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SPS Governance Proposal - Generating Income Streams for the DAO by Adjusting DEC Burning Allocation UPDATED by rdkmedia

View this thread on: hive.blogpeakd.comecency.com
· @rdkmedia · (edited)
$0.04
SPS Governance Proposal - Generating Income Streams for the DAO by Adjusting DEC Burning Allocation UPDATED

![Burn DEC.jpg](https://files.peakd.com/file/peakd-hive/rdkmedia/AJmqMJdMjEMRvwXyTZQTBw2T1cHJtNZhZadhick3hkRW8Jr7pX36DUBJbstBgMv.jpg)



As the SPS DAO transitions to a system where it hires the Splinterlands company for developing new card sets, promo cards, and other in-game content, it is critical to ensure that the DAO maintains continuous income streams to sustain ongoing game development and operations. This proposal introduces a simple and effective method to generate consistent revenue for the DAO by reallocating a portion of DEC burns to the DAO.
The Splinterlands company currently received 600M DEC from the DAO as a payment for the Promo Card Sales. To ensure arrangements like this, the DAO should generate continuous DEC income streams. In that way the DAO could pay the Splinterlands company in the future, even if the Promo Card Sales don't generate as much DEC income as planned.

**Proposal Overview**
This proposal suggests that the DAO take 50% of all DEC burnings from various sources such as market fees and the Wild Season Pass and transfer them directly to the DAO treasury. The remaining 50% of DEC would continue to be burned, providing a balanced approach to both DEC burning and DAO income generation.

**For example**
•	Current Wild Season Pass: Costs 2000 DEC, all of which is currently burned.
•	Proposed Change: Burn 1000 DEC and send the other 1000 DEC to the DAO treasury.
This strategy ensures that part of the DEC is removed from circulation (similar to burning) but with the added benefit of providing the DAO with a steady revenue stream.

**Rationale**
The idea of burning DEC is based on the principle that reducing token supply can increase value in the long term. DEC is a stablecoin in the Splinterlands ecosystem, pegged at 1000 DEC = $1. Players often receive a discount when purchasing in-game items with DEC, as 1000 DEC currently trades for approximately $0.80. This provides a 20% discount on purchases, making DEC a valuable asset for in-game transactions.
However, by reallocating part of the DEC that would otherwise be burned, we can lock that value into the DAO treasury, which serves a similar purpose of removing DEC from circulation while also providing funding for long-term growth.
A balanced strategy that locks DEC in the DAO treasury would still limit circulating supply while allowing the DAO to generate income. This income could be reinvested into the Splinterlands ecosystem—for development, maintenance, and growth—ultimately benefiting the broader community.

## **Supporting Arguments**

**Locking DEC in the DAO** 
Redirecting a portion of DEC burnings to the DAO treasury means the DEC will not return to regular market circulation, similar to the effects of burning. However, unlike a pure burn, this allows the DAO to accumulate assets that can be strategically deployed for growth.

**Burning Stuff Doesn't Automatically Bring Value**
Chaos Legion Presale Example: During the Chaos Legion Presale, vouchers were being burned at values between $15 to $20 per voucher, but this didn’t result in sustained value. Packs purchased during that period are now trading at around $0.30 on secondary markets, highlighting that burning valuable assets does not always benefit the ecosystem as anticipated. How did the $20 voucher burn benefit the ecosystem long term?

**Flexibility and Adaptability**
Theoretical models like the Flywheel assume optimal market conditions, but in reality, we cannot always rely on ideal circumstances. By securing a portion of DEC for the DAO, we create a more resilient financial base, ensuring that the DAO can support future development and growth even if the market fluctuates.

**Sustainability for the DAO and Splinterlands**
By creating a consistent revenue stream, the DAO can ensure ongoing funding for Splinterlands projects and initiatives. This will foster a mutually beneficial relationship between the DAO and the Splinterlands company, ensuring long-term sustainability for both parties.


