This draft has been approved by all members of the SPS Foundation board unanimously.
The purpose of this proposal is to allow the SPS DAO to vote on whether or not it would like to implement an SPS Rental Floor price as a temporary measure until a maker-taker style system could be developed for SPS rentals. There was polling done to determine what changes if any the DAO would like to vote on and this proposal is built based off the results of that poll.
If this proposal passes, the Splinterlands in game SPS rental system and any third party automated rental services should raise the floor price of SPS rentals to 0.003 DEC per SPS. This change should remain active until either a new proposal is made to rescind this change or a maker-taker style system is developed where both buyers and sellers can set their desired price.
The objective of the proposal is to be the first economy in history to not crumble after implementing floor prices? I don't like our odds.
Not a fan of price floors...
Any economics 101 textbook would confidently predict that fewer total SPS gets rented. Instead there's a sizable deadweight loss of SPS owners that would prefer to rent below the artificial floor rather than stay unrented.
To get a higher equilibrium, you need to increase demand.
Yes. I will vote against any proposal that aims to increase or introduce artificial floors.
This is a over simplified attempt to apply economic theory to a system that has much more complexity than buying and selling commodities. Players need SPS to increase returns for winning ranked battles. The most immediate way to gain SPS using your own means is to either buy or rent. If the rental price increases the option to buy and own becomes more desirable. This should put upward pressure on the price of SPS which is what I would assume that the DAO would want. Raising the floor price from 0.001 to 0.003 will not decrease the desire to hold SPS. It may stop some from playing if they are unable raise funds to short term elevate their SPS holdings but generally the concerns of the penniless go unnoticed in the world of SPL.
It is my considered prediction that should this proposal gain traction the increased cost of renting would mostly be accepted without significant reduction in rental activity or measureable increase in the SPS price. I remain neutral to this proposal and do not advocate for or against it.
I agree I've simplified it.
But economics are economics: we aren't just talking about buying and selling commodities...
The laws of Supply and Demand are applied to all types of economic goods and services (including labor, luxury goods, monopolies, usage of government services, and yes, even crypto DeFi tokens with complicated utility).
If you believe that rental demand for SPS is wouldn't decrease, irrespective of any rental price increase, then let's imagine, as a mental exercise, a highly exaggerated price to explore the concept.
Probably very few of the players that currently rent 100,000 SPS a week would consider spending 100,000 DEC per week on SPS rentals.
But whether they reduce their rental, or buy instead, the result is that less SPS will get rented.
A higher floor price will certainly impact the demand for SPS rentals.
How much will tripling the floor price impact demand? Well, I don't think anyone will have an answer to that. But it definitely won't be zero...
And the less SPS that is rented, the more competitive it will be for SPS owners to successfully rent out their SPS.
So if the goal of this is to allow players the ability to rent out SPS instead of losing to SPS renter bots, I'm firmly convinced that the rental bots will continue to quickly and easily fill all the SPS rental demand.
In response to your follow up I would first like to remind that the rental market was set up when SPS replaced CP as a playing requirement. The staked SPS requirement was deliberately set at levels that would stretch the average player. The rental market was to allow those deficient in SPS the option of renting while offering a passive income to those with an excess SPS holding. The whole idea around the staked SPS requirement was to give value to SPS and stop holders from dumping SPS which was in an unstoppable inflationary death spiral in the middle of the bear cycle.
You claim that rental demand will drop as a result because players will just do with less and initially I would agree. Without new players I would also expect the rental demand to slowly decrease over time as some of those renting would be accumulating. Does it really matter if players rent less? not to me anyway.
The real issue that you are walking around is on the supply side. There is much more staked SPS available now than there is demand for renting it. You are concerned that by raising the floor rental income will be harder to get because bots will fill bids faster and the greedy bots will get all of it. Based on your concerns @clayboyn should investigate and report the extent of rental bots and describe what the DAO's position is regarding them. I agree that it is an unfair system if bots are being used and not everyone has the ability or means to use them.
thanks for the clarification.
I suspect we are in agreement here: in my view the supply side of staked SPS is far more than we need for our current playerbase.
And the path forward for SPS emissions is an important conversation (and we should have that conversation as soon as possible!), but this proposal isn't really likely to change much about the supply side - it's going to remain available in excess, and stakers will gladly rent their excess for whatever yield enhancement they can.
So instead of more attempts to brute-force market dynamics against established economic theory, I'd much rather see something done to either
a) slow down the supply side, or
b) increase the demand side.
This does neither of those things.
My concern isn't really about the bots - I only mentioned them because it was part of the "rationale" for why this proposal is here. My concern is about reducing SPS demand with an artificial floor, where reducing rental demand actually means reducing utility for majority of SPS owners.
Let the market be the market. No need to create an artificial floor. By getting more people in the Splinterlands economy the problem will fix itself. Same for card rentals, no quick price fixing is needed. Long term solution is more players. Let's solely focus on that.
totally against it. With this proposal i am fairly certain that this team has 0 knowledge on as how an economy works.
This proposal had nothing to do with the team. Just FYI.
Thank you for participating in SPS DAO Governance @clayboyn!
You can place or monitor SPS Stake Weighted votes for and against this proposal at the link below:
Link to this Pre-Proposal
Updated At: 2024-12-16 09:20 UTC
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If this proposal goes ahead the next proposal would be to distribute the dao holdings among the owners of sps.
No sense.
This is not a good idea and it certainly won't help economy-wise. It will hurt.
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If you are the only participant left in an economy you are not the winner...
Just let the market run itself unless we have a situation were team cost is to big to sustain too many transactions like what happened with rentals when golem was nonstop posting... and Doesn't seem sps rentals is causing any issue so... idk, looks like a bad proposal to me, but i may be biased, Since I rent 60% of my sps to get better rewards.
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