SPS Governance Proposal - Generating Income Streams for the DAO by Adjusting DEC Burning Allocation

As the SPS DAO transitions to a system where it hires the Splinterlands company for developing new card sets, promo cards, and other in-game content, it is critical to ensure that the DAO maintains continuous income streams to sustain ongoing game development and operations. This proposal introduces a simple and effective method to generate consistent revenue for the DAO by reallocating a portion of DEC burns to the DAO.
The Splinterlands company currently received 600M DEC from the DAO as a payment for the Promo Card Sales. To ensure arrangements like this, the DAO should generate continuous DEC income streams. In that way the DAO could pay the Splinterlands company in the future, even if the Promo Card Sales don't generate as much DEC income as planned.

Proposal Overview
This proposal suggests that the DAO take 50% of all DEC burnings from various sources such as market fees and the Wild Season Pass and transfer them directly to the DAO treasury. The remaining 50% of DEC would continue to be burned, providing a balanced approach to both DEC burning and DAO income generation.

For example
• Current Wild Season Pass: Costs 2000 DEC, all of which is currently burned.
• Proposed Change: Burn 1000 DEC and send the other 1000 DEC to the DAO treasury.
This strategy ensures that part of the DEC is removed from circulation (similar to burning) but with the added benefit of providing the DAO with a steady revenue stream.

Rationale
The idea of burning DEC is based on the principle that reducing token supply can increase value in the long term. DEC is a stablecoin in the Splinterlands ecosystem, pegged at 1000 DEC = $1. Players often receive a discount when purchasing in-game items with DEC, as 1000 DEC currently trades for approximately $0.80. This provides a 20% discount on purchases, making DEC a valuable asset for in-game transactions.
However, by reallocating part of the DEC that would otherwise be burned, we can lock that value into the DAO treasury, which serves a similar purpose of removing DEC from circulation while also providing funding for long-term growth.
A balanced strategy that locks DEC in the DAO treasury would still limit circulating supply while allowing the DAO to generate income. This income could be reinvested into the Splinterlands ecosystem—for development, maintenance, and growth—ultimately benefiting the broader community.

Supporting Arguments

Locking DEC in the DAO
Redirecting a portion of DEC burnings to the DAO treasury means the DEC will not return to regular market circulation, similar to the effects of burning. However, unlike a pure burn, this allows the DAO to accumulate assets that can be strategically deployed for growth.

Burning Stuff Doesn't Automatically Bring Value
Chaos Legion Presale Example: During the Chaos Legion Presale, vouchers were being burned at values between $15 to $20 per voucher, but this didn’t result in sustained value. Packs purchased during that period are now trading at around $0.30 on secondary markets, highlighting that burning valuable assets does not always benefit the ecosystem as anticipated. How did the $20 voucher burn benefit the ecosystem long term?

Flexibility and Adaptability
Theoretical models like the Flywheel assume optimal market conditions, but in reality, we cannot always rely on ideal circumstances. By securing a portion of DEC for the DAO, we create a more resilient financial base, ensuring that the DAO can support future development and growth even if the market fluctuates.

Sustainability for the DAO and Splinterlands
By creating a consistent revenue stream, the DAO can ensure ongoing funding for Splinterlands projects and initiatives. This will foster a mutually beneficial relationship between the DAO and the Splinterlands company, ensuring long-term sustainability for both parties.

Implementation

1. Reallocation of DEC Burns: Modify the current burning mechanisms to allocate 50% of all DEC burns from the following sources to the DAO treasury:
   • Wild Season Pass fees
   • Market fees
   • Any other similar DEC-burning mechanisms
2. Begin Immediate Income Generation: Once the proposal is passed, the DEC generated from these mechanisms will be immediately transferred to the SPS DAO account, where it will be held as an asset and potentially used for future game development or other DAO-related initiatives.
3. Monitoring and Review: The DAO will monitor the effects of this reallocation and adjust if necessary, based on the impact on DEC supply, DAO income, and community sentiment.

The 50% burn and 50% transfer to the DAO is just a suggestion. These numbers could be adjusted to a 80% burn and 20% transfer to the DAO. The Splinterlands company should decide how to impliment it exactly.

Potential Concerns:
• Liquidity Locking: A portion of DEC would be effectively "locked" in the DAO treasury, potentially reducing immediate market liquidity.
• Impact on Burning Goals: Some community members might argue that reducing the DEC burn percentage could delay the intended long-term benefits of supply reduction. However, since the DEC sent to the DAO will not be circulating, the overall impact on the DEC supply remains limited.

Conclusion:
By reallocating a portion of all DEC burns to the DAO treasury, we create a sustainable revenue model that supports the continued development and growth of the Splinterlands game. This proposal strikes a balance between maintaining DEC burning mechanisms and ensuring that the DAO can actively participate in shaping the future of the game through a stable income stream.

This approach not only benefits the DAO but also contributes to the long-term health of the Splinterlands ecosystem, enabling both economic growth and game expansion.

Even if this proposal fails, I would like to get a continuous discussion going about DAO income streams to make sure that the DAO and Splinterlands have enough runway for the upcoming years.

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