The SPS Distribution Audit
Over the last few months I have been working with a few Splinterlands team members to try to prepare the SPS token to expand into new EVMs. Throughout that process it became clear that we needed to clean up deployment contracts, audit the token distribution and to fix or create new APIs for greater data transparency.
Today I would like to share with the DAO my findings as far as the SPS token distribution goes. We are off target in a few places, some over and some under, but overall we're actually quite significantly under target for the planned five year distribution window.
To provide a more easily digestible view of the information that I'm about to share, I've provided the chart below to help visually convey the information that I'll be discussing. Please note that while we're significantly off target in several of these distribution buckets, some of it can be attributed to the sources of inflation having delayed starts or cuts made by subsequent DAO proposals.
It should also be noted that the information in the chart is up to date as of May 31, 2024. It takes time to gather all of this information, investigate the findings, and then consolidate the information into a format like this.
Airdrop
The airdrop distribution was pretty straightforward to audit. There were 400,000,000 tokens allocated for a one year airdrop period and a subsequent SPS DAO proposal to transfer unclaimed airdrop tokens to the SPS DAO after an additional one year claim period. 33,283,891 SPS were sent to the DAO.
DAO
One of the most interesting findings in this audit was the current state of the tokens allocated for the SPS DAO. The inflation for the SPS DAO was stopped on April 14th 2023 and will need to be addressed once validators are released. Another important thing to note in regards to the DAO tokens is that 78,746,577 tokens that were minted were actually sent to the reserve wallet instead of the DAO wallet when tokens were being handed off to the SPS DAO Treasurers.
We will have to figure out how we want to address this issue as a DAO. There's a couple of important points to consider: the DAO isn't actually being directly apportioned the tokens that it should be and they should not be counted as part of the circulating supply and it's also worth noting that the DAO technically controls the noncirculating supply and could still vote to do whatever it wants with those tokens through subsequent DAO proposals.
In my opinion, this is the first major indicator that we need to get Validators online asap.
Private Sale
This is one of the allocations that I needed serious help to audit. Thankfully the team provided the information that I needed to verify the distribution. 200,000,000 tokens were sold during the private sale and all of them were distributed. I'm also confident in saying that almost all of these buyers have already sold their tokens at this point.
Unallocated
This is the allocation that was originally earmarked for Team Funds. It became clear very early on that was a bad idea and the team made the decision to abandon its claim to these tokens which essentially returned control of this source of inflation to the DAO. 12,872,998 of these tokens were minted and distributed before the distribution was stopped. 65,000,000 of these tokens were also split off into a new allocation for SoulKeep rewards.
Partners/Advisors
For full transparency: This allocation and the Unallocated funds were distributed through the same wallets. A total of 42,872,998 tokens were distributed between Partners/Advisors and Unallocated. The size of this clearly marked allocation was 30,000,000 and I made the decision to mark this allocation fully distributed and to have the remainder notated in the Unallocated funds section for accounting purposes.
Play to Earn
The Play to Earn allocation is subdivided into 4 different allocations: Ranked, Tournaments, Brawls and Land. It's worth noting that it took a year to bring 3 of those subdivisions online, which makes the overall Play to Earn distribution appear to be much further off target than it actually is.
Important things to note:
- We are slightly over on Ranked rewards which means we'll run out of that allocation a few months early if nothing changes.
- We are significantly under target for tournaments, which is one of the reasons I spent so much time working on tournaments a few months back. I have corrected the schedule, but there are still roughly 7% of those tokens that will not be minted without a proposal on what to do with them.
- Brawls are significantly under target, in part due to the fact that Tier 5 brawls were not rewarding tokens for a substantial amount of time. This was addressed with a proposal a few months back to encourage guilds to advance to higher Tiers of Brawls.
- Land is slightly over, similar to Ranked rewards. We'll likely run out of this allocation a few months earlier than intended if nothing changes.
Staking, LP and Oracles (Validators)
This allocation makes me even more aware of how critical it is to get validators online as soon as possible. While performing this audit it became clear that Staking rewards are seriously over target. This resulted in a lot of investigation and it appears that what happened is that while Staking rewards were supposed to reduce over time to hit the 65 month target, that was not implemented properly, so we're roughly 12% over target meaning that if we don't change anything, that allocation will run out approximately 8 months earlier than expected.
