SPS Flywheel and How to Get There

in LeoFinance3 months ago (edited)

So you've probably heard by now that Splinterlands is not immune from the crypto winter that we have been going through. Like many other tech companies, they've had to layoff a good chunk of their staff to extend their runway.

It is unfortunate, but that's how it goes sometimes.

So what can we as members of the SPL community help the situation?

Sure, we could just go out and spend a bunch of money on packs, but that's not actually something people are going to do if the incentives aren't already there. And if they were, then this wouldn't be an issue in the first place.

The single biggest thing we can do is get the SPS flywheel moving.

Splinterlands is a part of the crypto universe. I look forward to the day when we can say it has decoupled from the slings and arrows of crypto volatility, but today is not that day. When BTC drops 75% from its highs a year ago and almost every other coin drops 90+% then we are going to have a slowdown in all economic activity in the Splinterverse.

So how does the SPS flywheel help?

Imagine this scenario:

SPS peaked on launch and has been grinding lower ever since. That's actually fairly normal for an inflationary governance token.

We see SPS bottom out at 0.02.

Then it starts slowly rising. 0.03. 0.04. 0.06. 0.09. 0.13. 0.20. 0.25.

Before you know it, it has 10x'd while BTC is still going sideways and bad projects are imploding left and right.

When one of the largest players in the space has a coin that 10x's that's the kind of thing that gets noticed. This is built in marketing to the defi crowd, which is full of people that already understand NFTs and tokenomics. As Splinterlands gains more of their attention, some portion of them will enter the ecosystem and start to bring in fresh capital that will buoy everything else.

How will the SPS flywheel actually do this?

When DEC is above ~1050 splintoshis (aka 0.001050) the SPS burn mechanism will make an arbitrage loop profitable.

Let's say SPS is at 0.05. I could burn 20 SPS (1 USD worth) and receive 975 DEC. That DEC is worth 1.02375 USD. I can then sell that DEC to the liquidity pool and receive 20.4 SPS.

That 0.4 SPS extra is what we call profit.

And the price of DEC will be pushed down a little bit closer to the 1000 splintoshi par value.

Repeat, repeat, repeat until the arbitrage is no longer profitable at about 1025 splintoshis.

So that will keep a lid on the price of DEC. But notice what happened on the SPS side. SPS was burned and then more was bought. So this arbitrage loop creates buying and burning rather than buying and selling.

Once the buying and burning pressure exceeds the emissions and selling pressure on the market place the price of SPS will start to rise.

This is the genius of the SPS-DEC system. It funnels all the demand that people have to use the transactional currency of DEC into the governance token of SPS. It also is not subject to implosion like we saw with UST because there is no way to go backwards and burn DEC for SPS.

But like I said, it funnels all the demand that people have to use DEC. If there isn't sufficient demand for DEC, the whole thing doesn't work.

But it gets worse. Not only do we have a lack of demand for DEC expressed by the marketplace, but we also have some 6 billion DEC already in existence that we would need to burn through first and take out of circulation.

So the necessary pre-condition to get the SPS flywheel going is to suck up the 6 billion DEC in the market and make people want to continue to use even more DEC.

Sounds great, how do we generate demand for DEC when there currently isn't much?

Over the past few days I've seen a few proposal that I think have a lot of merit:

DEC bonds for land

We know that lands are going to require upgrades. Those upgrades are going to cost DEC. It's going to take... probably a lot.

So the idea is that a user could pay DEC today at a discount against the DEC upgrade costs in the future.

We don't know exactly how long into the future deployment is going to take, so instead of discounting future flows by time like a normal bond we would discount by size.

Example:

I want to pre-pay for 50,000 DEC worth of upgrades. Splinterlands charges me 47,500 DEC (5% discount) for that bond which I will get in the form of a NFT. When lands finally come online, I will be able to redeem that NFT for 50,000 DEC in upgrades.

or...

I want to pre-pay for 1,000,000 DEC worth of upgrades. Larger size, larger discount. Maybe I get a 20% discount at the 7-figure mark and it costs me 800,000 DEC today to lock that up. This also helps account for the uncertainty if I'm actually going to need that much DEC.

Fun side effect: a whole secondary market in DEC bonds could develop. Just like we see the values of normal bonds fluctuate with the overall interest rates available to traders we could see the resale value of bonds fluctuate as get more definitive info about lands. Once lands are fully deployed then there should be no discount at all unless people actually bought more bonds than can be used on lands in total. Unlikely IMHO.

