Let's Talk Splinterlands - State Of The SPS Economy

A lot has been going on in Splinterlands these last 6 months and things are still moving really fast. The game totally exploded with the introduction of SPS and thanks to vouchers and the first phase of the Chaos Legion presale the value of SPS got really close to 1$ per SPS. Ever since, its value has been declining quite a bit, loosing more than 80% along the way. At the time of writing this, it's traded at 0.184$ and unsurprisingly, this has a lot of people worried about their investment.

While I obviously would love to see it at a higher price like anybody else, personally, I'm not really worried about it at all. Quite the contrary actually, I'm still pretty pleased how well SPS has been doing ever since it launched. When it was announced, I had hoped that it would manage to stay above its presale value of 0.018$ per token and not much else. In this article, I want to discuss why the price is as low as it is right now, why this really isn't too big of an issue, and where I think we will be going from here on.

One of the main reasons for the sharp decline of SPS certainly is the general bearish sentiment we had in recent weeks. BTC has been under-performing by quite a bit and it showed in basically all token values across the board. While this certainly is an issue for any crypto currency and likely still will be for another decade or so, I firmly believe that SPS is not as much correlated with the movement of BTC as many other tokens out there. It still will fall when BTC falls, but it shouldn't need a BTC pump to pump itself. Either way, there are other factors at work and I think they play a way larger role in the current price movement.

First of all, there is a lot of selling pressure on SPS right now. Private investors are receiving 20,000,000 SPS each month and will do so for another 5 months. Those entities paid 0.018$ per SPS so even if they sell at its current value, they still made a 1000% gain on their investment. While it certainly was Splinterlands hope to find new long term partners through this private token sale, the truth is that many of them were just in for the quick buck and have zero interest in the actual project.

At the same time, all token holders within the game receive their daily airdrop of SPS. While a lot of these players certainly are more invested in the game than these private investors, there are nevertheless a lot of people selling what they get on a daily basis. One of the reasons for this is the odd interaction with DEC. Since you get 1 airdrop point per DEC in your account you get a bigger SPS return by converting your SPS to DEC and holding on to DEC instead of SPS. Others will sell their SPS to buy more packs and cards, while some are just looking to cash out and take their profits. Just like the monthly drop for the private investors, the daily airdrop is going to continue for quite a while and as long as it's going, we'll see more selling pressure on the token.

The other major factor is that there aren't terribly much reasons to actually buy SPS right now. I know this sounds kinda odd from somebody holding almost 300,000 SPS in his main account alone, but it's the truth. If you had a certain amount of money to invest, you could either use it to buy SPS or you could just buy any other Splinterlands asset (cards, packs, land, ...) instead and start earning free SPS on top of that. The truth is, I wouldn't advise anybody to buy SPS off the market but instead get cards with that money and start playing the game or renting out the cards. That way you can earn in other ways while still receiving SPS on top. While I absolutely adore the way the team crafted the airdrop, it creates double trouble for the short term economy. Not only does it create a lot of sell pressure, it also makes it less attractive to actually buy SPS.

The good news is, none of these issues are going to last indefinitely. Once the airdrop for both players and private investors ends there will be a tremendously lower amount of sell pressure in the market. Not only that, though, you'll also see more incentives to buy. SPS will play a major part in Splinterlands land expansion, it will be needed to buy Riftwatchers packs, and it will be a requirement to earn any meaningful money in the game because staking and battle rewards will be shifted towards SPS staked on (successful) players.

So is now a good time to buy? Who knows, really. The airdrops are still ongoing for a while, all the major use cases are still a few months away. So this could be as low as it gets or we could loose another 50% and trade below 0.1$ in a month. Either way, you can't really go wrong with getting your hands on more SPS at this time in my opinion. If you combine the staking rewards (~37.75% APR) and the value of the daily voucher drop (~40% APR) you are looking at quite healthy returns even without any price action in the coming months.

The most important part about all this is, in my opinion, that you really shouldn't look at SPS as a means of buying it low and selling it high. You sure could do that and it might very well be a successful move, but I feel like it's missing the point. Moving forward, anything cool and interesting within Splinterlands will require (staked) SPS in one way or the other. At the same time, as vouchers already showed, owning SPS means that you will earn a fair share of the game's revenue. So to me, SPS is more like owning shares of Splinterlands than anything else. These 300,000 SPS I have staked will never get unstaked again, they'll remain right there for the reminder of Splinterlands or my live - which ever ends first.

Nobody can make any guarantees if and how successful Splinterlands is going to be in the future but I feel like there's a really decent chance that it will be around for years and there's a non-zero chance that it will become the blockchain Magic the Gathering, being played and collected for decades to come. If that happens, well, then I'm a made man - exciting times for sure!

Before I finish I want to quickly say Thank you! to everybody that read and/or commented my first article in months! I never expected that amount of positive reactions to it and I'm really thankful for it. While I doubted my decision to write articles again at that time, I'm now highly motivated to get back to writing articles on a regular basis - I've missed you guys!

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