Yes: I Agree!
"I like to think the DEC that goes to the DAO burned": This is what Splinterlands CEO Matt mentioned at timestamp 1:34:17 of the following SL townhall. Below is also the direct YouTube link for the Town Hall.
Very rarely I look for a timestamp of a video so accurately; because very rarely it is this important to quote. The reason I want to bring this up is a fact that I have to deal with answering this question over and over again in the Mav Chat. I don't want to do this anymore. I like to write my reasoning in support to Matt's comment and idea and post it. Everytime anyone brings this up again, I will just refer to this post.
Matt also adds, and I quote:
"I would be against any DAO proposals which spends that DEC specifically"
I like to add, that is also my position and I am quite certain that is also Vugtis's, who is the largest stakeholder of the DAO.
I quote Vugtis:
"Just watched TH. Matt said "I consider the DEC in the DAO burned". The best sentence I heard from him today. I am not a madman after all."
So these are all the facts. Now I will go on and explain this a bit. Here is a cautionary note: this explanation is for readers benefit, and not up for discussion. I have quite a solid financial background and my logic on the tokenomics of SPS-DEC flywheel is firm and unyielding. I am NOT writing to post to convince people and reciprocally people shouldn't have any expectation of convincing me. This is simply my position and I am making my thinking visible.
Explanation
The source of DAO (especially the large and growing part) is from the pack sale of Rebellion set, where DAO is getting 50% of the revenue. As the RB set sale progresses, this stash of DEC in the DAO will grow. The trouble is people see this as MONEY! It is not for the DAO.
What it is, that DEC is a crucial cog of the SPS flywheel that Matt designed. The goal of the mechanism is to make DEC an algorithmic stable coin. As DEC supply was traditionally large with huge inflation, it is later designed by Matt to stop printing DEC. The only way to get DEC is by burning SPS/Cards. Card burning is limited and largely over. That leaves buring SPS as the only source of getting DEC. With more and more DEC getting locked in Land, DEC market is getting thin, which is exactly what we like! Buring SPS reduces the supply of SPS, and which effectively rises the price of SPS, and therefore all our asset prices rise, because the game reward people in SPS primarily.
Also we like to burn more SPS when price of SPS is low, thereby buring more token and reducing supply. Higher the price of SPS, progressively less this effect might me. All the community holds and earn SPS. Rise of SPS price benefits the entire community.
If the DEC, which is spend by the community to purchase the pack, get sold again (spending DAO DEC means selling it at market) then that adds to inflation, and essentially stops the flywheel. So as a stakeholder of the DAO, I will personally not let that happen.
Now years down the lane, if SPS is near $1, which will ensure DAO is flooded with cash, and have a stable DEC at peg, we may consider something, but that is so far out into the future, it is not worth a discussion at this point.
Just one idea. If we believe in the flyweel and believe in the future of increasing sps price, wouldnt it be good to swap DAO Dec into SPS?
Yes it would increase DEC supply but at the same time take sps from the market into DAO treasury. It would now reduce more SPS supply than later when SPS has a higher value.
What do you think about this?
Swapping DEC into SPS should benefit the flyweel. If not immideately than latest short or mid term.
That will be market manipulation and someone will go to jail for that and that won't be me. Vugtis wrote the following to Aggy and this is set in stone:
Hmm did not think about this, but in my oppinion it is not price manipulation. Its more like buying back shares as a company. And it is completely transparent.
One thing I do not understand about this "See DEC in DAO as burned". Hiw is the DAO earning anything of value, to pay SPL for new editions or other tasks, if the DAO cannot use at least parts of its income from these deals?
As I explained in the end, the last sentence of my post, we can. In a distant future with much higher prices when we are flushed in cash, we can.
Awesome @azircon . With this last sentence we 100% agree. Your logic is indeed sound about the flywheel, and we are definitely on the same page!
Absolutely Dave. We are aligned
Thank you, I learned here :)
Even on this simple thing people have various strong opinions!
Some says it is like burning USD on top of Empire state building! :)
No one gets, moronic that US Fed might be, they still do not have multiple currencies! LOL
Hey,
i'm also in favor of the dao not putting anything into circulation until the flywheel is up to end level high speed and can no longer be stopped.
but i would still like to throw a thought into the room.
whether the dao burns sps and outputs the dec. whether the dao sells sps and the receiver burns it and outputs the dec. or whether others burn their sps and the dao outputs their dec. doesn't make any difference in the end, does it?
because one thing should be clear, the dao has to be able to spend it at some point, otherwise we make the dao incapable of acting. because the foreign currencies in the dao are not infinite, or?^^
Yes DAO can technically spend it as some point. There is no issue with it. Many years in future and at high SPS prices, sure!
Hopefully this will clear things up for people and we won't see some of those proposals like we have in the past where people want to try and spend that DEC or do crazy things with it.
Yes, that is my intent.
As opposed to repeating the same thing over and over again to different individuals, I plan on just pointing them to this post.
I don't blame you for that at all!
We should at least empower the DAO to be able to arbitrage the DEC when above peg to help the company redeem credits and amass a position of other USD-bscked stable coins like USDC or USDT.
we will; in perhaps a year or two or SPS near $1 whichever is sooner
Let's hope we see a lot more fly wheel action here. I suspect once land 2.0 which buildings and even more mantiance costs starts to spin up we should hopefully see a rather steady progression of SPS being burned and the value that continues to rise. I also believe we are close if not already there to half of the SPS print being done which means emissions are going to start to really drop across the board
Yes, flywheel will mature as land mature
I am fully in line with your thoughts. Putting over 1 billion DECs present in the DAO back into circulation would nullify the peg achieved and stabilized in recent weeks, discouraging the burning of SPS!
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Yes, so we won't do it. Everyone who considers this I will point to this post
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I’m really sorry
I’ve always heard of DAO but have no idea about what it is
Can you please shed more light?
You have to spend some money $10 to be exact first and start playing the game.
Thank you
I’d work towards that