For myself, I have a ton of land. I would be locking up DEC for a sufficient discount on the daily.

Advantages: Would be fairly easy to code. No game balance changes.

Disadvantages: It's very economic and not in the "fun" category.

Cheap promos

image.png

I think the Halfling Alchemist is the best card in the game. It was a limited edition promo for the BTC halving. I don't remember how much it cost, but it was fairly reasonable. It's a good card, but not OP. It's limited enough that you don't see it all that often and don't usually plan for it. So when you see your opponent with it you are automatically worried.

The idea here is to generate one new limited edition common promo a week or one a month that is pretty cheap. As a common, you'll need a bunch of them to level up but individually the cost should be small. Of course this would be paid in DEC.

I like small-print promos because they increase differentiation between decks. At a given level of competition I think most players having mostly the same cards is... kinda stale. It makes sense for stock tournaments that are true tests of skill. But having a unique card in your deck I think adds to the fun of regular play.

Side note: it's harder to create a game theory optimal team when there are more unique factors among decks. This makes bots less competitive.

Advantages: As we saw with Lux Vega there is still demand in the community for promos if they are worth the price. People love cheap cards.

Disadvantages: Requires balancing in cards. Requires team to go through the whole card generation process.

Community generated skins

image.png

Look at a lot of the AAA games and you will find that many of them sell skins. People seem to love customization.

People did not love the skins available from Splinterlands for beta cards until they were given SPS airdrops.

By opening the door to the community to create new skins we could get an amazing variety of skins from artists we already have in our player base.

But we also can't let anyone put in any skin they like. We'd get all kinds of nonsense. So for this to work the community would have to review the skins and determine as a group that these skins are acceptable for use. They aren't deceiving or misrepresenting or just too hard to identify.

This is a fantastic use case for DAO votes.

I imagine that an artist will design a skin, submit it to the DAO for approval, and once approved it will go on sale in the store under their own theme. Revenues would be split between the artist and Splinterlands (who would sequester or burn the DEC).

Advantages: Once up and running requires little to no work from SPL team. Cool graphics for your collection. Personality + individuality.

Disadvantages: Requires development of player submissions to the DAO proposal system. Probably a lot of skins will not sell, which would make some artists sad.

I'm sure people have many more ideas. These 3 stand out to me as having key qualities:

1, They have the potential to burn or lock up a lot of DEC
2, They would not require too much additional work from the SPL team
3, They are things that people want anyways in the near or medium term

I'm reasonably confident the team will see this post so if you have additional ideas that meet these 3 criteria drop them below in a comment. Include what your idea is as well as its advantages and disadvantages.

The solution is likely not a magic bullet, but if we can get a few of these processes up and running we can start churning through that 6 billion DEC overhang faster. And the faster we do that, the sooner we get to the SPS flywheel. And the sooner we get to the SPS flywheel, the sooner we start bringing in defi outsiders. And the sooner we bring in defi outsiders, the sooner we can start recovering from this nasty bear market whether BTC goes back up or not.

Posted Using LeoFinance Beta

Sort:  

Create a "Flash Sale" page in the store where you will periodically put select Gladiator cards up for sale...using DEC of course.
The team has slowly been eroding the barriers between brawl/ranked play by allowing players to get Merits in chests and giving ranked legal monsters Bloodlust. they are niche so exist in a bubble:

  • No market impact (they are soul-bound)
  • No impact on ranked meta (can only be played in brawls)

It would of course effect the Brawl meta. but not really in a bad way. Say you put Quora up 20USD RF and 40USD GF. it really benefits everyone. Worst case, you even the odds with "that" guy lol. Team wants more people involved in brawls and in my mind one of the biggest contributors to success in brawls is the possession of a potent Gladiator.

This would expand access to brawl success for smaller guilds both in size of guild and bags. success allows for growth which allows for advancement (using DEC).

This would also allow the team to introduce new Gladiators over time.

Create a Flash Sale for a limited time and then pull them...with no promise to ever bring them back...

