ARE SPS & DEC A GOOD INVESTMENT IN CURRENT MARKET CONDITIONS?

SPS and DEC are 2 major tradable currencies in Splinterlands, both of these currencies have different utilities in the game, you can learn more about Splinterlands currencies in that Splinterlands Basics guide.

SPS and DEC tokens have gone through a lot of thick and thin during the bear and bull markets but are still considered hot coins for long-term investment by experienced traders. Let's find out what makes these tokens either good or bad in the current market scenario.

SPS Token

SPS (Splintershards) is listed on many major markets such as Binance and Gate.io. But, SPS has seen the moon once in its 2 years time, since its launch in July 2021, the token rose to $0.83 for a limited time, but it keeps sinking since then.

^{Image Courtesy: Tradingview.com}

If we look at the distribution chart, SPS has a 65-month plan of exhaustion, which means five and a half years for all the tokens to be in circulation and staking.

^{Image Courtesy: https://sps.splinterlands.com}

SPS is a reward token, it is aimed to prize the players and holders of certain Splinterlands assets with SPS rewards. It has a steady minting process to keep the reward supply reaching distribution pools every day. We have to wait until it

Reasons for the Price Drop:

• The players are getting SPS rewards for playing the game, which is almost free after a one-time investment in the game. This steady supply to reward pools reduces the overall demand in the market and makes SPS lose its initial price at a faster pace than expected.
• Earned SPS tokens are sold in the open market for different reasons, but one major cause is to obtain DEC tokens for rental expenditure in the game. It increases the Sell volume and lowers the Buy volume.
• Dominance of bots leaching on the reward pools and trading SPS tokens for other tokens, this phenomenon creates an earning gap for new and real players.
• Induction of new soulbound cards has also created selling pressure on SPS. Previously, players were using reward cards to earn DEC by selling and renting them, but now it is impossible for players to sell or rent out new reward cards. The soulbound cards are supposed to remain locked for around 2 years.
• Lake of marketing outside Hive is another drawback for low awareness of SPS token. Splinterlands team is taking some steps to promote the game, but there needs to be a solid marketing plan that may effectively bring new players and investors in the long run.

What Technical Analysis Is Saying about SPS?
We will not consider short-term investment or day trading goals for SPS, it will unjust for SPS, as there are 3 more years to dilute all SPS into the market. We should think of long-term investment opportunities to fully exploit the rewarding potential of SPS.

^{Image Courtesy: Tradingview.com}

If we think of long-term investment in SPS the overall sentiment is 'Neutral', it implies that investors are free to choose which path they like to go. But, if we see the graph pattern, despite a bull run in the crypto market, SPS does not rise much in price as expected. So, it may be a buying pattern in the Oscillators indicator, but again Moving Averages indicator is discouraging the Buy signals.

What if the release of new SPS tokens in the ecosystem causes a further reduction in price, can we stall the price? Let's think about holding SPS tokens from circulating in the market by holding them in liquidity pools and staking, or introducing a burning process during sale events of packs and other game assets.

DEC Token

DEC (Dark Energy Crystals) is a primary currency for buying game assets and using rental services, but some of its utility is diverted to SPS tokens such as buying new packs and validator nodes. DEC is intended to be pegged with USD, as 1000 DEC are equal to 1 USD.

DEC tokens are also burned in different game activities, guild leaders use DEC to upgrade buildings, and SPS DAO proposals also require 100,000 DEC to be burned for placing a proposal for voting.

DEC was once a reward token for ranked battles and brawls, but now it is only given to players who stand in the top 25 players on the "Leaderboard".

Why DEC is Out of Peg:
DEC had an initial max supply of 1 Trillion tokens, but it is not the case anymore because it is no longer a major reward token after being replaced with SPS token.

^{Image Courtesy: https://coinmarketcap.com}

If we look at the graph, we see the DEC price had successfully pegged with USD in 2020 and 2021, but from the end of 2021, it broke its peg and the price rose up $0.015. Then the inevitable happened the price slid down to $0.0007, from that point until now the peg is not coinciding with USD.

It seems that DEC has no countermeasure to keep its peg in balance with USD, there should have been a solid backing in a dedicated vault to keep its peg controlled. It is a normal method used by stable coin issuers that they maintain the peg with an altcoin in a special automatic wallet that does buy and sell in large volumes to stabilize the price of a stablecoin. A big example of this mechanism is Hive's HBD token, which uses a stabilizer mechanism to control the HBD price very precisely.

Measures Taken by Splinterlands Team to Stabilize Its Peg with USD:
From 2022, Splinterlands team took some drastic measures to bring back DEC in peg with USD, below is the list of steps taken by Splinterlands management.

• DEC rewards were replaced with SPS for ranked battles, this step cut off the major emission of DEC tokens into the ecosystem. In those times, DEC had a price of $0.0005, but then it slowly rose to 0.0006
• Later on, DEC rewards were removed from brawls after another proposal was approved for using SPS as rewards instead. Another small portion of the DEC supply was turned down by the team.
• Induction of the new token DEC-B (DEC Battery) has been patched in the game. The presale event is running with a 20% discount and DEC-B can be purchased using DEC and Vouchers tokens. Both DEC and Voucher tokens will burn after swapping them with DEC-B tokens.

It is expected that this process will erase a big chunk of DEC tokens from the supply, and it will add more value to the prices of both DEC and Voucher tokens.

At the moment, DEC price has reached $0.00072 after implementing the above-mentioned measures by the team. The only emission of DEC tokens goes to Leaderboard rewards, which is not a big problem at the moment, and we expect that soon these DEC rewards may go away and get replaced with SPS tokens.

After seeing the improvement in DEC price, investors are hopeful to see DEC level with USD in the future. Although it will take some time, it feels that the direction is right for DEC token to reach its peg with USD.

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Please note, this is the author's personal opinion and does not construct any financial advice or endorsement in any manner whatsoever. Kindly do your own research before any financial decision or trading in cryptocurrencies.

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^{References and Resources: Splinterlands Docs SPS Whitepaper}