Right now, Splinterlands is having a real hard time as it tries to move the economy beyond ponzinomics toward something that is more sustainable and less rewarding. Here are some thoughts on the situation...
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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