If there are any "Brawls are holy" folks out there...at least i didn't hit you with "Splinterlands second Neutral Summoner is a Gladiator that gives your whole team bloodlust" put that up for 100k DEC..i'd buy a few :P

Posted Using LeoFinance Beta

I like it

Posted Using LeoFinance Beta

I have an idea that would help burn a ton of DEC, why not increase the market fee from 5% to 7% and burn that 2 % extra. We still have a lot of volume in the secondary market and if DEC starts increasing in price the daily volume is likely to grow too.
You can play around with the percentages but you get the idea, the same thing could be done for the rental market...
Using the 2% and the last 24 hours sales volume it would burn 1,536,460 DEC per day. Not bad considering we're in the crypto winter.

I think that's probably doable

I like the GLS system better of 2% going to the DAO. But yeah, having market fees benefit the economy in some way would be excellent.

I know the second round (item and spell selection) becomes problematic with different opponent skins.
Surely having the standard skins displayed on that screen, but the bought/selected skins visible in the battle replay, would fit the bill.

Posted Using LeoFinance Beta

I think the skins would be part of the gamesmanship, subject to DAO oversight.

Plus maybe one of your items or spells would be glamour-breaker: removes all opponent skins.

Posted Using LeoFinance Beta

Except bots can ID cards with 100% accuracy.

Hmm, true.

Posted Using LeoFinance Beta

Unpopular opinion but I'd rather see them start hammering out quality of life improvements, fixing bugs, and improving the new player experience before they start selling futures and more promo cards.

!PGM
!PIZZA

Sent 0.1 PGM - 0.1 LVL- 1 STARBITS - 0.05 DEC - 15 SBT - 0.1 THG - tokens to @torran

remaining commands 1

BUY AND STAKE THE PGM TO SEND A LOT OF TOKENS!

The tokens that the command sends are: 0.1 PGM-0.1 LVL-0.1 THGAMING-0.05 DEC-15 SBT-1 STARBITS-[0.00000001 BTC (SWAP.BTC) only if you have 2500 PGM in stake or more ]

5000 PGM IN STAKE = 2x rewards!

image.png
Discord image.png

Support the curation account @ pgm-curator with a delegation 10 HP - 50 HP - 100 HP - 500 HP - 1000 HP

Get potential votes from @ pgm-curator by paying in PGM, here is a guide

I'm a bot, if you want a hand ask @ zottone444


We've already got an enormous amount of Art we can use for skins.

Splinterlands Art contest winners. Get the permission of the artist, or make it a condition of entry that winning entries will be licensed by Splinterlands and receive an x% royalty on skin sales.

The mechanics might be a difficult thing to implement (as the devs are busy working on other things) - but the pay off for the community and the artists involved is ongoing, instead of a once upon a time prize.

Excellent point. I have literally never looked at the art contests and completely forgot about them.

Posted Using LeoFinance Beta

You can find an overview of the recent art contest winners on this page: https://www.splinterlore.com/current-contest-winners-1

some people also mentioned, that you could sell a title for DEC Burn. would be a nice DEC sink. and probably verry easy to do.

Like "Inferno", "The Energy Consumer" etc.. not that creative but you get the idea. xD

the only thing i am not sure about its if you would make it a on time promotion only. or you would make it really expensive but it would be available for sale for longer / forever time.

Ah yes I had forgotten that one.

I'm not sure how much people would actually throw into that. Worth a shot though 🤷

Posted Using LeoFinance Beta

Since I am not owning a title and always wanted one, I would be willing to pay a handsome amount for such a title.

Like the land related DEC bond idea. The other two, not so much.

Kind of tired of card and more card related stuff

Well, to be fair, Splinterlands IS a CARD game! Without the cards you don't have the game, and without the game you don't have the economy, DEC, SPS etc...

Posted Using LeoFinance Beta

Of course. We all love cards. We have them, we keep them and we use them. However they are not solution to every problem

Posted Using LeoFinance Beta

You got an alchemist for every 10(?) packs you bought... not many packs, might have been 20. I can't remember either.

I'm a biggest fan of the bond idea. To add to this I envision some sort of upgrade pool. You dump DEC/bonds into this on your land page and you can draw out upgrade percentages on your structure. I'd prefer the bonds just be account locked and you can redeem them for upgrade pool credit as soon as the function goes live. Making a bond marketplace seems like excess work.

