Resolving SPS Inflation
b6d8c9a02e9e69591eaa0c921baaf6ef4c2b75a3
It is important to take a step back and reexamine the economy as a whole, with the loss of so many players, the question of the total supply of SPS should be in question. With the shrinking player base, is 3 billion SPS still a logical amount, at this point in time, my argument is no. At the time of drafting this proposal the current value of SPS sits at $0.0071748, per Hive Engine market data. A significant drop in value from when it was first introduced. Therefore, to stabilize the value of the Splinterlands SPS (Splintershards) token, immediate deflationary steps need to be taken. We have real world examples, that show this is a viable solution to the inflation that we are experiencing, i.e. Bitcoin and corporate stock buybacks. Bitcoin, in particular, shows us that scarcity is king in the crypto world. This proposal aims to take the white paper total from 3 billion tokens to 2 billion. I would prefer an immediate reduction of supply, however, to not shock the system, a trial period of 3 months is proposed. Sending 2% per month of the remaining unreleased supply to be sent to the null account effectively burning it out of the economy.
Implementation
Since there is over an additional 1 billion in SPS that has yet to be added to the ecosystem over the next two years, this will only compound inflationary pressures in the Splinterlands economy. That is why this proposal takes aim at the remaining SPS that has yet to be released, specifically, the Foundation/DAO pool will have .2% burned monthly, the Unallocated pool will have .2% burned monthly, the Play to Earn pool will have .8% burned monthly, and the Staking/LP/Oracle Rewards pool will have .8% burned monthly. All totaling up to 2% each month during the three-month trial period.
Once the test period has concluded if this has succeeded in stabilizing SPS token and increasing the price by 5% at least, then this should continue till the total supply of SPS is limited to 2 billion through the remaining release schedule of 65 months, per the white paper.
Potential Pros
Scarcity Effect: Reducing the total supply of SPS tokens can create scarcity, which, if demand remains steady or increases, could drive up the value of each token. This is based on the basic economic principle that scarcity can lead to increased prices.
Reduced Inflation: By cutting the above mentioned SPS distributions, the rate of inflation will decrease. Lower supply growth can help stabilize the token’s price or even increase it if demand remains constant or grows.
Enhanced Investor Confidence: A clear commitment to controlling inflation and enhancing token value can improve investor confidence. Investors might view the token as a more credible and stable asset, attracting more long-term holders.
Perceived Stability: Reducing the supply can help stabilize the token’s price fluctuations over time, making it less volatile and more attractive as a digital asset.
Sustainable Economy: By adjusting the token supply to better match the game's current user base and economic activity, the overall economy of Splinterlands can become more sustainable. This can help prevent the kind of hyperinflation that diminishes a token's value and utility.
Long-Term Planning: A more stable and predictable token economy can help both players and developers plan for the long term, potentially leading to more strategic gameplay and investment.
Increased Engagement: If the value of rewards becomes more meaningful due to higher token value, it could lead to increased player engagement. Players might feel more rewarded and motivated to play regularly.
Community Trust and Loyalty: By demonstrating a proactive approach to managing economic challenges, the development team can build greater trust with the community. Stabilizing the economy can help retain players who might otherwise leave the game due to poor economic conditions or devalued rewards. It may also have the added benefit of attracting back players, who have since left.
Marketing and Public Relations: Splinterlands can showcase its commitment to innovation and responsiveness to community feedback, enhancing its image as a player-focused game. Successfully implementing and communicating such a strategy can generate positive publicity and enhance the game’s reputation in the market.
Potential Risks
Market Adaptation: The market might take time to adapt to the new token metrics, resulting in volatility or unintended economic behaviors within the game's ecosystem.
Demand Elasticity: While reducing supply theoretically increases value, this assumes demand remains constant or increases. If demand is elastic and sensitive to changes in supply and rewards, the actual effect could be counterintuitive, with value dropping as players leave or disengage.
