Splinterlands Assets Holders Can Learn from dCity History

Recently, you can see a lot of screenshots of the SPS Management Page in Splinterlands game. Usually, it is just the APR of staking SPS tokens cut off the page. It probably started with six or seven digits when released a week ago but it has since settled somewhere above 300% APR. Does the number ring the bell? If you have been around dCity in late 2020, it should. I play more than I post so it is easy to remember my first dCity post was a reaction to a post that had the magical 301% APR right in the headline.

Disclamer 1: I sold my decent Splinterlands deck months ago. I wish I didn't, obviously. If I had kept it I would be selling like crazy now. I can tell you why because I am no longer invested in SL.

Disclaimer 2: I used the money to buy dCity stuff so if you decide to buy in, my dCity assets appreciate. Therefore, you should expect me to shill the game disproportinately. Run your own math.

Here comes another number. The dCity game has not generated much posts recently so it is much rarer to find. If you hold the SIM token, your APR is currently in the 50% area.

Soft Peg

SPS token is brand new and difficult to assess but as it is clearly linked to DEC token, which is the major token of Splinterlands (at least for now). Both DEC and SIM are softly pegged. Certain in-game transactions are set price in both the in-game currency and a common currency. In splinterlands, it is 1000 DEC per 1 USD. In dCity, it is 200 SIM per 1 HIVE. Basically, this allows the game to regulate printing of new tokens depending on the environment status. When the game is running hot (as dCity did in November/December and Splinterlands does in August and probably September) the price can go over the peg due to the demand pressure. When this happens in dCity, players are incentivised to start buying with HIVE instead of SIM - the game's reward pool fills with money and people keep their SIM until the rush calms down and the new SIM printing can cover the demand. Price can go down below peg and things go back to normal.

If things go too cold, you need a similar mechanics on the other side. That is what taxes do - if the price is low, fewer SIM tokens are printed daily. When the SIM token went down 5x anyway (nearly 10x at ATL), the SIM holding rewards were introduced. SIM holders are paid a share of HIVE denominated rewards pool. If the price of SIM drops in half, the rewards stay the same so your SIM earns twice as much. That is why a buyer tends to be found pretty fast and the price recovers.

Running the Numbers

Before we start comparing apples and oranges, remember the two tokens are pegged to different currencies. HIVEUSD can move either way (HIVEUP good for dCity, HIVEDOWN good for Splinterlands)

So am I telling you to take 50% APR instead of 300% APR? Maybe. If you purchase DEC (or any DEC-related assets) right now at $0.006, you should be ready to see it go back to $0.001 peg at some point. Do you think it makes your unsustainable 300% APR go down six-fold? Maybe not.

Try depositing your fiat to a bank at 0.6% APR. If your central bank runs out of luck and the value of the currency goes down six-fold you do not expect to come out of this mess ahead at 0.1% APR, don't you?

If you buy $100 worth of token X, carry it through the year at 300% APR and it manages to keep the X/USD price, congratulations - you have $400 now. If the value is down six-fold, I am sorry, you only have $66.67 now. At least you are better off than anyone that held the token at 0.6% APR or not investing at all (now at $16.77 or $16.67 respectively).

Obviously, Splinterlands can grow a lot more than they already did. Or drop out off the spotlight and go well below their peg like dCity did in the first half of 2021. You need to assess the 300% APR by yourself. My best guess is that the devs are going to find the way in tough times just as dCity did.

SIM Assessment

I will take a shot at commenting the 50% APR of SIM holding. Or maybe the recent pump of the SIM token. The SIMHIVE run began at 0.001 when the SIM holding reward was tripled up with no prior warning (the daily reward is basically governed by SIM holders voting but the devs made a sudden increase of the budget). The price doubled in a week and stabilised since. Tripling the rewards makes the target price 0.003 rather than the actual 0.002 so despite a couple of regulars stacking up, the value is still in. When the move towards 0.003 happens, the holding APR goes down to 33% but I guess that is fine. If not, you can close your position with an instant 50% profit. As long as the pool stays healthy (the game assets are working in Hive curation as well as DeFi Diesel pools) you are good to go. If the Splinterlands effect kicks in and the game gets attention of the new Hiveans coming via the Splinterlands' gates, you can hit the jackpot on your second chance attempt. Feel free to make your own post about it and consider adding @dcityrewards as 5% beneficiary to show your willingness to help the game's reward pools grow.

Remeber to register for dCity sponsored Splinterlands tournaments. 10 000 Entry currently trades at 7 HIVE and you can buy it at Hive Engine market or mine it yourself setting up your own dCity and grabbing Stadiums and Gamers from the market.