bc0d3b83a40af54d80c36c1fad3c33a7d31f4056

EDITS

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For first time readers, I suggest starting from "The Proposal" section then moving back up to the edits.

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Edit 1
An example how of the current market works:

1. Player lists card on Splinterlands worth 100 DEC
2. A second player buys on Peakmonsters
3. 5 DEC is given to Peakmonsters, the seller receives 95 DEC

An example of this proposal in action:

1. Player lists card on Splinterlands worth 100 DEC
2. A second player buys on Peakmonsters
3. 3.5 DEC is given to Peakmonsters (the buying market), 0.5 DEC is given to Splinterlands (the listing market), 2 DEC is given to the DAO, the seller receives 94 DEC
4. Please note that the seller may remove from the market at any time without a fee, market fees are only charged at the time of sale.

Therefore, the market places as a whole receive 1 DEC less, the seller receives 1 DEC less and the DAO receives 2 DEC more. This example can be converted to a percentage at a 1:1 rate.

Edit 2
Added #5 under "What this means"
Added #6 under benefits

Edit 3
After thorough discussions and careful consideration of all stakeholders involved, including market users (buyers and sellers), marketplace owners, large SPS stakeholders and the game's founders both @yabapmatt and @aggroed, I have decided to amend this proposal. This change does not explicitly express the views of any single party, but rather a compromise I have personally created based on taking into account everyone's feedback. They may express their own personal views if they wish to in the comments below.

The new distribution of fees will be: 0.5% to the listing market, 3.5% to the buying market and 2% to the DAO.
The example above in Edit 1 has been edited to reflect this.

I would like to first preface this change by saying my gut still believes in the original split of 2% to the listing market, 2% to the buying market and 2% to the DAO, and it seems the majority of the community agrees as the proposal is currently sitting at a 73.10% approval after 5 days of voting.

However, I do sympathize with the two parties the previous distribution will impact the most: marketplace owners who do not have a listing UI and buyers who utilize cashback services. This update is dedicated to them to ensure minimal impacts to their services while still serving the initial goal of this proposal that the majority voted for:

1. DAO gets a portion of trading volume to ensure we "put value back into the game through trading",
2. Lower current circulating supply of DEC by distributing DECs to the DAO, which can be burned, held or used (likely in many years) at the community's discretion,
3. Creating an incentive for developers to focus on listing frontends too,
4. And lastly bots can no longer pay lower fees (1%)

Edit 4
Added some FAQs at the bottom of the proposal

Edit 5
Added a "side note" at the bottom

The Proposal

This proposal has four changes to the way the market protocol works, all 4 items will work in parallel to enhance the economy and incentives of the Splinterlands market.

1. Set market fee to a fixed 6% (Cards, Rentals, Assets, Lands, etc.)
2. 2% of market fee goes to DAO
3. 0.5% goes to the market a user listed on and 3.5% goes to the market a user bought on
4. When no market (or invalid market) UI is used for one of those operations, the amount will go to the Splinterlands company

What This Means

1. Increase of 1% fee to sellers
2. Increase in DAO funding/less DECs in circulation
3. Decrease in funds rewarded to markets that only facilitate sales
4. New opportunities for earnings by marketplaces
5. Bots can no longer list at 1% fee, same fee for every user

Benefits

1. All market UIs will have incentive to develop tools to help both sides of all the different markets (renting, assets, lands and card sales)
2. The DAO will receive 2% of all market transactions
3. The DAO receiving increased funds can help reduce circulating supply of DEC and give the community more capabilities in the future via increased DAO funds
4. Decrease of circulating DEC supply will help the overall token prices of the Splinterlands ecosystem and help bring DEC back to peg, thus moving us closer to the "flywheel effect"
5. Listing fee under the standard rate (6%) is no longer accepted. For example, bot sellers will no longer be able to list at 1% fees
6. Less DEC in circulation --> closer to peg --> closer to flywheel effect --> closer to burning SPS for DEC (ultimate goal) --> higher SPS value --> more earnings for everyone!

Potential Drawbacks

1. Market interfaces may see a decreased focus on building selling tools (in comparison to listing tools)
2. A general decrease going to market interfaces (includeing funds to the Splinterlands company)
3. Sellers will see normal rates go from 5 to 6%
4. Reduction of kickback to those who buy on sites that promise immediate revenue share on their purchases

Implementation

Upon discussion with @yabapmatt, he does not anticipate that implementing this proposal will require a large development effort. The specific rates could be changed by a proposal in the future with very little coding effort after the initial change.