Competitiveness: Lower rewards might make Splinterlands less attractive compared to other play-to-earn games and DeFi platforms offering higher returns, potentially reducing the user base. Seeing as how the player base has already shrunk significantly, i.e. bot farms leaving, this is a lower tier risk in my opinion.
Player and Investor Sentiment: Reducing rewards may negatively impact player and investor sentiment, leading to dissatisfaction or reduced engagement. This can counteract the intended positive price effects if a significant number of users leave the ecosystem. Seeing as how the team has already taken steps to combat those who would leech on the system, I believe this to also be a lower tier risk
I look forward to the feedback of the Splinterlands management team and the community.
Yea nerf rewards too, we Just Need that now 😂
It's definitely time to cut the supply. A billion may be a tad aggressive though. I will vote for this regardless. SPS will never have value with so many tokens. Let's save ourselves years of burning and just do it now. I suggest targeting all the SPS left in the LP pool first and see what other areas need to get cut to reach that goal.
Interesting. Thanks for bringing this to a vote. This one is goiing to need the whole two weeks to discuss the ramifications I think. I'll wait to see where the conversation goes before I vote
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Link to this Pre-Proposal
Updated At: 2024-07-09 10:19 UTC
At the time SPS white paper was written, the player base was similar size to today. The problem is not purely 3B total token supply, it is demand relative to that supply.
Why not stretch out, or hold back, the tokens yet printed? Slow the drip, and perhaps increase the drip in line with the whitepaper targets as playerbase (demand) increases?
Burning these tokens is simply a short-term bandaid and does little to sure up the sound financial future of the SPSDAO and the game itself. Before we jump to any conclusion burning tokens, there needs to be a solid plan in place to extend both play rewards and node license rewards past the 2 years remaining in the SPS print schedule.
I fully agree that the current supply of SPS is far too much for the appetite of the current player base, but that won't always be the case if/when new players arrive to the Splinterverse. But burning is near-sighted!
We especially need to be prepared to reward node license holders for securing the decentralized future of this game when the company finally takes a step back from being the main host. Of course, we also need a plan to make sure there is SPS to reward both ranked play and tournament play after these two years are up.
One strategy could be to reduce the emission rate for SPS rewards, so it would help with the supply issue by releasing less SPS now while also providing for more years of certain reward structure. Another strategy could be to reduce the total supply while also planning for an SPS buyback to ensure SPS rewards are available after the print is closed.
Unless this proposal is refined to include a plan for SPS rewards after the emission schedule ends, I will not vote for it to pass.
YAS! Stop paying license holders- just pay people who run nodes, based on the amount of traffic their node gets. This would prepare license holders to begin securing the decentralized future of the game.
Any analisis that starts with a "with the shrinking playerbase" its going to be wrong.
The idea is not to have a "shrinking playerbase".
If you cant turn around the "shrinking playerbase" to an "expanding playerbase" nothing will make sense. No asset will go up, no matter what you do.
Cutting down on rewards on the "play to earn" side of things this wont help turn that around. More players will leave. This will be another blow to current and future players.
In conclusion. This, as is currently written wont work. If anything we need to give "playing the game" aka ranked and tournaments MORE, not less if we want to attract new players.
Your math is horrifically wrong. If you want to reduce the total amount by 2%, you have to reduce each individual pool by 2% as well (or adjust the percentages so the weighted average is 2%).
Otherwise we would burn 25% in each of the 4 pools and then have burned 100% lmao
That's a just and fair point, but you didn't have to be a dick about it, did you? #checkcheckthatout
I don't think this will do anything positive, especially the reduction of the player rewards will be counter productive and put more pressure on the team to create enough burn to sustain rewards faster. If anything I would prolong the emission phase to give them more time, which of course would require to reduce emissions now.
Where to take it away? If I had to choose I would argue to slash LP rewards further. There is so much liquidity there, more than required. I believe a big chunk of liquidity providers do it because they will hold SPS anyway, I doubt there are many yield speculants there with inflation exceeding rewards.
