Splinterlands Supply Glut Back to the Forefront

in LeoFinance2 months ago

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They say you should dress for the job you want but if you want to be a surgeon, walking into your burger flipping job looking like you're ready to get elbow deep in someone's guts may not help you.

Splinterlands has been dressing for the job they want for a while now. With the web 3 notion that you can't tell people what to do but you can poke them relentlessly until they do what you want them to do, Splinterlands has made a game full of glut.

Take a look at this.

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There are probably only a little over 1/3 of the 15 million CL packs opened so far. While almost 2/3 have been sold, you know half of those are probably sitting unopened.

There have also been many people who've combined these cards to all different levels.

Still there are 236,704 Hardy Stonefish in circulation.

If you ask the team about it though they will correctly point something out about this card and all the rest:

It takes 400 copies to max out this card. If you assumed all 236,704 of these were level one cards (they aren't), and you divide that by 400, you would have just 591 copies of this card to be split amongst 100k players. In that sense, this card is scarce as hell.

Further, they will tell you that it's their goal to make that happen. But we all know, this isn't possible. The game in which people get and combine all the cards real quick is the game they've been dressing for since Alpha but they never got the job and they never will.

This has been a huge problem in this game up until now. The supply glut is the biggest thing holding this game back. But so far the negative impact has been less than it could have been.

Two super events that increased card availability

The problem got worse when the rental market came out because cards that were just sitting dormant in many whale accounts could now be rented out. The utility of millions of these cards was now unleashed on the market so suddenly fewer cards were needed in the game.

Luckily though the rental market was also a HUGE innovation that, along with the SPS airdrop, brought tons of new player expansion and soaked some of that up.

Right now though we are seeing another event quite similar to the one the rental market brought, but without the expansion of players.

Even though the rental market existed, many huge whale accounts didn't bother putting their cards on the rental market. Maybe their accounts were too big and unwieldy. Maybe they just didn't see its potential. Maybe they understood the damage they would cause to the value of their own cards. I really don't know but I do know they haven't put the utility of their decks on the market and that has helped the market weather the supply issues caused by the team dressing for a job they aren't qualified for.

The event happening now is the emergence of rental bot companies.

For a 10% profit share, a bot will manage your rentals for you if you have the hive power to keep up with it.

How good is the bot? That's a whole other post. Let's just say that if you weren't good at managing your cards, its probably an upgrade but not anywhere close to as good as you may have been hearing. There's some shady stuff going on in the numbers. Unsure if its intentional but there are some problems to be sure.

The biggest of these companies is splex with its Rent Golem.
It could be higher now but a few seasons ago splex was saying their bots run over 30% of the rental market. That was after just a few months of existing.

What the emergence of these bots did was wake up the giants.

Maybe you remember earlier this year when someone opened 250k Chaos Legion packs making them the biggest account in the game in terms of total collection power? I've watched that account and besides a few delegations, those cards has sat unused.

Screen Shot 20220805 at 3.28.27 PM.png

Not anymore. Now 15k of those cards have hit the rental market. It would be more of them except bots are HP heavy and that is about all the accounts 13k hp can take.

But if you're wondering why your rentals just took a hit? There it is.

And it's not just them. To give you an idea of the accounts Splex is now managing, they have 3 levels of volume discounts.

My account is worth a bit over $60k USD. Most of it is optimized for rentals.

According to Splinterlands, accounts over $10k in value are the top .45% of all accounts. I can only guess that mine is top .25%.

My account doesn't come close to qualifying for a volume discount. Not even the first level. My account usually makes 25-30k dec per day. To reach level 1 of their discount tier requires a 14-day daily average of 50k dec. To get the best discount you need 150k dec per day. I'm not actually sure that anyone reaches that.

To be fair, there are ways to add to your average that aren't rental market related like spending a lot of cash on cards using their market place but it's still going to be a huge challenge to get to those levels on the 14-day average they want.

Splex isn't targeting normal accounts although they will take you. They are after the whaliest of whales. They are waking giants and flooding the market with cards that were dormant until recently. This is a super event that no one is really talking about.

