Splinterlands | Moving Beyond Ponzinomics !
Play2Earn Adoption Dilemma!
One of the big issues with play2earn games is that players expect to earn money which simply isn't possible without Ponzinomics where new players act as exit liquidity for older players. This brings about a dilemma on how to go about initial adoption having to make a choice between 2 options.
- High Unsustainable Rewards: The Ponzinomics are very easy at the start when a game doesn't have many players and bag holders. This allows to easily get adoption with a price that has to be paid later down the line as exponentially more new players need to come in to keep this up. This model was seen in many projects like Crypto Kitties, Axie Infinity, Splinterlands, Sorare, Defi Farming Platforms, GambleFi Sites that give tokens for Playing, ... and all of them sooner or later have to pay the price for this. Right now Echelon Prime with the Parallel TGC seems to be following this path where the entry cost is paid back in a couple of days which is simply never sustainable and I do suspect that they will pay the price for this at some point in time.
- Realistic Lower Sustainable Rewards: When a project chooses to give more sustainable rewards straight from the start, it creates the problem that it is far less attractive for players to come in creating the needed adoption. Especially in a world where Meme coins rule as they give the potential (illusion) for anyone to get rich overnight offering crazy excitement. A game which needs quite some investment that very slowly over time allows you to earn that back simply isn't that attractive. I would say Mobile Minigames is an example of a game that took this path which combined with some other judgement mistakes from the devs are holding it back to get adopted despite the fact that it's actually really fun. Nobody is really interested or wants to take the risk of having to wait and play 3+ years to actually start earnings something.
Splinterlands Transition!
Splinterlands clearly started out with unsustainable Ponzinomics creating multiple assets (Reward Cards / DEC / SPS / Vouchers / Merrits / SPT / ...) out of thin air which created a window where investing was extremely fun and rewarding which caused a crazy growth and adoption cycle. However, once the inflood of new players (of which many were bots trying to exploit the system) stopped and many were trying to cash in on the rewards, the system pretty more or less collapsed which resulted in a period where it needed fixing.
Pretty much week after week after week, card assets continue to go down while a ton of new cards from packs are added.
At this point, pretty much all earnings have been cut to being soulbound with no real monetary value and only the ability to earn some SPS is left (along with good blogging earnings which I don't consider part of the game)
- Cards From the Spellbook became Starter Cards
- Potions Were Introduced
- DEC Rewards Were Removed
- Reward Cards Are Soulbound
- Pack Rewards were removed
- DEC Leaderboard Rewards were Nerfed
- DEC Burn Value of Gladius Packs will be Removed
- SPS from Chests will be Removed
While all of this is needed to cut the inflation which the economy clearly can't handle, it also removes the incentives for players to come into the ecosystem as in the end, 99% of new players that come in still do so with the main reason to potentially earn something. It puts Splinterlands right now in a really tough situation during this bull run as the only thing that can bring adoption at the moment is for SPS to increase in value which isn't happening.
The Crypto space has been in a raging Bull market, yet SPS has barely moved sticking at a 23 Million Circulating Market Cap. I would say this mainly comes down to the fact that SPS is trading at a valuation that is actually based on players using it to increase their game rewards with it capturing zero of the speculative value that most other gaming tokens have. One of the reasons for sure is the lack of a listing on a top tier centralized exchange.
All this puts Splinterlands in a difficult transition phase where they need more adoption but at the same time continue to lower the rewards with everything depending on the price of SPS. The big difficulty is that Price creates adoption and not the other way around, unfortunately. Also with the focus on indirectly supporting the price of SPS by creating value for DEC, it takes from the value of other assets like cards which has totally crushed the existing player base making them less willing to put more money in the ecosystem.
Not All Hope is Lost!
While things don't look all too good now for Splinterlands, there are still plenty of good things. The game itself is still actually fun to play and enjoyable (even though the time investment is too big) which is a massive absolute key factor in surviving the bad times. However, it does always feel that the need to keep the economy up comes at the cost of potentially better gameplay. New game modes would really be welcome at this point as only new cards which increase inflation putting more pressure on card prices. The Community also is very strong in this game with many loyal players who really love the game and the creation of a lot of content and podcasts / videos.
There are also more things on the horizon with the new player experience and Soulkeep, ...
The Way Forward!
It's clear now that Splinterlands is mostly a game where players own their assets and can get part of what they invested back the moment they decide to move on. One of the main problems I see is that buying cards or packs is almost a guarantee to lose money as their usecase is totally stripped away the moment they get moved from Modern to Wild. Having some kind of card burn mechanic or something that makes older cards that are low in circulation and strong actually go up in value as more players come in is needed. Aside from this, the game itself just needs to improve and more game modes need to be added so it becomes a game players are willing to come into just for the fun with the potential earnings and ownership as a nice extra.
Conclusion!
The great thing about Splinterlands is that is actually has a good game and a great community behind it which should help it survive these difficult times. Splinterlands has run out of the ability to use Ponzinomics creating more new assets out of thin air to drive adoption. I don't expect to magically turn around but instead for things to slowly but surely recover over time creating another smaller adoption wave.
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The thing I always find myself pondering when it comes to the entire "play to earn" concept is "where is the VALUE PROPOSITION" in play-to-earn... period?