The LP rewards are under target due to several proposals that have been passed by the DAO since the distribution began. This means that we can either never print those tokens, reallocate them elsewhere, extend the runway of that allocation or find a new use for them. This was expected and is working as intended.
Update: Validators are slightly over target right now. I updated the graphic to correct this issue.
SoulKeep
The allocation for SoulKeep is slightly under target. I didn't find any explanation as to why, but it's yet again another example of why getting Validators online is critical and I'll dive into that more below in my suggestions.
Where do we go from here?
I've been spending a lot of time pondering this question and I have some suggestions on how to move forward. It's worth noting that I am but one opinion and I'm sure others will have their own suggestions. Hopefully this audit will inspire some great conversations and help us to choose a good path forward.
My Suggestions
My primary suggestion that comes out of this whole process is that we need to get Validators online immediately. I know that is not exactly possible, but I don't think the importance of this can be understated. We should have all of this information readily available and easily auditable by anyone at any time via clearly readable on-chain data. It shouldn't take months of work to figure out what tokens went where and how much are left to be distributed.
I would suggest that when we transition to the SPS Chain that all tokens are minted and each allocation has its own "bucket" of rewards that can be verified by API. This would allow for third party tools to be developed that can track the amount of rewards remaining in real time and we'll know down to the day when they are schedule to run out.
Having that level of information would allow us to start planning and working to address how we want to proceed before an allocation is depleted. For example, knowing exactly when Staking inflation or Play to Earn rewards are going to run out will add a sense of urgency and a clear deadline of when the DAO needs to be self sustaining and have itself positioned to provide rewards for actions it wants to incentivize moving forward.
There's a lot of information to digest in this post and I have plenty of my own thoughts, but I think it's more important to open it up to discussion at this point. It's not for me to tell us how we have to proceed. This is a DAO and it's up to all of us to chart the course forward. I've shared my findings and immediate thoughts, but it's worth noting that my opinion is just one in the collective. Thanks for your time and consideration.
Heck of a job Clay, thank you
Thanks for sharing! - @azircon
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Thanks for getting all this information together and laying it out in an understandable fashion. I think it will be very helpful in a discussion for what happens next going forward!
This is the single biggest question that the SPSDAO needs to answer before it works out the SPS overhang and SPS print schedule. Once the future node and reward structure is in place, then we can work to make sure we have an emissions schedule that is meeting those needs and the current/future needs of the game.
All this talk of burning is way too short-sighted. Thank you for all of your hard work in collecting this data for the SPSDAO.
Well put
Yeah, needs to think about the sustanability of the game.
Great work to bring this data in.
However, I have a question what will happen when we distribute all the SPS? I tried to get the answer from the whitepaper but could not find any.
Right now we distributed almost half of the maximum total supply. According to your tables, we will run out of SPS for staking and LP in 2027 and for validators in 2028. It is not that far from now. What then next? No rewards for those activities?
I can not see any way to bring SPS back to the ecosystem. Maybe the season pass should be sold in SPS, for SPS value of 1-2$ of SPS.
Bitcoin for instance has a halving mechanism for minting new tokens. We have fixed rates. They have fees for transactions, we have none.
I think we need to find a solution to bring SPS to the pool to redistribute them for all activities (or maybe I don't understand something).
I saw there is a proposal to cut off max total SPS supply. I suppose manipulating the total supply in either way just breaks trust in the whole ecosystem so this is not the way to go.
We're currently sitting on about 2 million USD worth of DEC which can be used for rewards if it needs to be. As far as LPs, we've been moving to have the DAO take over LPs for a while now. I think it's likely those rewards will be phased out entirely or repurposed in a way that benefits the DAO long term. In general, how to make the DAO self sustainable is always on my mind and the driving force behind many proposals I put forth. I think we'll get there.
Good plan 👍
This will be huge. Great DAO potential with the solid, established community. Looking forward to following.
@clayboyn
Hopefully we've some experts who can sound off about how much stuff should really cost once this new validator proposal hits 😀
Good work Clay, thanks!
After reading this I have changed my mind on how much priority needed to towards SPS DAO. I used to think of it as moderately important. Right now I would rank it below New Player Experience and onboarding + marketing. Thank for compiling this report!