Another thing would be to slash staking rewards, but that might be just my bias against passive income in games that is not direct profit sharing. Passive income through print is just bad in my opinion. Stake SPS to earn more rewards for playing and if you don't have time or want to play rent it to someone else.
We need the flywheel. I think soulkeep had a better system in place to activate the flywheel. The average player doesn't want to keep spending thousands of dollars on a card game every few months to play it at a reasonable level. MTG doesn't require card combining or any BS. You buy 1 card and play with it and it's the same as every other card of it's type. I think a card burning system would work if you need to burn cards to mint future cards and reward cards could easily fit into this structure to provide rewarding gameplay but when a game isnt fun, you wont have people coming in and that's where we're at now.
Yaaaas
SPL needs the flywheel- it's the only way to contain token inflation. Right now, the wheel is broken and IMHO- Vouchers have broken the wheel.
Vouchers are getting burned in lieu of DEC, because so many Vouchers continue to be issued.
Ie. 40 Vouchers for a Wild Pass are ~$0.54 while the 2000 DEC runs ~$1.25. Stop issuing Vouchers, Voucher price goes up, start burning DEC, DEC price goes up--> get the flywheel restarted.
Changing the WP just because "things aren't going up" is a TERRIBLE idea.
I cannot stress this enough. Once that changes... All bets are off and "trust" in the Ecosystem is lost.
3 Billion Tokens is irrelevant, it's the $$$ in the ecosystem that matters.
Considering there are over 144Bn Doge in circulation and Doge is $.12 with an $18Bn MCap, Token Supply doesn't matter. Our MktCap is like $10,000,000 +/- and the solution, imo, is simply more users thus demand.
In fact, like most coins on Coinbase, the lower the $ value of a token the more attractive it is to new investors.
I appreciate the approach to this issue but cannot in good faith support this method of "correction".
I know this always sounds good to people but it's proven to be a horrible way to go about things. Instead we need the team or DAO proposals to come up with ways to USE the SPS and give it value. The player base will come.
Diddydidit, I like that you are trying to solve a problem you see. I appreciate the thoughts and I'm happy you are bringing this discussion up.
I agree with @ducecrypto and @vettev that reducing emissions, and thus extending rewards over a longer period of time, makes more sense than just burning them.
I get your frustration, but people make decisions using a total market cap based on 3B total tokens eventually given out. I feel that making it less (or more) than the whitepaper would be a problem, and it would hurt the trust and confidence in the future.
I also think this is a very intricate subject that will take a lot of discussion to pass. I welcome the process starting, but I'd be surprised if this topic can pass anything without a bunch of people getting together to build a compromise solution. (ps... you can count me in if anyone wants me involved!)
To be honest I don't think cutting from 3B to 2B is enough. We are in a downwards flywheel already and I don't think anything can stop it. Maybe if we halted all token emissions and card printing entirely, there would be a small chance that the ecosystem recovers. I prefer we keep the 3B and wait until asset/token prices drop another 99% which will not take so long if we keep things like they are. With a 2B supply it will take longer, which is undesirable. Once we get a legendary gold alpha card for 80 USD and an occupied legendary plot for 25 USD new players will come because they can become Goldmatters for 1-2k and vugtis for 10k. Currently new players have no desire to fund the old whales only to become tiny shrimps. They just won't. And the more the whales buy now the more they exacerbate the problem that new players won't be interested in participating. Only when new players see a similar "advantage" like with the SPS airdrop or the original land sale, they will come back in bigger numbers. When whales need to get a 100x only to break even, that would be some incentive for new players, We aren't there yet but we will be. The best thing we can do is to prep the SPL team for sustainable hibernation, so the game can still exist in a few years with absolutely minimal costs, and to run prices to almost zero as fast as we can. Hence, i am against cutting to 2B because it will just slow down the inevitable. We need another 99% drop as fast as possible on all assets. When the big reset is complete, we can start to recover.
this is the most ridiculous thing ive ever read
here is more: https://peakd.com/splinterlands/@tharanthula/the-future-of-splinterlands
I think there are better solutions to this problem, like getting rid of vouchers so people have to buy the season passes and energy in dec. We could also stop allowing reward cards to be burned for dec.