I imagine it would be 3rd party developed

Love it!! Hopefully we can get the team involved and can start to act on these ideas/proposals sooner rather than later. I'd even go so far as to propose DEC bonds in general... NOT restricted to land use but redeemable for anything in the SPL shop that burns DEC! Including promo cards, future packs, etc. This broadens the appeal far beyond the relatively small amount of land holders and even allows the minnows to get in (who might invest smaller amounts in order to spend that DEC on promo cards, potions etc)...
But I definitely like the idea of the scaling discount with quantity.

Posted Using LeoFinance Beta

Yeah I guess there's no particular reason to restrict it to land

Some good ideas. Will revisit post at a later date to hopefully add some.

I think it would be best if the splinterlands team wouldn’t need to spend a lot of resources.

One idea would be to have a special Dec millionaire club with different levels. So 1 million gets you a discount on the store, 10 million get you a special nft and higher discount and 100 million gives access to the highest discount and gives guaranteed access to pre-sales along with the other benefits. The dec would be locked in a smart contract for a year.

A millionaire club for sps would be interesting as well

Really great suggestions. I would vote all three of them if they would be added as proposals. Let's hope the devs are reading our largest whales blog. !1UP

Could we even go so far as to revisit proposals to INCLUDE DEC as opposed to propose ONLY DEC solutions?? I think it was the 'all or nothing' approach that got some things voted down, like the sale of RW packs in DEC. Ie I'd bet that if we were given the OPTION of using DEC, DEC bonds or SPS to buy RW packs the prop might get more support.

Posted Using LeoFinance Beta

There is way too much DEC in the system right now but luckily that is going to start coming down now that many new featured have been added in.

Heck I don't even think you can earn DEC from anywhere anymore am I right in that thinking? There's no print on it anymore only sinks.

Posted Using LeoFinance Beta

There are still season leaderboard payments in DEC, but it's pretty small.

Posted Using LeoFinance Beta

Love the bond idea - But would people put up money for something in the future that they may not even want? You could have bond cards that are trade-able as the price of DEC fluctuates

Common card idea - Won't this just flood the market with non useful cards ? If promo card is worth having it should be special and add value to your deck

Community skins - Absolutely love this idea. I think this would drive adoption with all the posts for new shins for the game - It cost Splinterlands little to implement

Always a great read Neal - Thanks

The main value to the game for the promo cards would be their uniqueness. Not evryone would be able to have them.

Neal I think this is a terrific post that summarizes a lot of the ideas floating around. I like all the solutions and agree that they all create value for the game.

We don't have to have every idea be the "sole solution" to the issue, instead we should ask ourselves these questions?

Would this be a positive for the game and for the players? Will it cost the devs a ton of time to implement it?

I believe if you put these 3 ideas up for a vote, all 3 would resoundingly pass. I say lets find out and ask the team to strongly consider it. Lets not wait for things to be perfect, lets trust the community to make good decisions (using the DAO vote would be a great way move the ball forward).

Thanks for putting these ideas down in a coherent way that is easy to understand. Let's do it!

Posted Using LeoFinance Beta

I like the dao vote as a gauge of support

I've got a fever...and the only prescription... is more flywheel (among other things listed here but it doesn't meme as well).
These types of discussions are incredibly healthy in a lot of ways and I'm glad everyone that spent time in the Mavchat today got involved. Sometimes it's healthy to hear why or why not an idea is viable or why others are far more against an idea than you are... rather than screaming into the void.
Removing as much DEC out of the system is a fantastic idea and the "DEC BONDS" idea is fantastic. Saving it for a future burn (good band/album name btw @fatjimmy) gives fomo as well as removal of the resource going forward. I personally would like to see the same deal available for all "bond holders" but could compromise if we had to for higher returns for bigger amounts--the only issue is that these DEC Bonds likely couldn't be split up if it's being used toward one person's land plot or whatever else a single user is going to use it for--so carrying a 20% bonus across the board regardless of the bond might be the way to go.
Other interesting unintended consequence of the DEC BOND which is pretty cool... burned cards get a 20% bump. That could be just enough if some people have cards "dying on the vine" and could be more beneficial to burn especially if DEC price jumps.
Fantastic discussion all that were involved thanks nealmcspreadcoofs for putting together our ramblings and of course adding greatly to the discord.

Other interesting unintended consequence of the DEC BOND which is pretty cool... burned cards get a 20% bump. That could be just enough if some people have cards "dying on the vine" and could be more beneficial to burn especially if DEC price jumps.