Screen Shot 20220806 at 12.14.13 AM.png

A couple weeks ago I put out a post talking about how I'd been consistently renting out untamed summoners for 35 dec each. Now even after almost 2 million rentals, there are still 850 to 1650 of each sitting dormant on the market. And I can tell you, the bots are no longer paying up for using them. You can rent them all day now for a few dec. This is because so many new cards hit the market.

I don't write this to disparage the bot rental companies. I definitely have a few critiques of them that I might decide to write about later but ultimately I welcome their success. They are showing us a truer picture of the game. But I assure you, there are still many accounts sitting on a lot of dormant cards.

I mean, our friends that opened 250k packs have a lot more than 15k cards they could be putting on the market if they wanted to. We are still only seeing a fraction of whats out there.

What I'm writing this for is just to make people aware that this is happening and its going to have a detrimental effect on the game for a while.

The team has been lucky to this point that so much of the inventory they've been able to sell to us has been sidelined but that luck might be running out.

With bots renting out cards, we are getting more and more of them finding their way to the battlefield - or rather, to sitting on the market driving card values and prices lower. And it's just going to keep growing. I think the biggest holdup now is that these bots are still hive power hungry. You need a lot of hive power to keep a large account managed properly. But at these bots find ways to get more efficient, we will see a steady influx of inventory coming in even if the devs didn't release another pack.

It's time to revisit the idea that "well, when you combine all the cards it's not that bad" when they've spent the last 4 years unsuccessfully trying to get people to combine all the cards.

Combining cards gets harder as time goes on

And as each new pack comes, the likelihood that anyone is going to go back tot he old sets and start maxing cards gets lower. This is especially true now that Modern only works with 2 generations of cards. Untamed is a few months away from being banished to Wild only. When that happens, Chaos Legion will be on the downhill slide with its days numbered too.

And remember, the side set gets kicked down the line at the same time the parent set does. That means Rift Watchers only gets about 15 months of circulation before it's deemed too old to be Modern.

If someone plans on playing only Modern going forward, this has to be factored in when deciding which cards to buy and max out.

Gaming guilds and bot farms aren't that different

With the team set on attracting outside gaming guilds as a primary vehicle for growth and the fact that much of the reason for creating a Modern format was to give new guilds a chance to compete, we have to take that to mean that gaming guilds and the thousands of players they bring in will likely be playing mostly Modern.

This is great since there are more Modern cards than anything else but we do have to ask what this means for card sets when they are dropped from Modern. Are Untamed and Dice cards a few months away from a major selloff?

The other thing to ask is will these players be compelled to ever combine cards to max?

A few weeks ago in the townhall, Aggy interviewed a guild owner who was trying to make his way into Splinterlands. He said something interesting that makes a lot of sense:

Gaming Guilds don't buy the top cards. They don't try to come in first place but instead do just enough to be profitable.

Guilds are a lot like bot farms in that way. They need duplicatable strategies using easy to access cards. This likely doesn't mean maxing out a bunch of cards but spreading many lower level cards amongst many accounts.

And this shouldn't be weird.

I can't think of a single thing in life, including these games that doesn't have most participants operating at a mid to lower level. A few people rise to the top but the vast majority will always stay in lower levels in most of what they do. The average will always be well below the top in performance and ownership. This isn't different in Splinterlands and the cost structure of the game basically guarantees it.

It costs thousands of dollars to max out a card series. With each release being seemingly bigger in scope than the previous ones, its not going to get cheaper.

While a card like Hardy Stonefish might now be $0.015, that's just for the cheapest copies. In order to max a card out paying anywhere close to these prices for all 400 cards they would need, a player would have to slowly buy over days or even weeks. As you can see, in this card with 236k copies, there are only 4100 on the market at all.

And next month when Rift Watchers comes out, there will be a sudden shift in energy away from maxing out CL cards and it will be on to maxing the 46 brand new Rift Watchers cards. And before the people who really want to do that can finish the job, it will be onto rebellion.

At that point, it's going to be very rare to find someone who says the words, I'm trying to max out my CL collection. And also at that point, we will probably have 7.5 million CL packs unopened as people rush them to market expecting them to be worth $25 each.