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My Personal Thoughts
I believe oversupply is currently the biggest issue plaguing Splinterlands. This can be corrected with an increased player base (more demand) or an overall reduction in supply. This proposal focuses on reducing the supply of circulating DECs, thus getting us closer to the "flywheel effect".

Furthermore, this proposal incentivizes third-party marketplaces to develop useful tools for both listing and buying.

Based on the last 6 months of volume and average price of DEC found on the Peakmonsters’ Dashboard, this proposal could take out of circulation 413.7 million DECs per year, representing just under 8% of the current DEC supply, which is over 1 million DECs per day. This is before accounting for the lands, assets and rentals market, which I personally expect to pick up substantially once lands 1.5 is released.

Although this proposal alone may not bring Splinterlands to the moon, it is a long overdue modernization to the Splinterlands market structure which will assist in the long-term sustainability of the game’s economy. Marketplaces and card sellers may lose revenue in the short term, but stronger tokenomics supports token value which is ultimately the driving force for asset demand, utility and volume in the long run.

FAQs
Question: Why increase the fee from 5% to 6%? Why not just send 1% to the DAO and leave it at 5%?
Answer: This proposal was created to be "fair" to both marketplaces and players as they are both important pieces of this complicated ecosystem. By simply giving away 1% of the volume to the DAO, marketplaces are losing 20% revenue while players reap the benefits of reduced circulation. That would not be fair for our markets as they provide a pivotal service for our ecosystem. By increasing the fee, both players and markets share the burden equally and doubles the DAO's funding compared to the 1% distribution.
To put it bluntly, all parties lose a little bit to ensure there are less DECs in circulation in the short term and the DAO is well funded in the long term, thus helping all long term participants of our ecosystem.
Lastly, fees of anywhere between 5 to 10% are commonplace for NFTs on platforms such as Opensea. For example, the Runi collection has a 5% creator fee + 2.5% Opensea fee.

Question: Sending DECs to the DAO does not reduce circulating supply, only burning it does
Answer: Not technically a question, but also technically the truth. However, we have to consider that the DAO is not your average Joe holder.
Funds in the DAO cannot be accessed by any single person and must be approved by 66%+ of the community before it can be used. So we simply ask ourselves, would 66%+ of the community agree to spend or sell DECs while we are below peg? I highly doubt it.
The only use of DECs I can imagine passing in the short term is if we burn it, which leads us to the next FAQ.

Question: Why not simply burn the DECs to begin with?
Answer: By distributing it to the DAO, we give the community flexibility. Below are a few examples of how we can use the DECs in the future:

1. Once DECs are steadily pegged at $0.001 (and personally, I believe it will be), we could have a proposal where players can buy back the DECs from the DAO using SPS so the DAO holds more SPS (personally don't like this proposal)
2. If the Splinterlands company ever needs funding from the DAO, they may propose to take DECs which can be used for credit sale distributions, instead of requesting SPS which they must market sell for fiat/stablecoins. As a side note, my vision is that all cards/packs/items/spells/Dinos will come from lands and/or give revenue to the DAO, with Splinterlands the company being fully funded by the DAO.
3. @holoz0r had a great suggestion in the comments below where we can use the DECs from market fees to fund ranked rewards, he even did the maths to show it's very plausible,
4. Or we could just simply burn it!

Proposal Fee Sponsored By: Aqualis DAO

Aqualis is a DeFi protocol set to launch on BSC that aims to revolutionize capital efficiency. By utilizing a unique "asset multi-utilization algorithm", Aqualis can provide stablecoin rewards from trading fees, lending, flashloans and more with a single deposit, thus unlocking the lowest fees in DeFi while maintaining high organic rewards for depositors.

Aqualis will continue to support the Splinterlands community directly through expanding the Aqualis guild (currently recruiting), hosting tournaments, and building a portfolio of protocol owned Splinterlands assets as the protocol grows. Aqualis also plans to support the entire GameFi industry by focusing on DeFi tools specifically catered towards GameFi users.

If you would like to learn more about Aqualis, apply for the guild or simply stay up to date for giveaways, please join the Discord!

Side note: what are your opinions on proposals with a sponsor?