Why The DEC Peg Matters? | Splinterlands #395

As DEC continues is slow ascend back to its $1 peg, lets take a step back and understand why its important for the splinterlands economy for the DEC to be back at peg.

Understanding DEC and Its Pegged Value

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For the uninitiated, Dark Energy Crystals (DEC), was always meant to function as a stablecoin for the splinterlands economy with a fixed value of 1000 DEC to $1. The long-term vision for this peg is that it allows players to reliably use DEC to participate in various facets of splinterlands ecosystem -- guild upgrades, land, and battles without the unpredictable price fluctuations. This in theory is what a stablecoin strives to achieve.

Back in 2021 during the SPS airdrop event. The hype for airdrop points caused huge FOMO and led to a massive surge in DEC price. This was during the 2021 Crypto NFT bull run and for a period DEC was trading multiples above its peg value. Now as I explained above, stablecoins are never intended to fluctuate, and many players were holding lots of DEC when its price started to regress back to its original peg value.

Why The Peg Matters?

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A stable DEC, provide players opportunities to not pay inflated costs for interacting the games ecosystem. Therefore, one of the main benefits and why its important is that the game economy remains accessible to everyone in the ecosystem regardless of how much they have invested into the game (whether $10 or $10000). If DECs value is high, new players will have a much higher entry cost and we saw that during the 2021 Crypto NFT bull run. Likewise, the reverse is true, as we have seen over the past year with DEC being below its peg reaching a low of $0.6 per 1000 DEC.

And because DEC is central to many key gameplay elements in the splinterlands game like guild and land, having a stable and pegged rate becomes crucial for the stability of the game and the players capital investments. Take for example -- land, it requires DEC to work the land and therefore if the price of DEC is fluctuating it will have an impact on the investment required.

Benefits of DEC Remaining At Peg

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Back in the 2021 Crypto NFT bull run, I was selling majority of DEC earned via daily battles (Yes back in the day -- DEC was printed and handed out as rewards for daily battles). For a stablecoin it blew through its peg, and many were able to capitalize on this increased price for DEC, but in reality, this caused a lot of debt, and the over-printing of DEC has had to be paid back over the past few years. Therefore, it has taken many years for DEC to get back to its original intent. In any economy, a stable currency, creates a fairer and more sustainable economy and as a result players will not be at the mercy of crypto markets volatility.

Many players may have been burnt if they discovered splinterlands during the 2021 FOMO period and bought DEC and NFTs at inflated values during the SPS airdrop period. In hindsight, buying DEC above its peg value should always be seen as a risk as fundamentally it's been designed to regress back to its $1 peg value. However, during periods of FOMO, rationality goes out the window and people will chase hype cycles. Investing always comes with risk and any spike above peg should be seen as volatile.

By keeping DEC stable and reliable, splinterlands promotes fairness and sustainable game economy with DEC at its backbone. As splinterlands has been around since 2018 and therefore its not one of those fly-by-night crypto games, and long-term sustainability of splinterlands is an important topic that we should all be mindful of.

Concluding Thoughts

In the end, the importance of DEC peg is solely focused on long-term sustainability of the game. With many gameplay elements relying on DEC, having a stable DEC token, ensures that all players (new and experienced) will have a fair and balanced experience.

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