There are currently three proposals in game related to the distribution of DEC token. This and the recent discussions from the latest TownHall meetings are signs that DEC is trying to reach peg. The big question now is will DEC get back to peg and if so will it go over or stablize? Today we try to look at reasons why it can get to peg and more.
1 DEC = $0.001
With in game purchases players who use DEC to purchase assets such as Chaos booster packs or potions they are paying at a going rate of 1 DEC = $0.001. So in game DEC is treated as peg to $0.001. However over time the distribution of DEC through many outlets it made the token value drop below peg. The short history is that DEC majority of its lifespan has been under peg.
Chart above courtesy of Gerbot on discord shows the past year and half value of DEC per Hive. What is clearly shown is that DEC mainly leveled out in around 0.002 Hive which equated to somewhere around $0.0005 - $0.0008 range. This makes DEC under peg when being traded on open markets either in Hive-Engine or third party exchanges like Binance.
Proposals To Prop DEC Value
As mentioned earlier there are three proposals currently being voted on that effects the value of DEC. All three proposals in some way is removing the current amount of DEC in circulation, which really means reducing DEC supply. Mean while utility of the token remains the same so demand stays flat. With this type of supply and demand dynamic it can be easily concluded that DEC in all likelihood would rise in value. It currently is as the value now stands at $0.0008 per DEC and continues to rise daily.
Proposals #12 and #13 basically are allowing the use of circulated DEC to be used to purchases assets there are originally only able to be bought with SPS. With the approval of either proposals it would allow the use of DEC to become a new form of currency to purchase the specific assets in validator nodes and Riftwatchers booster packs.
As of now neither of the proposals is voted in favor to pass but there are still four days left to vote on both proposals. Then proposal #14 which was recently added was brought up about a week ago.
The proposal would replace DEC rewarded in liquidity pools to be SPS rewards instead. As of now the vote appears to be in favor for this proposal to pass but we still have five days to go. Yet lets assume it does pass what will be the results of this change?
In quick summary the daily yields earn by participants in the liquidity pools have slight drops in earnings and in addition all the pools will only reward SPS. Bottom line DEC rewards will not be created from these pools any longer. In total 70 million DEC that was suppose to be minted will stop and be replaced with SPS in some slightly less equal amount in value.
The plan for all these proposals appear to be trying to limit the amount of new DEC flowing into circulation. This is why the supply of DEC will dwindle and in the future with more proposals likely to come out some other ways of reducing DEC maybe in the works.
Where To Earn DEC?
Now that we discussed the reduction of DEC supply lets look at how much DEC is currently in circulation and how it will be produced? Through peakmonsters we can see top holders and how many DEC are held by all players.
There is approximately 6.3 billion DEC currently held in all in game wallets. This excludes the DEC held in liquidity pools but we can estimate that liquidity pools have around $1.31 million and at $0.0008 / DEC that equates to another 1.05 billion DEC. In total lets round it to around 7.5 billion DEC in circulation.
Now that number is just DEC tokens but there are other in game assets that have equivalent DEC and they are the NFTs cards. All cards have a DEC burn value to them. That is if a player destroys the card they get equal amount of DEC of that card.
This comes down to the collection power of each player equating to DEC burn rate of the cards. So in total all players combined there are 6.3 billion DEC burn rate. Combine this number with the DEC tokens in circulation we get 6.3 + 7.5 = 13.8 billion DEC.
If DEC is pegged to $0.001 we have:
13.8 billion x $0.001 = $13.8 million????
Overall marketcap has remain to be nearly $100 million.
In reality most cards are worth a lot more than the DEC burn rate they are selling at. The demand is high for many of the cards hence the price discrepancy. Yet is appears quite clear the need for DEC to be peg in order to raise the base value of the assets such as that of the NFTs and the DEC token itself. Without peg like right now the base value is closer to $11 million.
Another way to earn DEC is through the rental market in game or peakmonsters. The rentals charge in DEC so lenders would collect DEC daily.
Conclusions
We can see developers of the game trying to proposal ways to increase the value of DEC. The proposals from using DEC to purchase more goods or DEC supply reduced through less rewards. The benefits of having DEC at peg is apparent. The baseline value of assets are raised making overall market to be higher value when DEC is peg.
Beyond the ways to earn DEC there are also ways to spend DEC. Whether it is to invest in Guild building upgrades with DEC or purchase assets such as Chaos packs, potions and skins with DEC. The supply of DEC seems to have more ways to shrink than expand. In conclusion it appears the likelihood for DEC to reach peg is seemingly more and more likely on each passing day.
With now a better understanding of the numbers around DEC I feel I can say it is clear that DEC not only will likely reach peg but it will also likely remain at or above peg since the new supply of DEC continues to shrink daily and only accelerated if the proposals passes. Let me know what you think and curious to hear if there other perspectives on this?
Until next time thanks for reading!!!
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