144 sats \ 13 replies \ @kr 12 Mar \ on: AMA - Danny Diekroeger Founder of Deezy Labs - Ordinals, Lightning, and More AMA
what kind of revenue are people earning from hunting rare sats?
i guess a related question is how rare does a sat have to be for it to be worth significantly more than a typical sat?
Regarding rarities:
The ordinals protocol introduced some suggested rarities, which the market has respected - first sat of each block reward ("uncommon"), first sat of a difficulty adjustment ("rare"), first sat of a halving ("epic"), etc (https://docs.ordinals.com/overview.html#rarity)
Additionally, the open market has valued all kind of things, like the "Block9" (the sats from the first transaction satoshi ever made) "Black Uncommon" (last sat of each block), "2-digit Palindromes", etc. Here you can explore: https://magisat.io/
Regarding revenue:
With every 100 BTC scanned, you can find about $150 worth of rare sats. With our software, you can deposit and withdraw from an exchange about 70 round-trips per day. So with say, 50 BTC, you can get 3500 BTC worth of coverage in a day, finding about ~$5000 worth of sats. However there are also fees, you may pay like $1000 in on-chain and withdrawal fees in the day. Will let you do the math from there.
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some exchanges have expressed interest, but the big exchanges just move slowly and nobody on their teams are really looking for extra revenue opportunities.
a large exchange could probably make $10 million per year from sequestering the rare sats flowing through their platforms, but for them that apparently isn't enough to mobilize anyone to do anything.
our software is ready for them when they are ready lol
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yeah, so right now all that value is getting gobbled up by hunters like us and our customers
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what percentage of all rare sats have been discovered by this service to date?
if you can’t explicitly answer that question i’d love to get a better understanding of the rare sat market dynamics… are there 2-3 big players buying up all the rare sats? or are there lots of small players doing this too? has the value of a rare sat changed much since this sat hunting has begun?
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Around 5% of circulating rare sats have been sequestered to date. The rate of sequestering has increased over the last year as hunters have become more advanced. Additionally, new sats are always getting mined, so there is a constant stream of new sats.
The price of an uncommon sat is a good benchmark. Early last year, they were selling for over $1000, when sequestered supply was very low - there were almost no hunters. By the summer, this price came down to below $100. As ordinals came back late summer, the price of uncommons climbed as high as $350 or so, and now it is back down to about $140.
The demand comes from two groups:
- collectors who are buying to hold or speculate
- project founders who are launching a collectibles or art project, and want to inscribe their content on special sats to give it more weight in the market
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These prices are subject to supply and demand. It's like numismatics.
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We work with individuals and investment funds who want to run the hunting strategy. They run our software on their server, and hook it up to their account on Coinbase or Kraken or another exchange. Then they load it up with their coins and the funds move between their server's wallet and their exchange account, and the software spits out rare sats. We basically are providing the tooling for anyone to run this arbitrage. The exchanges are just kind of sleeping and not capturing any of value except for the withdrawal fees they charge.
Security risks are:
- Coins are in hot wallets all the time
- Exposed to a potential advanced attack through our software: https://github.com/deezy-inc/sat-hunter
- Risk of the exchange you're using going FTX and losing your coins
Privacy:
- People can kinda see that your coins are hunting, and we can see your balance
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sounds like casinos can be built on anything
and human nature likes novelty and to play games
and to populate new domains with such activities
and where there is demand, entrepreneurs will build stuff
and vc will look for anything that can make them gains or new ways to exit
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