YAS! So many better ways to approach this issue. So many, many simpler solutions to this problem.
For one, maybe not "getting rid" of Vouchers- maybe just stop printing them? The ones in circulation would, quickly, be 🔥until the price reached equilibrium with DEC.
For another, how about just stopping distributions to Licenses? Just Reward nodes.
Voting for this to pass so it will be discussed further but I do not think it has a chance to pass as it is currently written unfortunately.
There are definitely some important points that have been brought up in the comments that have to be accounted for. I think the solution where this has a chance to pass is to tie the reduction in emissions to a long term solution for ranked play. This need to coincide with a reduction in emissions in other areas too but I do not think the total supply is the main issue we need to tackle.
There are really only four sections in the whitepaper that are still emitting SPS tokens. (If there have been changes to these numbers since whitepaper was written please inform me, for instance what has been taken from unallocated and given to soulkeep.
Play To Earn 900M over 65 months
Staking/LP/oracle Rewards 900M over 65 months
Unallocated 270M over 65 months
Foundation/DAO 300M over 65 months
I think its fair to say the unallocated and Foundation/DAO is not affecting the market supply and should be untouched.
So before we start breaking down the Play to Earn section and the Staking/LP/oracle section, I think its important to quote the whitepaper here.
"Please keep in mind that once released, all of these details including, but not limited to, the amount of SPS added to the reward pools each month and how the rewards are distributed may be changed by a vote of staked SPS token holders. All information contained herein describes only how the system is planned to be set up at the initial launch, and it will be up to the token holders to decide whether or not to keep it or change it."
If the community comes to the conclusion that we need to start accounting for increased inflation outpacing growth, then we are within bounds to alter the course of the rewards. I am of the opinion that we need to vote on immediate action to address the inflation so we can make sure we are on the uptrend as this bull cycle gears up. An increasing price would not only reward those players and community members that have hodled but also would do wonders for potential eyeballs from the broader gaming community in Web3.
Sorry for the rambling, I find this extremely important.
So to breakdown Play To Earn and Staking etc..
There are 8 sections within Play To Earn and IMO they should all be treated equally. Each one on that list could use a long term solution so at the end of the 65th month ( which isnt that far away, 2 years left roughly?), there is not an abrupt shift in the market on all fronts at once.
Basic proposal would be to take the allocated amount left starting one month from now and create a bitcoin like distribution. Math would need to be worked out if at initial glance this looks viable, but roughly their would be a halving on rewards per month at a given interval of time for a given interval of time. I think we should be looking at a minimum of a 5 or 10 year runway for all of these items:
Reward Pool
Ranked Battles
SPS Staking Rewards
LP Incentives
Land Expansion
SPS Validator Nodes
Tournament Prizes
Guild Brawls
This way there is no change to ratio of how rewards are earned and no one section is benefitting more than another. Instead it reduced inflation by extending the distribution period to another 5 years.
To clarify, this would not be additional SPS distributed. You would take what has yet to be distributed under the initial whitepaper and would reallocate that amount over a 5, 10, 20, 50, 100 year period, whatever community decides. Maybe we give a few more months of current distribution quantity to lessen the shock or maybe the first 6 months uses a decreasing exponential curve to get us down to a level where the math works and a halving can be used to extend us out 10-20 years.
Yes there will be the argument that people will play less with less rewards, but if selling of SPS is lessened, the price increase of SPS will offset.
There are many Tokens that are more scarce than BTC. What makes the difference is the consistency combined with the demand and marketing. Nothing is going to change in BTC supply and investors can plan for the long term. If tokenomics get changed every few years vs never, the fickle project is going to have less long term investors. What is to say that there won't be another proposal later to change the supply again. Eventually we will become no different than a central bank messing with the money supply.
