Splinterlands - Fewer rentals and lower prices per rental.... how much lower can it go!?!

If yer renting yer Splinertlands cards out, you've probably noticed a significant decline in yer DEC earnings this season compared to last season.

The rental stats ($rentals in SM Voters Hut on Discord) clearly show the macro trend:

rental-market.png

How does this relate to the DEC supply?

The current rental market is down significantly compared to the same point last season.

Around the mid point of last season there were

  • 500K active daily rental contracts
  • worth around $20K a day

At the same point in this season we have the following:

  • 350K active rental contracts
  • worth around $10K a day.

So there are fewer rentals going out and players are paying less for them

The current DEC price seems to be holding steady at around $0.55

Screenshot 2021-09-22 at 13.14.08.png

At this price, the current DEC print rate is around 5.5 Million DEC a day - the base DEC print rate is 1 Million a day, it reduces when the price falls below $1 (not an issue right now!) and increases when the price rises above $1, proportionate to how much below or above the $1 DEC PEG the current price is.

If this formula is to be believed then Splinterlands is currently printing $30 000 of DEC EVERY SINGLE DAY - 5.5M times the current price of $0.0055.

And approximately one third of that is currently finding its way to the rentals market - which doesn't sound too bad from my perspective as someone who rents out cards.

NOTE that I think the early part of September was a one of unnatural sweet spot for Splnterlands renters - with the high DEC price, pumping because of SPS early dayz fomo and rewards cards out of print and relatively few players then compared to now - we had a perfect storm for HIGH DEC REWARDS and thus a lot more money to pumpity pump into rentals.

Now, with the declining DEC price (still GOOD, but down 25% on its high) and twice the number of players and reward cars things are about three times as tight.

And I expect returns to go lower.... looked at from purely an investment perspective it simply isn't worth renting out cards to advance up the leagues to try and increase your DEC earnings, because even with 5 Million DEC a day being printed that doesn't go very far when distributed between a growing number of players....

Screenshot 2021-09-22 at 13.05.04.png

There are 300 000 active daily players, and so this means that each player, on average, is receiving 5.5 Million DEC/ 300 000 per day, or 18 DEC per day.

NB keep in mind that the DEC rewards distribution is most certainly NOT equal, it is influenced by the following:

  • The League you are in (by far the most significant factor)
  • Your DEC capture rate
    = The cards you play - DEC bonus for Alpha, Promo, Gold.
  • Whether you are on a win streak, 5% extra per win up to 50% extra.
  • How many other people are playing, which given the number of bots probably won't have that much of an affect on yer earnings.

Based on feedback from people currently batting in different leagues on Discord, you can expect to earn the following, on average, per battle in each league:

  • 0.2 in Bronze
  • 6 DEC in Gold League
  • 30 DEC in Diamond League.

Assuming you're not a bot and that you can win around 30 battles per day (by which time your DEC capture rate would make it sub-optimal to carry on) you can expect to earn around.....

  • 30 DEC per day in Bronze
  • 180 DEC per day in Gold
  • 900 DEC per day in Diamond

To focus on the top league, 900 DEC doesn't get you very far at current market prices - you need at least a few maxed summoners to play at that level - if you want to GUARANTEE staying up there, you'll need a Valnamor and a Yodin - and renting JUST THESE would currently cost you nearly your whole daily earnings....

Screenshot 2021-09-22 at 14.44.23.png
And then there's all the other cards on top.

I know from having played recently with a deck worth just over $100K (no real surplus in there), that you need that kind of Vest to stay competitive, and so unless you already have a deck worth >$100K it's going to cost you your entire DEC earnings to stay competitive and keep on earning.

If you've got 'half a deck' and are supplementing with rentals to grind to my mind it just makes more sense to rent out that half a deck for DEC, meaning more rentals meaning lower prices.

The new rewards cards aren't going to help the rentals market either, they are just going to encourage people to spend their DEC earned on levelling up those cards, which makes total sense, vesting in your own deck rather than renting.

And finally, rather than playing and spending money renting to earn DEC it probably makes more financial sense to just take out a loan, BUY DEC and hold it for the 200% return on SPS - rather than giving it to someone like me, who then does exactly that!

And then, looking ahead, there's no way that the release of CHAOS LEGION isn't going to dampen the current rentals market even further!

Mitigating factors - what might keep rental prices up?

I might of course be wrong in my slight pessimism - more users seeking to try out the game could increase demand for rentals, and once SPS rewards become a factor that might make renting for rewards more viable too.

It's also possible that MORE demand for DEC pushes the price up further in the build up to Chaos, meaning more gets printed, meaning more rewards, but I'm not sure that's something I'd want, there's SO MUCH DEC supply already!

So maybe a sudden DEC dump could increase DEC returns on rentals, hmmm not too desirable either.

Or maybe people might suddenly start enjoying the game and want to rent for enjoyment rather than profit?

Then again, I'm a realist, so I'll enjoy my still relatively NOICE DEC earnings on rentals which I can!

In the long term of course there is LAND - which is going to be so awesome and sort out ALL of our financial problems FOR EVER, so who cares if things are an ickle bit tighter now compared to this time two weeks ago anyway!

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18 comments
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Great insight and overview of the rental market. Indeed the rewards seem to have decreased quite significantly, but still makes the game worth playing and daily rewards can earn quite some money in crypto. Daily Quests and Season End will still be the targets we are all aiming for!

