on a 4% inflation rate to Tfuel, if it gets lowered, expect everything to lower proportionately.

Bonus!

OK- bonus chart! Let us see what the above 100% Supply Staked would look like with prices to match the ridiculous scenario. As you can see, Price Gap is more important than the prices of the coins themselves when looking at Balancing the APRs.

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*Note This complete website is based on theoretical numbers and models, including non-predictive metrics. None of it should be looked at as investment advice or expected events.