The Splinterlands DEC Token Going Deflationary! Data On Inflation, Burns and Supply | April 2023

The DEC tokens have been going trough a maturity phase in Splinterlands. It was the first token that the game introduced, effectively incorporating the play to earn system back in 2019. The initial design was to provide an in game token with a semi stable value and use it for trade and price in the game.

At the beginning the focus was at providing support for the token on the downside, because usually in game reward tokens tend to be sold from gamers. To achieve this Splinterlands uses a so called “product backed currency” where packs and otter assets are sold in fixed DEC price. Recently with the land update, more usage for the token were introduced.
As mentioned DEC was introduced in 2019 and it was a reward token that gamers received when playing and winning games. Later, in 2021, the SPS token was introduced, that made the price of DEC surge on the upside. There were no mechanics in place to limit the DEC price on the upside and DEC reached 10x the value it was design to. Or its better to say that there were some mechanics in place (printing more when the price is higher), but this was not effective enough to peg the price on the upside. This was back in 2021.

Since then, more tweaks to the DEC tokenomics were introduced. DEC is now not a reward token in the game. It can be created at a fixed price when burning SPS for DEC. This gives it a lot more effective limit on the upper side. On the down side, more products and use cases are introduced.

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We will be looking at:

• Daily and monthly DEC created
• Daily and monthly DEC burned
• DEC created VS burnt
• DEC supply
• DEC price

We will be looking at the data starting from 2022 up until now.

DEC Created

First for the amount of DEC created. Here is the chart for the daily data.

We can see that up until August 2022, there was daily DEC issued. This was in the period when the token was used to reward players for battling. Since then the mechanics changed and DEC is no longer used as battle rewards token. However, there are few pools where users still receive DEC as reward, and we can see occasional issuance.
The major way to create the DEC token now is with SPS burns. As the demand for the DEC token grows in game, we can see more SPS being burned for DEC.

DEC Burned

DEC is burned for in game assets purchases and it is something that need to be taken into consideration. Here is the daily data.

We can notice the clear uptrend in the amount of DEC being burned.
Even more in the last period, when the daily burns are regularly above 1M and occasionally much more.

DEC Created VS Burned

When we put the created vs burned we have this:

We can notice the clear trend of more tokens being burned since September 2022.

Monthly DEC Created VS Burned

For a better representation here is the monthly chart for DEC created VS burned.

Note that April is not over yet.

Even so, April has been a record month for burning DEC, with more than 1B DEC burned. This is mostly because of land, and the DEC-B token, or DEC batteries, that give 20% discount.
We can notice that since September 2022, the DEC token has been mostly deflationary with more being burned than created. This is because since then the in game rewards are no longer in DEC and there is not a lot of sources for DEC inflation.

On the other hand there are still in game products that burn DEC. One of the latest additions for burning DEC is the market listing fee of 1 DEC.

DEC Supply

Here is the chart for the DEC supply.

This chart probably shows the DEC supply in the best way.
We can notice the sharp drop in the DEC supply recently when more than 1B was burned. Prior to this the DEC supply was also gradually decreasing.

The DEC supply was highest in August 2022, when there were around 7.2B tokens in circulation, or a theoretical $7M market cap. Now there are 5.2B tokens in circulation, or cumulatively 2B tokens less. Going forward there should be even more use cases for DEC, more pressure on the price and hopefully more SPS burning.

Price

So after all of this burning and use cases for DEC how is the price doing. Here is the chart.

As mentioned previously, in the past DEC had inefficient mechanics to limit its price on the upside and because of this at the beginning of 2022 the token was trading above its peg of 0.001 USD. Then the SPS to DEC conversions were introduced and this is a lot more efficient design. On top of this, the overall market took a major downtrend in 2022, so the upper side of the token was no longer a problem. DEC broke its peg on the downside, trading at 0.0006 for a period of time, or at 40% discount.
But in the last period we can see a clear recovery of the token price and it is now closer than ever to its peg. With deflationary supply in the last months, more use cases coming, DEC now seems positioned very well and with a good heath and stability ratio.

Disclaimer: All the data above is taken from Hive Engine and adjusted. There can sometimes be lags between the Hive Engine data and the in game data that represents the latest numbers.
I have compared the two sets of data and they are inline now.

All the best
@dalz

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