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The situation is also not helped, from the owner's point of view, by Jarvie adding $400K worth of cards to rentals. 😁

Or maybe that's now a significant amount?

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I wish it was just Jarvie and his $400k. There are tons of big names that just jumped in much bigger than they had been just as rentals began to slow. clove71 for instance is not everywhere bringing up the bottom of the market with a stack. CJturtlelands is popping up in a lot more places. Monster.candy is all over the place. And the whole buy ramp at the end of last season that took buys back to all time highs for 3 days almost all went straight into the rental market as well.

It's taken everything well below its natural equilibrium prices where the most money will change hands and into price areas where most people see it as so cheap, they don't register it as having value so they pass it up.

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(Edited)

Hmmmm. Interesting. I can see myself renting out fewer and fewer cards at this rate. I'm already looking at the bottom prices and thinking it's not worth changing mine for that. As a result my percentage rentals are well down.

I suppose I'll wait and see what it looks like when the big renters have listed all their cards. It's a time consuming process and for the small amounts many of my cards are getting this season it simply won't be worth it.

!PIZZA

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That's also interesting though because now I wonder how many other people will find it not worth it anymore and just give up.

You're right about it being a very time consuming process. I now have to adjust the price of every card (usually Down) one of more times every time a rental ends because there's sooo much inventory below me. It gets to the point where it becomes painful to help push a card price down I know should be going for more.

As long as rewards are this low though, the rental market is going to be terrible no matter how many people enter or exit. I'm really hoping the devs find a sweet spot with rewards. It probably shouldn't be the .60 cents per win I was making in bronze 1 last month at the peak but .03 cents is definitely too low for a vibrant economy.

!PIZZA

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I know that feeling - I do 10 at a time three times a day, but it's painful.

I take your point about needing better rewards..... people are much more likely to spend their magic internet money on rentals, probably not their hard earned FIAT!

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Oh did he just decide to activate his personal stash then>?

I'm not even sure that it is you know - I've got $100K rented out and I'm relatively small fry.

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Good to have you back chatting Splinterlands on LeoFinance!

Have you seen @imno's content that he's started sharing here too?

In my opinion, the two of you are the best Splinterlands investment writers we have on chain.

Keep it up :)

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He did just drop a comment in and so I will check out his stuff, cheers!

And thanks - I've been holding back writing more about it - mainly because my next jiggling around cards for rental return maximisation could be painful, time consuming I mean!

It's also a complex eco-system financially - agroeed mentioned Yabapmat should be given a PhD in Economics for designing it the other day!

About right.

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Great article.

For me, I don't care so much about the abundance of Dec in the system because I believe it can be absorbed by the abundance of new people and by the game itself if they did a few things like remove credits for everything except 3rd party sales and rentals. Untamed was credits but that doesn't mean CL should be. Also card packs should never be $2 again. They don't need to make them $40 or $50 like the market has decided Dice and Untamed are worth but I think $5 would be fine.

That's 1000 dec that could be burned per pack right there and an encouragement to get and save dec. Credits don't help the game at all. I understand its probably a more direct way for the devs to get paid for all the work they do and I don't want to take that from them but its really just not a great idea for the game.

I say increase rewards (I'm not exaggerating to say mine have dropped 95% in the past few weeks so doubling them from here isn't crazy), drop this peg algorithm for now entirely, and let's get back to growing the splinterlands economy while its hot and worry about soaking up more dec later.

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If DEC is burnt for CHAOS sales it's going to go through the roof!

Do you think we should be printing more DEC for rewards then? As in there's not enough in the system?

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I'm a little late answering this but its not so much that there's not enough DEC in the system, as much as there's not enough Dec being injected into the system as wages for playing.

DEC is dynamic and adding more into the system in the right way leads to higher usage, which grows the economy, which attract more users and increase demand. We saw this when DEC broke its peg and the algorithm started spitting it out like a slot machine stuck on jackpot. Suddenly player growth and dec usage/demand went parabolic. When Dec leveled out, so did the player growth rate and the demand from those players for dec (card sales and rentals withered).

Splinterlands is an interesting beast because Dec is injected into the game primarily as a reward for playing/winning. It's like wages for playing. The more people are encouraged to play and win, the more Dec will get injected into the economy but also the more Dec players will need in order to win more dec. And the way to encourage more people to play and win is to payout more dec per win.

The opposite is true also, if they lower the amount of dec they give out you can almost look at it as lowering wages. When wages start getting cut in the real world, demand for goods and services shrinks and the entire economy shrinks. Prices go lower, the need for currency goes lower, and the value of the currency goes lower.

Imagine economists coming out and recommending pay cuts for everyone because there are too many billionaires. That to me is similar to what cutting off the dec printing presses to control supply growth is. Most of the Dec is sitting in big accounts while the smaller players who need it and will actually spend it are getting cut off.

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Yes fair points - it's noticeable now that it's churning it out again, the rentals are doing much better.

It's a tough one to call, and the staking returns with SPS for holding it aren't helping with the supply either, but at some point that DEC is going to be released!

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Hi @revisesociology
Very interesting your article.
I rent my cards and have for many months also taken cards on rent the last two days of the season but in the last season I only rented my cards for the following reasons:

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Hi - I get you completely! It comes down to economics at the end of the day, you have to at least break even!

I guess spending hundreds of DEC a day only makes it worthwhile if you're aiming for a Top 3 slot, and that's a risk!

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