Have We Seen The Bottom For Splinterlands?

It's been almost two brutal years of bear market for the Splinterlands ecosystem. While other currencies already managed to regain some of their losses - Bitcoin almost doubled in value compared to it's low for this cycle - SPS has still to start an upwards momentum. At first glance, things might look grim and granted, we are far from entering bull territory still, but there are signs that we've indeed seen the bottom for Splinterlands and that things should look a lot better for the future.

First of all, a stronger Bitcoin can only help us and there's no denying that BTC is looking rather good right now. I know a lot of people look at this differently, I hear a lot of this time is different, there will be no more parabolic movement, we are breaking the cycle, and what not. But frankly? I believe none of it. While nobody can predict the future, I'm quite confident that history is going to repeat itself. If that's the case, we'll see some ups and downs up until the halving and then, with some months of nothing happening, we'll slowly transition back into the next hyper bull phase which should find its peak some time in 2025.

A rising tide lifts all boats and that's just as true for crypto. Once Bitcoin starts reaching new all time highs, stupid money will come back to the system and over time, it will spill over to all ecosystems, including Splinterlands. Obviously, we don't only want to rely on external factors to get the ecosystem going, though, and on that end, it's looking pretty good as well.

Generally speaking, we got rid of most of the ways that people were able to extract massive amounts of value from the game. One after the other, all the exploits to the system got removed. There are no rewards for ghost cards, reward cards are soulbound and will have to be unlocked before they go the market, we've stopped all the DEC faucets, and we've banned bots from Modern. This last part is going to be especially important eventually.

There's a 50:50 split in rewards between Modern and Wild, but there's more than a 95:5 split in terms of battles played. In other words, while all the bots are fighting each other to extract value from the Wild reward pool, only a small amount of players is competing for the Modern reward pool. This leads to some pretty significant payouts in terms of SPS per win:

With SPS at 1.4 cents, this only amounts to about $0.28 per win right now. But if the value of SPS starts going up again, so will be the value of these rewards. At 10 cents per SPS, this would already be a $2 payout per win. I don't see a scenario where we get to that return without a lot of new players getting interested in Splinterlands again. This would obviously reduce the payout per player and win, but with the way the ecosystem is set up, it would also mean that all those players would need staked SPS for these earnings, in turn increasing the value of SPS even more. So if and once we can get to higher SPS prices again, we could very well see a life cycle for SPS and the whole ecosystem, possibly bringing us back to where we were during the last bull... or beyond.

So the question remains, how realistic is it for us to get back to these prices? Are we ever going to see some upward pressure again? Without new players, it's going to be hard, granted, but right now we are in a classical chicken:egg dilemma. Without new players the value of stuff isn't going up and without value going up no new players are coming to the game. Luckily, there's one mechanic that should help us stabilize the economy and start a slow but steady uptick for SPS again - the flywheel. Granted, the term has been used way too often and yet we've never seen it in effect so far. But we very well could rather soon.

The amount of DEC in circulation has been on a downtrend for months now. Once it close enough to peg, people started to burn their cards, thus bringing the overall decrease to a halt. While there are a lot of cards remaining that might be burned eventually, their numbers are still limited. On top of that, while there's still about 4.6B DEC out there, a lot of that is not really liquid:

A whopping 777M DEC is already held by the DAO and with how votes have been going recently, there's no way what so ever that this DEC is coming back to the market any time soon. And thanks to the Rebellion sale, this number is only going up. Every Rebellion pack sold means another 2,000 DEC is going to the DAO, slowly but steadily draining all the liquid DEC out of the system. So now all it needs is another major demand shock for DEC to empty the market and get the price back to peg. Well, lucky us, there's a very good chance we'll learn about the release date for land as soon as tomorrow and also, it looks like the release is indeed going to be in November still. While it still will not happen overnight, these events combined can only mean one thing - all the liquid DEC will either be locked up in the DAO or on land, finally getting us peg to back and hopefully holding us safely in that area.

And that's where the flywheel finally should kick in. If you can't buy DEC below peg from the market, you either have to pay a premium to get it, or you burn SPS for it. This will not only help to reduce the overall available amount of SPS, more importantly, at least short term, it will reduce the selling pressure we see on SPS. Right now, if people want to exchange their SPS to DEC, they will just sell SPS and buy DEC With it, always putting sell pressure on SPS. If the SPS is burned instead, no SPS is sold any longer. I don't expect to see a reaction from SPS right away, but we should also stop the bleed. If all goes well, we'll slowly start to rise again and eventually, we will attract interest from outside of our ecosystem and Hive again. If all goes well, this could very well happen along with the emerging bull run, which could and should really push us to new heights once more.

So this is my bullish outlook on the future of our little ecosystem. I obviously could be wrong, there are no guarantees, and any and all of the parts I've described could play out completely different. We'll see what happens, but personally, I'm pretty excited for what the future holds in store for us!

And that's all from me for today, thank you all for reading and see you next time!