I would like to take the time to outline a few of the significant flaws I see regarding the current ‘card burn for RW packs’ proposal, and also point out potential unforeseen consequences.
The author presents theoretical numbers and situations that tilt bias in favor of the proposal. In reality, the presented examples do not reflect or represent the actual proposed scenario, including quantity of RW packs available for the event, number of potential cards burned, etc.
I’ll touch on these details as they are presented below.
First of all, this prop was modified from the pre proposal to be more reflective of Matt’s ideas for a card burn event. Since we all respect Matt so much and value his opinions and ideas, this may seem good upon first consideration. But realizing that Matt just loosely threw some general concepts out there in a HIVE post comment, and realizing that he did not have the time nor take the time to help write a more detailed proposal for this event (when specifically asked by the author) with more scrutiny over details, might affect one’s viewpoint here and is worth consideration.
This leaves some very important details open to ‘interpretation’, such as the QUANTITY of packs that would be pulled from the DAO treasury for this event.
The author says 50-100k packs… which can represent 33% to 66% of the DAOs RW reserves. That’s a large variable and too vague for my taste.
The new proposal is unfortunately extremely misleading, since the author literally includes the entire original proposal under the disclaimer “Everything below is no longer part of the active proposal”.
While this disclaimer is presented, we do need to look at this large ‘omitted’ section of the proposal and consider certain elements, since it is indeed included in print, thus influencing the reader.
It also gives us valuable insight into the flawed reasoning behind the proposal in the first place.
Let’s start at the beginning.
Bot farm value extract opportunity
This proposal offers a perfect exploit for large bot farms (that have been a leading cause of reward card inflation to begin with) to CASH OUT by converting low value reward cards (remember, that they have had a significant part in de-valuing) and extract even more value from our damaged ecosystem.
Shell game
One of the most important things to address is the fact that this proposal does NOT add value to the ecosystem, but simply transfers the concentrated value of one asset (RW) and significantly dilutes it into another (CL/CLR).
The sheer size of the pool RW is being diluted into also renders the transferred value inconsequential, and basically dilutes said value into almost nothing.
I will cite some numbers below, but think of it like this. Take the freshwater of Lake Michigan (RW), and dump it into the ocean (CL) with the intention of making the ocean have more freshwater content.
Damages RW set value
Let’s address the value of the Rift Watchers card edition. For full transparency, I was against the burning of RW from the start and voted against that proposal.
However, the main arguments that were presented in favor of burning RW packs were ‘oversupply’ and ‘maintaining value of the set’. That burn proposal passed specifically to address the community’s desire to address these two issues. This current proposal quite literary works directly against the passed burn proposal.
This proposal WILL devalue RW cards. The author admits this openly. This is one part I have a hard time grasping. Players repeatedly point out that RW is ’the only set holding its value’, yet are now in favor of literally working to decrease the value of the RW set.
The author states, (presented in the form of addressing counterpoints):
"It will devalue RiftWatchers cards and be a slap in the face to those who bought in early
Yes. It probably will devalue RiftWatchers cards. But, it should not be considered a slap in the face. if you're sitting on enough RiftWatchers cards to be worried about their value, you're probably sitting on tons of other cards that will gain in value as they become more scarce. Also, you can take advantage of the deal as well. Even the mavs probably have a few RW cards they haven't maxed yet on their alt accounts."
I find this statement to be particularly revealing, and gets us to the real heart of the proposal.
This proposal is not really about the burning of CL cards, it’s about the intentional devaluing of RW cards in order to stock up for personal gain, and attempts to justify this move by stating that everyone can benefit by getting the opportunity to buy more (and cheaper) RW cards.
This statement uses flawed logic in an attempt to justify the intentional devaluing of the RW set. “If you’re sitting on enough RW cards to be worried about their value. You’re probably sitting on tons of other cards that will gain value as they become more scarce”.
This statement further supports that we are NOT ADDING value to the ecosystem nor generating value with this proposal by reducing asset quantity (CL), but merely transferring value from one asset to another.
