NOTE: Part 2 can be found here.

I initially wrote this thinking my measly amount of HORSE tokens would never earn enough reward ETH to make this investment worthwhile.

I aimed to mathematically show that HORSE tokens were overvalued. But I realise that I made a mathematical error by looking at daily return on investment (ROI) rather than yearly. Perhaps now I see that HORSE may in fact be undervalued.

If you are new to the Ethorse platform:

(Swearing)

The numbers:

There are 125 000 000 HORSE tokens

5% (currently) of pot goes towards token holders.

HORSE is currently valued at around 0.00017 ETH.

Formulae

RewardETH = potVolume * 0.05 * (tokensHeld / 125000000) * 365

Where potVolume is the daily total pot volume, tokensHeld is the number of tokens you hold.

We can substitute tokensHeld = ETHinvested / 0.00017 so:

RewardETH = potVolume * 0.05 * (ETHInvested/ (125000000 * 0.00017)) * 365

We can rearrange to solve for RewardETH / ETHInvested, or ROI:

RewardETH / ETHInvested= ROI = potVolume * (0.05 / (125000000 * 0.00017)) * 365

Or

annual ROI = potVolume * 0.00085

Analysis

Suppose now that you expect a 15% ROI after one year. This requires:

potVolume = 0.15 / 0.00085= 176

A daily pot volume of 176 ETH would put Ethorse at around 5th in weekly volume.