## **Implementation**
1.	Reallocation of DEC Burns: Modify the current burning mechanisms to allocate 50% of all DEC burns from the following sources to the DAO treasury:
•	Wild Season Pass fees
•	Market fees
•	Any other similar DEC-burning mechanisms
2.	Begin Immediate Income Generation: Once the proposal is passed, the DEC generated from these mechanisms will be immediately transferred to the SPS DAO account, where it will be held as an asset and potentially used for future game development or other DAO-related initiatives.
3.	Monitoring and Review: The DAO will monitor the effects of this reallocation and adjust if necessary, based on the impact on DEC supply, DAO income, and community sentiment.

The **50% burn** and **50% transfer** to the DAO is just a suggestion. These numbers could be adjusted to a **80% burn** and **20% transfer** to the DAO. The Splinterlands company should decide how to impliment it exactly.

**Potential Concerns:**
•	Liquidity Locking: A portion of DEC would be effectively "locked" in the DAO treasury, potentially reducing immediate market liquidity.
•	Impact on Burning Goals: Some community members might argue that reducing the DEC burn percentage could delay the intended long-term benefits of supply reduction. However, since the DEC sent to the DAO will not be circulating, the overall impact on the DEC supply remains limited.

**Conclusion:**
By reallocating a portion of all DEC burns to the DAO treasury, we create a sustainable revenue model that supports the continued development and growth of the Splinterlands game. This proposal strikes a balance between maintaining DEC burning mechanisms and ensuring that the DAO can actively participate in shaping the future of the game through a stable income stream.

This approach not only benefits the DAO but also contributes to the long-term health of the Splinterlands ecosystem, enabling both economic growth and game expansion.

Even if this proposal fails, I would like to get a continuous discussion going about DAO income streams to make sure that the DAO and Splinterlands have enough runway for the upcoming years.

🐼 
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vote details (39)
@captaindingus ·
Pardon my language... *ahem*

I FUCKING SUGGESTED THIS THREE YEARS AGO 😡

But NOOOOOOOOOOOOOOOOOOOOOO don't listen to Jimbo.  It's not like I was involved in the FIRST NFT BASED BLOCKCHAIN GAME BACK IN 2015 AND SAW WHAT WORKED AND WHAT DIDN'T.

Anyways... glad to see it's FINALLY being suggested.  This will help generate a ton of revenue and if you'd get around to launching "Pay to Enter, Sit n Go Tourneys" + "Pack Wars" that'll ALSO generate a lot of revenue.
👍  ,
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vote details (2)
@rdkmedia ·
Thanks for your support! I saw you upvoted the draft proposal. But it seem like many SPS whales don't like that idea too much. 
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@davemccoy ·
I'm not sure if I support the proposal itself, but I definitely appreciate you taking your time and money to make the proposal.  I think the person that was worried about you using ChatGPT is just not aware that you are spending your own money to try to make a difference that you feel is important.

So no matter what, I'm thankful that you made it and respect you for trying to solve issues to make our community stronger @rdkmedia 
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vote details (6)
@rdkmedia ·
$0.03
Thank you Dave! To be 100% transparent: I discussed the proposal with @clayboyn  before I published it. I would have payed for the proposal myself, but Clayboyn helped me with the publication process and offered to make this a DAO funded proposal, as it's concerning the DAO finances.

I would like to get some thoughts from you, if you want to share. Do you have any suggestion how this proposal could be improved?

Hope the hear you again soon in @thepeoplesguild podcast!
👍  , ,
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vote details (3)
@davemccoy ·
$0.03
awesome that you ask me RDK!  

I think the proposal itself is articulated well and has a consistent point - give 1/2 the DEC Burns to the team for their revenue.

I don't think you can make the proposal any more fair or clear.  

I think the negative issue, as you also clearly stated, is that this slows or delays the mechanism for locking up the DEC, thus impacting our economy to a very small degree. The main issue I see with this is precedence.

