I just wanted to organize my thoughts about accepting non-DEC tokens for a mini-set.

The One-Way Flywheel

The SPS-DEC flywheel cycle has been the central tenet of our tokenomics design for several years. It's not perfect. But it does work to translate DEC demand to SPS.

We see it each time DEC demand spikes: High DEC demand translates into SPS demand. But it's a one way pull. SPS demand doesn't translate back to DEC demand. It fact, it relies entirely on maintaining DEC demand.

Mini-Set Sellout - yes please!

I am operating under the team's assumption that the miniset is expected to sell out. Looking at what the DAO gets under each option, according to the PeakD post: - 2,588m DEC (worth $2.1 Million at current price), or - 181m SPS - (worth $1.4 million USD at current price, equivalent to ~1,700 M DEC currently), or - $2.588m USDC, or - some mix of the above

The Proposal: Buy with SPS for 33% Discount

So what happens... the savvy deal-hunters among us will pay with SPS - at today's prices, it's 33% cheaper than DEC! That's fine, we say - the DAO needs SPS, and we want SPS demand!

• Some large stakers have more SPS than they need, and may unstake extra for a discount on packs
• Just noting that this act of unstaking to buy creates zero SPS buying pressure
• Also noting that historically, discounted packs tends to create downward pressure on card prices
  • (as a small set, the impact of this may be fairly minimal, but still worth considering)
• Some players will swap DEC for SPS (from reserves, LPs, or Land to buy SPS)
• this does create buying pressure in SPS and equal sell pressure in DEC, pushing back on Flywheel
• Some players will use fresh monies to buy SPS for packs
• this is the goal, but will these players outcompete the others

This is just a guess, but I suspect that a very meaningful portion of the available packs will be purchased by the same individuals that already hold more SPS than they need for their game purposes...
How much will be unstaked? I don't know. But I'm betting its a significant share that effectively choose to exchange a pile of formerly-staked SPS for new card packs.

Selling only via DEC - By the Numbers

In theory, the DAO could sell 1.7 Billion DEC to buy the full 181 Million SPS today. - So yes, it creates 1.7 Billion DEC of sell pressure. - But by pricing entirely in DEC, it also sets up to 2.588 Billion DEC of buying pressure for DEC

So I don't think we need to be so fearful of DAO selling DEC in advance of major product sales - they just front load a bit of selling.

Effectively the DAO is giving up potentially 800 M DEC to give players an option to spend SPS instead.

(Technical note: I know... you couldn't really swap 1.7 B DEC without market impact - the above is meant as an illustration of value. Whether the DAO decided to spread out market impact of swapping DEC for SPS, it could set market orders at certain levels, or simply focus all at peak periods of demand - trading is more art than science. But the core idea is that it is almost certainly cheaper to just buy the SPS and yet still absorb more DEC than by offering a deal where the DAO is effectively buying SPS from players at $0.0142.)

Hangover after the Party

After the sale finishes, - just like most real-life celebrations where we "enjoy ourselves" too much... - we always end up with a hangover. This is normal - it takes time for the market to find an equilibrium, especially when we overindulge with burning and minting so much DEC so quickly.

If a quick miniset sale leads to rapid SPS price improvement, okay that can be a good thing. But we aren't here to pump and dump, right? We want ongoing SPS demand and growth.

SPS price needs to sustain itself, but after the sale is over, can it still do that when wallets have just been emptied and DEC is even further suppressed from flywheel territory? I'm not confident that $1.4 Million of SPS demand, some of it coming from existing stake, is enough to create the virtuous cycle that some are imagining, and meanwhile there does seem like it brings the additional risk of "Frustrating the Flywheel."

DEC already has an imbalanced Risk Profile

Yes, SPS is our flagship token. I'm not suggesting that should change.

If you want a token with the potential to turn Paupers to Princes - Choose SPS.

Meanwhile, DEC is our "store of value" - it's transactional, it's required for land stake, it's in most of the LPs - basically it's almost everywhere you look. And owing to the design of Land - DEC has a role in protecting old card values through staking.

But if we are talking about Risk vs Return...
DEC has very limited upside potential (being capped at $0.001) - but it has full downside exposure. That's unfortunately a lop-sided risk to shoulder for such an important token in the economy.

Keeping demand for DEC high, helps to lower the lop-sided risk of holding and staking it, which further reduces the risks associated with all the other assets that DEC supports - including SPS!

Not a Criticism

You may feel differently. That's okay. My hope was to explain, with my own spin and bits of data, why I believe it's better to not offer discounted packs for SPS.

You are, of course, welcome to believe differently. If you are willing, I'm happy to learn more about the assumptions and facts that lead you to your own conclusions, as well as how you prioritize different parts of this complicated economy.

A community is better when it is willing to respectfully take each other's perspectives and to give each other the benefit of the doubt. Hopefully we all come away feeling like we understand each other a little better.

Until next time, -Vonak