Question: What Happens When Any Card Can Be Rented For .1 DEC?

We'll get back to this depth chart later.

Five days ago I put out a post talking about the complete lack of growth in Splinterlands.

One of the things I noted was that the rental market is failing. I said that because the US dollar value of global card rentals was back to where it was in August when there were 1/8th the amount of players.

Two weeks earlier I gave my thesis on why I saw that coming and said there that without intervention, the rental market will go to Zero.

The theory in a nutshell goes like this. There are more cards on the market than there are renters. This means on any given day there are a bunch of cards people are putting on the market with the hopes of renting them out and making an income that will not be rented and no income will be made.

Because cards are commodities that have no variation other than price, the only way to get your cards rented again is to undercut the market. But that means your cards will now get rented in place of someone else's cards who have no choice but to undercut you when they notice their misfortune. Since there are no overhead costs to renting cards out once you own them, this can go on until almost every card is sitting at .1 DEC.

And this was happening before Chaos Legion came out and added 5 million cards to the pile with 70 million more coming soon.

Well in my post five days ago I showed that the global rental value was back down to $28k USD which again is where it was in August when there were 1/8th the players.

Today that's been cut that in half. Just 5 days later the rental market has collapsed another 50% and is now worth only $15k and racing full speed to zero. Several cards I'm looking at that would rent for at least a 2-3 DEC a few days ago are now pinned at .1 DEC.

So now that this theory is proving true, let's look at likely scenarios for Splinterlands if you can get use almost any card you want to .1 DEC.

First, let's ask the question, what's the value of owning cards that you could just rent for almost nothing every single day.

You don't need to own it to use it. I'd say using it is the most important part to the gamers. There's no money in renting it out which is the most important part to a Splinterlands investor so no reason for them to own it. These are the two biggest value propositions I'd say, right? The conciliation prize for holding assets is that until next July you'll get SPS airdrop points for them. Worthwhile? People have been crazy bullish on this game over the past 90 days I'd say, right?

Imagine what it does if they aren't bullish anymore?

So if you take out the two main reasons to own these cards, how much are they worth? I'd say most reasonable people would say they aren't worth much at all anymore unless you think a game with assets that have little value is going to just kill it with its governance coin airdrop.

OK, so let's look at DEC. DEC is the lifeblood of this game right now. When this slot machine was spitting out tons of dec per win, assets prices went crazy. When it stopped they came back down in a hurry.

High DEC price = more players = high assets prices.

The value of DEC is directly correlated to its use in the economy. DEC has two main uses. One is buying cards and the other is renting cards. If cards lose their value and can be rented for free, what use is DEC?

If DEC drops in value the payouts go down by both volume and value which means playing the game loses value.

What happens when playing the game loses value?

You lose players. And that makes the inventory problem that started this problem even worse.

Do I really need to go further?

Does the Splinterlands team really not see this?

As they celebrate the infusion of cash they just got from this flash of success, the actual mechanics of the economy are acting very quickly to create a collapse in the game that may not be able to be recovered from.

How Can We Fix It?

Now that we've gotten that out of the way, how can we fix this? Here's a few ideas to try to make a dent although with 70 million more cards coming in, I'm not sure a dent will matter.

The issue is that prices are collapsing because you don't have enough people to rent all the cards.
Sooo, attract new people.

Stop this war on bronze:

and turn it into a ban on new bots like everyone has been screaming since forever. If you have a bot account already it's grandfathered in as clearly bots do play some important role in having opponents available quickly and lots of bot accounts do own many assets you don't want dumped. These people also broke no rules by setting them up originally so they shouldn't be banned or punished now. But no new ones.

As I'll point out in a few minutes, bots aren't just a danger to the game but they are a danger to the markets directly.

Card staking and rental pools instead of free to use ghost cards:

We have more cards than we could ever use and 70 million more coming out soon yet we give everyone a ghost pack of those very same cards to use for free and forever. Stop that. Introduce card staking for common and rare cards where owners can stake those cards and players who don't own cards can pay a low flat rate or give a small percentage of their winnings into the pool in exchange for having full access to all the cards at the level of their choosing. The winnings get spread amongst the card owners based on the cards they locked up in the staking pool. Cards are time locked so theres a predictable amount in the pool always.

The renters of these cards can choose higher or lower level cards to pick up and since most would go higher, it would encourage card owners to combine their cards to have them used which would take some of this inventory out.

Increase The Minimum Rental Price:

All rentals outside of the staking pool go to a minimum of 1 DEC instead of .1 DEC.
Make DEC useful and it will send the price up and rewards will move up naturally and more people will come in and you can alleviate the problem all together. And since you banned bots, you don't have to worry about bot farms taking all the rewards. And just to avoid a PR nightmare by raising the prices, you can temporarily add a bonus to the DEC pool for new or smaller players ONLY. Give those guys something sometimes. People tend to invest more when the investment is paying off already.

Space out the Chaos Legion drop. Don't add more vouchers. Just slow the release until the market can catch up and then encourage widespread buying instead of having contests to see who can be the biggest whale (Consolidator of resources). Just like fiat currencies, economies work best when there's a more even distribution. Be the crypto solution to fiats consolidation problem. You know it's all going up to the whales eventually but at least give the minnows a taste.

Pull Back Splinterlands (and CEO) Controlled Inventory On The Market:

Have all the whale accounts Splinterlands controls take their stuff off the market until the market catches up to the amount of inventory. It's fine to pad inventory levels at the end of the season but it doesn't need to be there every day.

Finally...

Take some control over the price of DEC beyond the algorithm:

I get that its a free market but if you go watch the trading in Tribaldex for a few minutes, you'll see its not normal price action. There are bot owners very intentionally crushing the price with all sorts of tactics. I wrote about some of these back in September when the DEC market was crashing and taking the game with it. Well it's back and now they are even more sophisticated.

Take a look at this very unnatural sell wall that never goes away and then spend a half hour watching the various listings and what they do to avoid getting bought up while pushing all new sellers lower and lower. This wall hasn't budged in days and doesn't get smaller even when big buys come in. It's all bots and they aren't programmed to sell but to keep selling pressure on at all times. If any of their inventory does get sold accidentally, they push it down further, rebuy and stack it back on the sell wall. I've been fascinated by it and I've probably sat here for about 3 hours of my life watching patterns and trying to figure it out.

With the way DEC works in this game, this alone can destroy Splinterlands.

Do something about it.

There's a bunch of things that would start to make a dent in this problem but the first step is admitting there is one. I know it's hard to see it with all the recent success and the expanding team and all that but success in many places can be collapsed by one "big enough" problem and that big enough problem seems to be here right now.

I have another post coming tonight or tomorrow about how I would do releases to avoid these problems going forward and create real scarcity and fun. I hope you'll read it and tell me what you think.

PS: A month ago these number were 14k dec per day and 54% APR and that was way down from the days of 25k and 115%. I could get 12% staking Hive stable coins as of today. Why take this crazy amount of risk anymore for 12%?!