While by itself its not a huge deal, people tend to try and repeat behavior on the "next" thing that comes up.  By not clamping down on this and holding a firm line, then I think the fear is that the future proposals will also want to use the DEC being either burned or even worse in the DAO.

I tend to fall in the camp of being conservative and I prefer discipline,  which sometimes means working out things with harder solutions.  So while I think you have done a great job of identifying the problem and finding a solution, I think it would be better if we could find a way to 1) find an alternative to Matt's proposal (which you did well btw) and also 2) see if there are even better ways to find the money where we don't have to take it from either the burn or the DAO (for sure).

Sorry for the long response, but I wanted to give you the courtesy of answering your question because I really do appreciate your proposal, its structure, and the way you handled adversity in the comment section.  You earned my respect RDK!  :)
👍  ,
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vote details (2)
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@hivewatchers ·
Hello.

There is reasonable evidence that this article is machine-generated. 

We would appreciate it if you could avoid publishing AI-generated content (full or partial texts, art, etc.).

Thank you.

Guide: [AI-Generated Content = Not Original Content](https://hive.blog/steemcleaners/@steemcleaners/the-art-of-commenting) 

If you believe this comment is in error, please contact us in [#appeals in Discord](https://discord.gg/eSwf8vzhWs).
👍  
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vote details (7)
@rdkmedia ·
$0.02
I used ChatGPT to help the write this proposal. The ideas are from me and I used ChatGPT to help the with the formulations. I didn't know that it's not allowed. I only did it because I'm not an English native speaker and thought it would be better understandable that way.
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vote details (5)
@davemccoy ·
$0.03
I appreciate the proposal and that you are trying to convey a message that you think will be helpful.  Thank you RDK!
👍  ,
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vote details (2)
@hivewatchers ·
Hello.

Thank you for explaining.
Please avoid posting AI-generated writing as it could be considered fraud.
👎  , , , , ,
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vote details (6)
@imno ·
I can't begin to express how painful chatgpt's writing is. So much text that didn't need to be here. 

Anyway, the idea behind the DAO paying for sets and promo cards is that those things generate revenue for the DAO. I don't think this proposal is necessary. 
👍  
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vote details (1)
@nozem01 ·
Correct me if I'm wrong but wouldn't the only way for the DAO to benefit from the DEC they receive is to sell it on the market and thus get sell pressure? I think the DAO definitely need to let it's money work if possible but DEC NEED to get back to peg
👍  
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vote details (1)
@rdkmedia ·
The DAO pays DEC regularly the the Splinterlands company. Recently they did it for the promo card sale. For transactions like that, it would be good to have enough DEC in the DAO.
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@oaaguy ·
$0.02
Ugh. This is a poor example of "Hivewatching". The point of this article is not to "farm Hive" - it's to share an original idea. 

Who cares if AI helped clean up the language? That's the selling point of AI - to help improve the technical things while humans do the human things.
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vote details (7)
@davemccoy ·
$0.03
Yes I agree OAA! Glad you made this point as I appreciate @rdkmedia taking the time and money to make a proposal that he feels is important.
👍  , , , , ,
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vote details (6)
@rdkmedia ·
$0.03
Thanks for the support. I made @sps.dao  100% as beneficiary for the Hive Rewards Payout. I'm not trying to farm rewards. I just want to discuss options to generate income streams for the DAO.
👍  , , , , ,
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vote details (6)
@snowboarderpete ·
I don't feel very strongly either way on this one so will vote for it until convinced otherwise
👍  
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vote details (1)
@splex.proposals ·
Proposal 19783
Thank you for participating in SPS DAO Governance @rdkmedia!
You can place or monitor SPS Stake Weighted votes for and against this proposal at the link below:
[Link to this Pre-Proposal](https://splex.gg/proposals/19783)

> ***This Pre-Proposal is over!***
> ***Burn trx invalid***

*Updated At: 2024-10-10 09:15 UTC*

![Summary](https://splex.gg/proposals/19783/png?ts1728551731)
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@splinterboost ·
 <center> This post has been supported by @Splinterboost with a 15% upvote! Delagate HP to Splinterboost to Earn Daily HIVE rewards for supporting the @Splinterlands community!</center> 

 <center> [ Delegate HP ](https://peakd.com/@splinterboost)  | [Join Discord](https://discord.gg/RK4ZHKmgcX) </center>
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@sprstoner ·
The DAO needs income streams. and every expense should come with a plan to earn that money back as well.