Reducing all the rewards + treasury is not going go do much. If anything this is going to hinder the amount of funds DAO has to invest in the future while driving away more players. We need more players and using the inflation to get more players is what matter at the moment. Messing around with what was promised in the whitepaper is only going to distract us from the real goal of building a great product.
I have read your proposal and whilst I think it is great that you are thinking of ways to stabilise or increase the price if SPS. I feel this is not the way.
Whilst reading I was thinking of how it would effect the market and sure it could help raise the value of SPS now but it is not a long term solution. It has the potential to create more issues then it would fix. My immediate concern was what if the player base grows again? We could then be in a situation where we don't have enough SPS.
I then read through the comments people have left and they are also concerned with the Issues it could create. One person said that at the time of the White Paper being written we had a similar player base to now. Whilst I can not confirm or deny this I feel like they are right in the fact that before land at least they would be right as around the time land was released we got an influx of players. It has been recent changes that have seen the player base drop back down ( or do I say correct ) to pre land numbers.
Other people have said that doing this could damage the games trust with trust with the community as it would have to change the white paper. Trust is a big thing if the community loses trust in a game blockchain or otherwise it can cause terminal issues to the game leading to the games death. I believe a lot of trust has already been lost through changes the developers have made that the community did not like. The people that are still playing the game are the ones that believe in the game and trust that things will turn around. We do not need to erode their trust anymore then it already has been.
I do want to stop and say thank you though as I believe that you put a lot of time and effort into this and the fact that you are looking to actively help and grow the game is amazing. Thank you!
Sou contra a queima de token, por isso meu voto é 'não'.
Not to pile on, concerning the many, glaring errors in your proposal, logic, and reasoning but...
What you are proposing and stock buybacks are in no way related. Corporate stock buybacks are not "burn un-issued shares" nor are they "slow the issuance of new shares onto the market". Corporate stock buybacks are, well, just that- the company that originally issued the shares, buys them back.
Some, similar, approaches to the issue would include things like:
Hello, I have been an entrepreneur for over 15 years now. I love Splinterland and the idea of it being a user-run company. However, I believe that the decisions made over the last few years have brought this game to the brink of failure. We have seen a ton of proposals to try to stop the devaluation of the sps and the dec and although several ideas are well the real problem is the lack of players. Even if we have the best games in the world, if no advertising campaign is done to make the games known and attract new players, we are doom. The best way in my opinion would be to have a budget for Meta and Google advertising campaigns. I hope you understand the importance of quickly setting up a marketing team before it's too late.😲
In my opinion, the most important is creating more usage for SPS or something like airdrop to get more attraction to SPS than the burning.
It has been an embarrassment to watch SPS go down in value over the past 3-4 years... Why has no one implemented a vote so that each SPS holder gets treated equally. Why make proposals when we all know the WHALES are controlling every possible decision.. Splinterlands has been such a regret of mine to invest in... I guess I forgot that $$$ is on the minds of Splinterlands top animals yet, they forget, Splinterlands would not exist if it was not for us.
Problem: Uh Oh, market's crashing... Everyone at the company wants to keep their job.
Current Company Reaction: "Indefiniitely print new cards, or else we have to fire everyone in the company until it's over..."
Solution: Future burning of SPS gets split by percentage, regularly, monitored, and voted to remain controlled. Splinterlands LLC or whoever's keeping the lights on and started this shabang(henceforth called Splinterlands LLC) gets a percentage portion to keep running the operation, and the rest gets burned.
The overall portions of burning and the percentage rate they get can be driven by what they need to keep the doors open. But, if the Splinterlands LLC, goes this route, they need to STOP printing new decks for a set amount of time, IMO indefinitely until previous peak prices are exceeded, but hey that's just me...
You're already burning it, just burn a tad more and keep a piece to keep the lights on. I'm not gonna recommend anything that'll cost you employees, I'm just a concerned American watching our government do the same thing with USD that your art department is doing with Cards. I know we're on an economic downswing, but I'm hoping some logical input can save both Splinterlands and the USA.
"Print Less, Sell for More."
-Misheard Arron Burr Lyric via Hamilton