The great bot return

But it's not all bad. In the last townhall, Aggy interviewed another dude who said he ran a bot farm that has been disabled since ranked rewards went into effect. He is planning on coming back but he still hasn't worked out the rental kinks.

This is something I've been saying for months. We lost a lot of bots who need to rent cards to play this game. Not just a few cards but 40-70 cards each. But they are trying to figure out how to come back still and eventually they will figure it out.

We've seen many false starts as a few bot farms turn things back on for a few days and then disappear again. Recently we hit all time records in total rentals at over 3 million in a single day. This was in the middle of last season and it topped every end of season ramp we've ever had.

This season we have dropped back down but at 1.8 million rentals, its still quite high. The problem now is that with all the new inventory on the market, 1.8 million no longer has any impact on sending values up higher. At this point, I think we need about 4 million in order to really see a balance in supply and demand and that's more than we've ever done.

But, all we are waiting for is these bots to turn back on. Once they do that, the fact that there's more inventory on the market might be a positive because otherwise prices may get out of hand.

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Interesting read. Land is going to swallow a lot of cards, which you don't mention.., that is if what those monsters produce on the land outweighs the return of renting them. If all these monsters are suddenly put to work, renting will be more profitable again.

Thanks.

I thought that too but I'm honestly not sure now how many cards land will swallow up.

In the last town hall someone asked Yabapmatt if they are putting out more cards with these current releases to cover land and do they expect a card shortage?

He seemed to be a little surprised by the question and his answer implied that land wouldn't really put any strain on overall supply but would take many older, more rare cards out of circulation.

He said something like, "The purpose in land is just to give older cards a place to be used." He went on to say "let's say land takes 5 cards, you get a lot more output on your land if you use 5 fully maxed out alpha gold legendaries than you do putting 5 common CL cards on there." <--What's in the quotes is just from memory and may not be exact.

I'm not sure if 5 was just a number pulled out of his ass or if its really what he's thinking but if its 5, that could only mean 750k cards pulled out. While that could mean lots more combined cards, I think the major takeaway is that Matt doesn't see land as a major card sink with the exception of old rare cards which he said there will not be enough of.

This also makes me think that if they start to think it could be a strain, they will probably just adjust the rebellion release upward.

I think renting is going to come and go. Today I'm suddenly doing very well again as someone's bot is renting 1 BCX Chaos Legion rare cards for 20 dec lol. I bought a bunch more yesterday because with 2-day rentals, at that price, it covered 1/6th of the cost in one rental.

Thank you for the support!

Alpha's have big CP, it can only be down to that. At the top level there are not many players with Maxx'd Alpha's and people in those days left cards half-levelled up. I have some Beta's in a similar state.

He likely means cards like those. They would be better suited as land slaves.

It could come down to CP for sure but the fact that they have boosts in gameplay for alpha and beta makes me believe its probably going to be similar with land.

Even if the top level players did have all those cards, they would run out very quickly if they had a lot of land to cover. I think that's the point Matt is getting at though. The older and rarer the card, the more it should be in demand. If they do this right, the demand for those cards will continue to grow forever as land owners slowly try to increase the output of their land by getting closer to the ideal. People might even start combining alpha and beta cards again.

I'm going to start picking up more alpha cards in anticipation. They are really cheap right now. At the very least, they should maintain a high rental value if I'm reading this right.

I was thinking that same thing. Land will be a huge sink for liquid cards, especially previous generation ones.

Thanks for the thought provoking post. Perhaps they got too aggressive with the supply for CL, time will tell. It will certainly take a while for that supply to get soaked up. Aside from land, perhaps additional incentives will need to be created to promote wild play or card burning to help sustain a healthy demand for previous generations of cards. I am sure they would be open to that should the need arise. I will continue to accumulate whatever 'cheap' CL and reward cards I can get based on these assumptions.

Thanks for reading. I'd imagine they are going to be even more aggressive with rebellion. What could be interesting is when governance starts if players will look for ways to encourage lowering the supply. I think Aggy and Matt consider pack sales as "core business" and therefore it couldn't be voted on but I wonder if the community would ever vote to do something like increase the dec for card burns. I'm sure we could come up with some creative ideas together.