I am not sure this is the best way.
👍  
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vote details (1)
@rdkmedia ·
Thanks for the feedback. My proposal is just an idea. I'm open to suggestions or different ideas how to general continuous income streams for the DAO. 
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@thatclaimgame · (edited)
In the end you ask for lower burn rates, at the benefit of the DAO, which delays SPS burn and subsequent value increase at the cost of the DAO. Let me explain.

I can see where the idea is coming from, but unless the DEC would be locked in the DAO forever, and then what is the point of it, it is a net zero change. The reality is, the DEC will be used, it will be given to the team, which I have no problem with and then it will slowly be reintroduced into the market when someone pays with credits.

For reference, since the team got the 600m DEC, 370m were given to sellers when people bought with credits. Roughly 150m (guessed based on splintercards numbers, dont hold me on that) of this found its way back to the DAO (the DAO effectively being a seller of promo cards) and while we all hope it will be more through the promo sales later on, you still reintroduce DEC from the DAO back to the market. In itself this is not the worst thing, but I think we can throw the DEC will be locked in the DAO argument out the window.

So basically you delay DEC burn by requiring it to circle longer until burned and you delay the necessity to burn SPS (or cards before that) to get DEC. So you delay the value increase of SPS, which negatively affects all SPS holders a.k.a the DAO. The reality is that every DEC that goes back to the DAO instead of being burned (which already happens with market taxes if I recall correctly) offers the DAO an option. Either keep it locked down or bridge some cost at the expense of SPS value.

So while I definitely agree that the DAO needs established income streams as soon as SPS rewards run out, I would argue that giving DEC to the DAO instead of burning is not that, it is just flexibility, which I think the DAO doesn't need currently. The "DAO funds and earns" activities should at least pay for themselves in the long run, if not the team and the DAO are screwed anyway. What I don't understand is why the DAO is the only seller in the whole ecosystem who can't decide the selling price.
👍  
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vote details (1)
@rdkmedia ·
Thanks for your insightful feedback!

You are right about that the DEC would be given to the team at some point. But the DAO could decide at which point that would be. So it could lead to "delay DEC burn by requiring it to circle longer", but not necessarily. The DAO could HODL this DEC until the DEC overhang in the market is gone. So it all depends on the DAOs decision how to use these funds.

I think the general argument that burning SPS will automatically lead to SPS price increase works only if there is enough SPS demand in the market.
If an asset is just scared, but nobody wants it, it's not vauable.

The same goes for DEC. If we just burn all DEC, but nobody wants to use it to buy Splinterlands products, DEC would be completely worthless.

Of course the Flywheel could work how it's promoted, but I think that supply and demand is almost never factored in into the discussion.

You said: "I definitely agree that the DAO needs established income streams as soon as SPS rewards run out, I would argue that giving DEC to the DAO instead of burning is not that, it is just flexibility"
Yes, totally! I think that this flexibility could help the DAO long term.

Thanks again for your detailed response. Even if we see some things differently, I think we both want Splinterlands to survive. 
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@winddrake ·
works if we do not spend it. WHat is going to prevent a dump by the DAO? No value base is created unless it's transacted? The base argument reads to me " we want money so let us keep burned coins" Not saying dao deosnt need money or anyone is being greedy BUT the whole point of burning is to force locking coins by eliminating them thus avoiding the human temptation to spend, which in a free market is assumed. 
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