In doing so we are intentionally devaluing the one set the community identifies as MAINTAINING its value against the current downward trends. Why on earth would we want to do this? And considering the print rate of RW is already so much smaller than CL (and even smaller since the burn has started), we are deliberately devaluing a potentially extremely rare and valuable card set in exchange for something which will likely have very little effect on the prices of the set we are burning. This is due to the sheer quantity of CL and CLRs in circulation vs. such a small percentage of that quantity being burned.
We will be doing much more harm to the value of RW than we will be adding to the value of CL. This move will simply dilute the concentrated value of RW into the overprinted supply of CL/CLR. And since we’re dealing with such a small % of CL/CLR being burned, this is basically just evaporating the value we take from RW.
On top of this, this proposal is literally draining value straight out of the DAO holdings while the DAO gets literally nothing in return.
This statement also shows us that the real goal here is to literally decrease the value of the RW set in order to give more people an opportunity to own RW cards. It literally suggests that all players, mavs included, should ‘take advantage’ of this deliberately manufactured arbitrage opportunity if it passes. This is intentional price manipulation that goes directly against the ‘there’s not enough for everybody’ and ‘Push and Shove’ mantras we have been so fond of in the past.
I also disagree with the statement that this should not be considered a slap in the face for those who previously purchased RW packs and cards. It most certainly is, and also gets us into the trust element.
If we see, over and over, that assets will be intentionally sold at lower prices later on, why would players buy early? Or buy from the SPL shop at all? By observing what I have seen from CL and if this passes, from RW sales, I would be reluctant to buy Rebellon packs early on. I would be incentivised to just buy the individual cards I need to be competitive in gameplay, and later on buy packs when they inevitably get offered for sale at a lower price.
Let’s take a quick look at some numbers.
The author states:
”While it's hard to say how much we could decrease the card supply by, if one million Rift Watcher packs sold this way, it could lower the total BCX supply of commons and rare cards by 10's of millions while making a significant dent in the overprinted epics and legendaries.”
I consider this to be a very misleading representation. We are not talking about 1 million RW packs. Not anywhere NEAR this quantity. This puts inflated numbers into people’s minds about how many cards may be burned if this prop were to pass. If we utilize 50K RW packs through this proposal, we’re talking 10M common cards burned, max. Not 10s of millions as suggested. And of course we’ll see Rare, Epic and Legendary cards burned as well, drastically lowering this number. Considering the millions and millions and millions of CL and CLR cards out there, this is quite literally barely a drop in the bucket. This will not have the impact on card supply that the author suggests by providing inflated numbers and RW pack quantities that are simply not available for this event as a mathematical example.
I must also point out that using the term ‘sell’ in reference to the RW packs used for this proposal is yet another very misleading term. There is no ‘selling’ involved here at all. The DAO is not SELLING these packs but literally giving them away.
Timing
Do we really want to put more on the dev and creative team’s plates right now? Matt did not have time to answer the inquiry for a revised proposal. This makes me think this is not something we want to load the team down with at this critical juncture. Despite the desire to not ‘put pressure on the team’, this proposal will do exactly that. In the author’s words:
It's clear to me though, that my proposal would not be possible to implement in time and I don't want to put that pressure on the team so I'm changing it to match Matt's suggestion. I asked him for new text but he's been understandably busy so I'm just going to copy his comment up here with one tweak and say this is the new proposal.
False sense of urgency
There is more misleading content included regarding the false urgency for this proposal to get rushed through. This misunderstanding of a very basic yet vital concept that is at the heart of this proposal should be another red flag to show this proposal was not thoroughly thought through, and if so, the basic logic and reasoning behind the proposal is flawed.
The author states (again presented as counterpoint):
"Let's wait and see what land does first
There isn't time to wait. Thousands of RW packs burn daily. The proposal system takes two weeks and it takes time to implement if this does pass. To try this again later we would need a whole new set that wasn't meant to be team revenue. This is the perfect opportunity to try something bold."