I'm also picking up cheap CL cards. The other day rentals spiked on many 1bcx CL rare cards to 20 dec. Its back down now but one 2 day rental paid for 1/6th of the cost. There are deals everywhere.

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Thanks for this! I didn't know about that biggest account starting to rent their cards out now that it's a trillion percent easier to manage.

I rent my duplicate cards out, but mainly I try and play with my full collection. I don't have many CL cards and most of my cards are Beta edition... so I just can't compete in tournaments and modern at the moment.

I've been noticing the value of my collection get lower almost every day for months and months, which is to be expected... and I've been waiting for Yodin and Kitty to get cheaper so I can get them.... but I hadn't thought about how much cheaper they might be after Untamed falls out of Modern. Do you think Guilds would sell all their CL cards once CL falls out of Modern? Or would they just start playing in Wild?

I'm honestly really worried about what Rebellion will do to the CL value. At this point I can't imagine CL packs ever being worth more than $4 on the secondary market... but if that's true then you can expect the investment into Rebellion to be significantly lower... how many people bought CL packs purely because Alpha, Beta, Untamed & Dice are worth way more on the secondary market than their initial purchase price? If that no longer is true then Rebellion is not going to sell well at all...

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Do you think Guilds would sell all their CL cards once CL falls out of Modern? Or would they just start playing in Wild?

It's really hard to say. Things change so fast around here that its impossible to know what things will look like a year from now but the problem now is that CL alone can't compete with the older cards. If CL, rebellion, and whatever is next does compete well, they might switch it over to wild but otherwise they'd have the same problem. Untamed is also going to be a huge hole to fill. There are some great core cards in that set and I wouldn't be surprised if losing Untamed from Modern doesn't push a few modern players toward building better wild decks.

I think cards, especially the newer ones, are being pushed toward being more tools to play than a way to store value. SPS is the new store of value. And on a higher level, the platform itself. That said, I don't think CL packs will have a problem getting back to $4 on the secondary. There will be a year where CL will still be on modern but wont be available through the site and that will keep a market for them. Plus many people just won't be willing to sell for less than at least a small profit. I could see CL packs trading around $5-7. They might spike toward $10 when they first sell out and then drop back down. I'm thinking Rebellion packs will probably be $5 so that will help them stay up.

It's a lot to think about.

It really is a lot to think about... which is great. It's honestly incredible to have so many things to try and weigh up and predict for what is essentially, just a card game.

Hmmm, you might be right about the CL packs on the secondary market. I think CL packs are going so cheaply ($1.84 on Hive Engine) because people can buy with DEC now (4000 DEC = $2.25) which means that if you have enough vouchers you can buy 2,000 packs for $4,517 and sell 2,400 packs for $4,416. This means 2,400 extra CL airdrop entries is only $100... which is an extra 4 Conqueror Jacek cards (assume value around $25) plus the other remaining airdrops.

However, once the edition sells out... the airdrop cards is removed from the equation, so why would anyone sell at a loss at that point? The only thing I can think of is to raise funds for Rebellion, but surely that's not the majority of people.

I guess it depends on how complete the Rebellion edition is... if Guilds and new players can be competitive with only Rebellion cards then there might not be much residual value in CL packs in the year it stays in Modern. I'm so curious to see what type of cards are in both Riftwatchers and Rebellion.

I'm really enjoying your insight... I haven't really thought about the editions as solo collections nor do I have really any insight into how guilds operate so your post really helps me think about the game outside of my little bubble. Thanks!

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What an awesome post; I wouldn't usually have sat through 2200 words, but on this one, I did. It's an interesting argument you have put forward, and explains why my rentals have been a bit cheaper when I was hunting today for some cards.

Thanks for the time in sharing.
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I really enjoyed reading your post.

I recently decided that I don't really like playing splinterlands and started renting out ALL my cards.

I saw all the posts about rentals going down and I am happy to understand why now. One whale account, plus a bunch of people like me, all looking at their strategies now that the airdrops are over.

I look forward to the bots getting it together again so they can rent out cards.

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