How does someone playing a game have "value" to the world? It may be fun, but it's a bit like sports: 0.001% of the players might get paid as professionals, and everyone else is basically in it for free. You might get paid for winning the NY Marathon, but nobody's going to pay you for your morning jog. Is the entire premise partially false? Is play-to-earn even possible, absent a scenario in which tournaments have an entrance fee and the rewards are given from a prize pool that's actually collected from players, rather than based in Ponzinomics?
Consider a non-digital — but related — game like MTG; it's now 30 years old and has 50 million players, both in physical space and online. The game itself doesn't reward anyone (unless it's a sponsored tournament), but there's a huge economy surrounding peripherals to the game, from cards autographed by artists, to original art works, to rare expansion decks, to card collections and so on. If you want an artist signed Black Lotus card, it'll set you back a cool US $500,000-ish on eBay. The financial aspects are in the collectability and scarcity of game assets, not in game play itself.
It'll be very interesting to see what direction Splinterlands goes, and how they handle this transition. I say this not so much as a player, but just as a very minor SPS stake holder.
=^..^=
The value proposition comes from owning assets and being able to sell which on it's own doesn't really produce earnings. In the end, it just needs to be a game where players are willing to spend money on without the expectation or need to earn. Something else that could bring in outside money to give value to players are advertisements. It in a way already exists with the tournaments but it would be nice to have during the waiting screens.
I still kind of want to buy cards to have fun with but it has been made impossible from a financial point of view (especially during the bull market where everything else is going up). The fact that cards become nearly useless over time the way things are set up now is a big issue. One of the reasons many were willing to invest is that idea of Magic The Gathering that some of the old cards that are really rare over time increase in value. That concept for Splinterlands has been broken.
I'm also interested to see how it all plays out!
Yeah, it's pretty crazy how much money I've lost on Splinterlands cards. 😭
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Thanks for a good article, and great analysis!
The Land expansion would've been a good addition to the game but unfortunately, it's not for new players or even for older ones who lack some serious capital & cards. I guess it's just there to please the whales. Would be awesome if the threshold to start could be lowered.
I still see land as just an attempt to give older cards a continued use case trying to use the ponzinomics creating more assets out of thin air with a promise that it will pay off in the future. It likely will be another prize that needs to be paid holding the ecosystem back at some point in time.
Yeah, I hate those surprise payments, power cores and all that. Instead of rewarding holders of older cards, they actually implement new payments if we wanna put cards to work for us, cards that keep losing value.
I was interested in buying land some time ago but nah, don't wanna be on the losing side all the time :D
Exactly, trust is one of the major issues.
Land plot claims at some point went for 700$ (which was a crazy inflated price to be honest) rewarding those who took the risk on the pre-sale. Devs saw a window to take part of that value introducing DEC staking requirements, and a ton of other costs to operate land which crashed the prices of both land and cards. The same thing was done moving all the bots to wild making the new cards worth exponentially more compared to the older ones to sell packs. And by replacing Collection power requirements with SPS staking requirements. Same thing now with the Ranked changes which are mostly in place to increase the pay2win in hopes to sell more packs.
It's part of the reasons why players are exiting or no longer willing to put fresh money in. All of it is sacrificing the value of one asset to increase the value of another while constantly introducing new assets and currencies.
There is also this trend of the company wanting to get Stable assets from the DAO which the community isn't really fond about. I also don't get why the promo event needs 100k worth of assets as 'rewards' which is basically the company dumping some of their holding inflating and crashing the prices even more.
The difficulty is that there are so many different assets in the game that have value that it's impossible to keep them all up. In the end the only real things that can save us is new players coming in which all focus should be on.
Man, this really hurt the card market and even though I though I thought it would really push SPS price, that was only momentary.
Perhaps there was(or is) trust in the new players will jump in during the bull run, just like you and save us....
While waiting that to happen, unfortunately, all I see now is the lack of demand everywhere: cards, SPS... Only Rebellion cards & packs still have demand but I'm afraid we all know what's going to happen to those eventually.
Hope I'm wrong though.
It's only a matter of time before those prices start falling off a cliff which is what forces me to stay away. In the meantime, the same old issue of crazy ratings inflation is back which was the reason why leagues and collection was introduced. With a level 3 rare summoner sliver deck on my alt account, I'm now in Diamond 2.
Ha! I'm in Wild Diamond II with level 2-4 summoners! It wasn't long ago when I was struggling even to to Gold and my deck hasn't improved that much. Wild has really come down lately...
I was just reading about DAO vote discussion over on X, interesting to see which way SPL is going... I really hope this is just a passing phase.
They probably wouldn't get 100K if they sold those assets on the open market. Not enough liquidity in the packs and cards market.
I wonder if they still that short on funds and runway that they need to sell off some of their asset holdings to keep going at a time when everything is down that much. One thing is sure right now especially with this latest update, the community sentiment is at an all-time low and I guess many will be throwing the towel the coming weeks.
The DAO should be holding stable coins (non Splinterlands assets) as an emergency fund to keep the game going. Frankly I don't care at all about any promo right now.
Yeah, I didn't think of that part. Would probably hurt old card prices.
I believe that SPS will surprise us all in the coming days.
THank you for sharing this informative article
Peace
I think all the games in this ecosystem have too small capability, thats why after some time all need to find someone will put money to loose, but without a new way to make this social coming popular, no way to have nice future, look the @dcity game, now is almost die, it's a pity, but due to this decentrilzed social, none want invest here...
Thanks for sharing! - @libertycrypto27
Interesting analysis and interesting thoughts on the transition phase of Splinterlands. In my opinion, improving the player experience will be very important for the future of Splinterlands