Packs for this proposal are not coming out of the general sale (the packs being burned) but rather the DAO’s treasury. This is a very misleading inclusion that will influence voters by giving a false sense of urgency. The DAO treasury packs are not getting burned and would otherwise remain in the DAO treasury indefinitely.
The last sentence here is also of extreme concern to me “This is the perfect opportunity to try something bold”. I disagree with this 1000% percent.
Given recent changes in team management, team structure, and financial management tactics, this is NOT the time to ‘try something bold’. Quite the opposite. I also find this sentence to be VERY revealing. The use of the word ‘TRY’. We are not currently in a situation to TRY or experiment with anything as ‘bold’ as this which can have many unforeseen consequences and ripple effects on many elements of the game economy, from RW prices to land utilization, staking and production, to DEC supply etc etc etc.
We are at a time where we need to really think things through and act conservatively. We should NOT be ‘trying something bold’ just to see how it turns out.
The author states further:
"I do not know the hurdles involved in implementing this change. Time is critical though as packs are burning. If this passes, it should be implemented in whatever manner brings it out the fastest, even if it's not a perfect representation of the proposal."
I have issues with this part, and again this is very misleading text.
Again, packs for this proposal are not coming out of the general sale (the packs being burned) but rather the DAO’s treasury, which will be holding a max total of 150K RW packs as part of the burn delegation. That’s a max number, which could be less depending on sales vs. burn. Again, this false sense of urgency misleads the voter and tilts bias in favor of this proposal.
The second part of this sentence is also a serious concern:
"If this passes, it should be implemented in whatever manner brings it out the fastest, even if it's not a perfect representation"
I cannot disagree with this more. Things like this that can have serious ripple effects on the economy need to be THOROUGHLY thought through, and implementation should indeed be perfect. Or as close to perfect as possible. To do otherwise, especially when manipulating market conditions, would be reckless.
Potential effects regarding DEC
We also need to consider some of the effects this event can have on land and the ever elusive ‘flywheel’ effect. The author says we should not wait for land, but I disagree.
Land has specifically been designed as both a card soak and DEC sink at this stage.
Given that many of these potentially burned cards would very likely end up on land in the next year or two, especially once land surfing comes into play, we need to consider the impact this proposal will have on the DEC supply and flywheel effect.
If these cards do not end up on land as intended (with the DEC staking requirements associated with them) that can drastically reduce the amount of DEC that is effectively locked up on land. DEC requirements for staking cards are quite high, and specifically designed to lock up as much DEC as possible, bringing us closer to the flywheel effect.
By burning the cards that would otherwise end up on land, we are drastically reducing the amount of DEC that gets removed from circulation and locked up on land in the short term.
This is likely an oversight and unintended consequence, but it is an unacceptable potential consequence in my opinion.
I also disagree with the statement that card demand is at an all time low. Matt has an ingenious built in burning mechanism specifically designed to address potential oversupply issues. When the price of a card drops to a certain point, you can burn that card for a specified amount of DEC and come out ahead. When prices get that low, cards do indeed get burned for DEC. However, we are not at the point where prices are low enough to incentivise the burning of cards for DEC. This is the market telling us that even with the huge amount of cards in circulation, the demand for these cards is real.
In the name of fairness, here are points from the proposal I do agree with. I believe it is important to consider both sides in any DAO vote situation.
"RiftWatchers is an exciting set that players want. Being able to trade the cards no one cares about for cards we do want would bring excitement to many players"
Ah, crap. I just realized this actually sheds more light on one of the underlying problems at hand. The use of the word ‘trade’ once again shows that we are not creating value but simply swapping it from one asset to another. But yes, I agree that having RW cards tradeable for CL cards would bring excitement to many players.
The bottom line
If we want to burn CL cards, we can put our heads together and come up with a much better plan that actually adds value to the ecosystem as opposed to this shell game that just drains value from one highly prized asset and dilutes it into another.
