ICP Price and NNS

Does the price of ICP have any effect on NNS staking behavior?

With the price of ICP dropping below $12, I spent some time this weekend wondering whether the drop in price from Zone 1 (December through April) is causing any change in behavior within staking on the NNS. Let’s take a look at the data…

Are Stakers Dissolving?

One area of concern would be if NNS stakers took the weakness in price as weakness in the project and began to dissolve their neurons. Since most ICP is staked for many years, this would indicate a long-term bearishness by stakers. However, fortunately, that doesn’t seem to be the case. In fact, the number of dissolving ICP on the NNS is actually decreasing (by almost 20% in seven month):

The devil is in the details, however. The major drops in the chart above are all caused by the 40xx neurons becoming dissolved and since we know these are DFINITY neurons, they probably should be excluded from the analysis. Even still, after removing the DFINITY neurons, dissolving ICP has decreased by 4M from November to May. Or, put another way, any increase in new dissolving is slightly less than the amount that is becoming dissolved, ex-DFINITY.

Are Short Term Stakers Bailing?

The above analysis is re-assuring, but it is also incomplete. The NNS is comprised of mostly VERY long term investors (8 Year Gang). It’s worth breaking the data down by buckets of dissolve delays in order to see if short term investors are more likely to dissolve.

The chart above shows that the number of ICP in short term dissolve delay neurons is decreasing across all buckets (0-1 years, 1-2 years, etc). This confirms the overall dissolving chart above. The decrease in ICP is almost certainly caused by neurons dissolving from one bucket to another and it’s clear that new dissolves aren’t happening, at least not on the scale of current dissolves.

The conclusion of the above two analyses should be this: the poor price performance of 2022 has not caused NNS stakers to begin to dissolve their neurons, nor has it caused investors who were previously dissolving to revert back to locking their neurons.

Is Anyone Bailing?

There are a small handful of large neurons that have begun dissolving in the past few months. This is clear in the small spikes upward in the first chart. The below chart of locked ICP in 0-1 Year neurons, zoomed into the last 3 months, shows that in particular there have been two large neurons (~1.5M ICP each) that decided to dissolve in the past two months. Both of these neurons were new stakes in 2022 and were staked for less than 1 year. Both have obviously decided to dissolve shortly after staking.

What About New Staking?

Are ICP investors taking advantage of the lower ICP price to buy and stake? The answer to that isn’t clear. Here are the approximate totals for new staking on the NNS:

January - 5.3M ICP

February - 2.1M

March - 1.0M

April - 1.0M

It seems to me that it’s difficult to argue that more people are staking on the NNS as a result of the decreased ICP price. However, it is worth pointing out that staking in 2022 has been much stronger (in ICP terms) than in 2021.

Conclusions

This is a high level look at the NNS behavior over the past few months. From this high level, there doesn’t appear to be much change in behavior due to the decrease in ICP price.

ICP Analysis NFT

Just a reminder that I’ll be launching an NFT for more analyses (like this on) tomorrow. You can find the NFT sale on CrowdFundNFT. Minting goes live at noon UTC for CrowdFundNFT holders (no whitelist) and 2pm UTC for general non CrowdFundNFT holders. See this article from me for more information. Hope you’ll join me over at DSCVR!