Not quite understanding this part. Do you mean the cards that would get staked in lands would get a 20% bump if you had a bond that you bought for a 20% discount?

Posted Using LeoFinance Beta

Sorry, i misspoke earlier to reply to this. If a card is burned, DEC is generated, and if that DEC is used to purchase a DEC Bond then yeah essentially a player would get a bonus on top of the normal burn value toward the benefit amount towards the future expense the DEC Bond would be used for.

Oh, I see.

Are many cards being burned these days? Or within 20% of burn rates?

Posted Using LeoFinance Beta

I would guess virtually none nowadays. More of them probably would if they were getting close 120% of the peg value created by DEC Bonds. That would be the hope of burning up most of the DEC available in game, but who knows? There are a fair amount of reward cards I would guess that are close to sale inside of that sweet spot if the bonus amount were indeed 20%, that of course would be the gigantic factor in all of it.

Thank you for your witness vote!
Have a !BEER on me!
To Opt-Out of my witness beer program just comment STOP below

I 100% agree with having cheap promos and skins as DEC or voucher sinks!

As for the DEC bonds, I agree with the idea IF land is truly going to be a major DEC sink like I think you are assuming. You are probably right, but I've tried to push back against land requiring large amounts of DEC. I'm very strongly against that. Any added cost to operate land is indirectly taking that value away from the land and the cards that will be used to operate it. I'm not a fan of that just for a burn mechanic. I'd love to see it as a sink to speed up production times, but I think it should be an optional thing.

What I would much rather see is land being utilized to add more gameplay based progression to Splinterlands. The team has admitted they don't have enough of this and have made sure to add it to the upcoming tower defense and GLS games. Land is an opportunity to go back and correct that with Splinterlands. Instead of leveling up your land by burning DEC, I want to see land leveled up by playing the actual game(s).

Now, there are a dozen different ways you can do this, including some cool ways to integrate SPS staking into it. For example, you could earn "land xp" (get a better name) from ranked battles and that gets distributed amongst all of the land you have, and then you can stake SPS to the pieces of land to magnify that xp gain (the more land you have, the more SPS you need staked to be able to get the max xp for every piece of land from a battle).

Anyways, I could ramble on forever about potential ways to add gameplay based progression into land, but the exact details there isn't really the point. IMO we need to shift into becoming more of a game and less of an investment product, and I think concepts like that are how we do it.

Curation.jpg

Well we basically know nothing but the vague statements that have been made to date. I do assume it will take a lot of DEC to upgrade regardless of any other mechanics

This post has been given a 15.0% UpVote by the SplinterBoost Community Curation Bot.
image.png
Vote For Witness | Delegate HP | Join Discord

1UP-PIZZA.png

You have received a 1UP from @flauwy!

The @oneup-cartel will soon upvote you with:
____
And they will bring !PIZZA 🍕.

Learn more about our delegation service to earn daily rewards. Join the Cartel on Discord.

🍕 PIZZA !

I gifted $PIZZA slices here:
@torran(9/10) tipped @nealmcspadden (x1)

Learn more at https://hive.pizza!

I've got a fever...and the only prescription... is more flywheel (among other things listed here but it doesn't meme as well).
These types of discussions are incredibly healthy in a lot of ways and I'm glad everyone that spent time in the Mavchat today got involved. Sometimes it's healthy to hear why or why not an idea is viable or why others are far more against an idea than you are... rather than screaming into the void.
Removing as much DEC out of the system is a fantastic idea and the "DEC BONDS" idea is fantastic. Saving it for a future burn (good band/album name btw @fatjimmy) gives fomo as well as removal of the resource going forward. I personally would like to see the same deal available for all "bond holders" but could compromise if we had to for higher returns for bigger amounts--the only issue is that these DEC Bonds likely couldn't be split up if it's being used toward one person's land plot or whatever else a single user is going to use it for--so carrying a 20% bonus across the board regardless of the bond might be the way to go.
Other interesting unintended consequence of the DEC BOND which is pretty cool... burned cards get a 20% bump. That could be just enough if some people have cards "dying on the vine" and could be more beneficial to burn especially if DEC price jumps.
Fantastic discussion all that were involved thanks nealmcspreadcoofs for putting together our ramblings and of course adding greatly to the discord.

FUTURE BURN! Love it!! 🤣

Posted Using LeoFinance Beta