Sakaba Game Report: What is the DAO of the Web3 card game ‘Splinterlands’?
When delving into Web3 games, terms like “DAO” (Decentralized Autonomous Organization) and “governance” frequently appear. However, few games seem to genuinely implement these concepts, with many seemingly just mentioning them in their whitepapers for the sake of it. Tokens, too, are sometimes casually labeled as “governance tokens.”
In this article, we’ve explored the DAO and governance practices of “Splinterlands,” a reputable trading card game that has been running for over five years.
<Introduction of the author>
I’m @hametaro_bcg, in charge of research at Sakaba. Since encountering Web3 games in 2019, I’ve been daily enjoying games and relishing the unique experiences only blockchain and NFTs can offer.
Table of Contents
- Definition of DAO
- Splinterlands’ FT (Fungible Tokens)
- Splinterlands’ Treasury Wallet
- Splinterlands’ Governance Proposals/Voting
- Lastly, The World After Token Issuance
Definition of DAO
I am not specifically an expert in blockchain or DAO. I am just a gamer who interacts with DAOs through Web3 games. For the definition of “What is a DAO?”, I decided to quote from a blog by Ms. Kanemitsu Midori.
1. Composed of people holding common FTs (Fungible Tokens, or typical tokens) or NFTs in their wallets (hereinafter referred to as “DAO members”).
2. A Treasury Wallet affiliated with the DAO exists transparently on the blockchain, where anyone can view its content, akin to a company’s bank account being open to public view.
3. Individual DAO members can propose how funds within the Treasury Wallet should be used. When such a proposal is approved via voting within the DAO, funds automatically move from the Treasury Wallet
To understand the DAO of Splinterlands, we will delve deeper into:
- FT (Fungible Tokens)
- Treasury Wallet
- Governance Proposals/Voting
Splinterlands’ FT (Fungible Token)
First and foremost, Splinterlands issues two tokens, with “SPS” being used for DAO.
- DEC: Utility Token
- SPS: Governance Token
The token allocation for SPS is shown in the following graph.
300 million, which is 10% of the total supply, is allocated to the DAO Foundation (Community). 50 million is issued on the first day, and the rest is released evenly over 64 months (3.9 million every month).
In addition to the above, resources have been secured for the DAO Foundation through the distribution of game item sales revenue.
Splinterlands’ Treasury Wallet
The treasury wallet, where Splinterlands’ community assets are stored, is publicly available on the blockchain for anyone to view. As reported in the semi-annual SPS DAO Treasury Report, one can view the owned assets and transaction history by looking at four addresses:
- In-Game — @sps.dao (https://api2.splinterlands.com/players/balances?username=sps.dao)
- Hive Engine — @sps.dao (https://hive-engine.com/@sps.dao/wallet)
- Ethereum — 0xb951679DB9E0cA31059e7528A82A756Ecb918519 (https://debank.com/profile/0xb951679DB9E0cA31059e7528A82A756Ecb918519)
- BNB Smart Chain — 0xdf5Fd6B21E0E7aC559B41Cf2597126B3714f432C (https://debank.com/profile/0xdf5Fd6B21E0E7aC559B41Cf2597126B3714f432C)
As of October 8, 2023, they held assets worth $4.53 million. These assets are providing liquidity or are staked. The use of these assets is determined through voting by the governance token holders.
Splinterlands Governance Proposals/Voting
Let’s take a look at the governance proposals currently being discussed in Splinterlands. While many proposals come from the game’s administration itself, avid players are also actively putting forward suggestions. I was amazed to see such progressive proposals and that governance token holders can participate in decision-making.
*Note: For each staked governance token, you get one vote. Proposals pass when more than two-thirds of votes are in favor.
Allocation of Governance Tokens to Sister Game
A proposal to allocate 1 million out of the 3.9 million governance tokens assigned to the DAO Foundation every month to a tower defense game, which is a sister game of Splinterlands. The proposal was approved because it adds more utility to Splinterlands cards and enhances the value of the utility token. The community decided to allocate governance tokens to a different game, even though it’s a sister game. Had it been rejected, I wonder how the rewards for the tower defense game would have been structured? They probably would have retried with adjusted allocation amounts until it was approved.
Distribution of Governance Tokens to Card Pack Holders of Sister Game
There was a proposal regarding the use of the 1 million governance tokens allocated monthly, as mentioned above. It was decided to distribute them to game asset holders during the pre-release phase of the tower defense game. I think allowing the community to make decisions right down to the reward structure is quite challenging.
Reward Structure Based on Card Level
There was a proposal from the administration to change the design so that higher-level cards would receive more rewards. In most cases, game administrations make unilateral decisions about game design and reward structure changes, right?
Prohibition of Bot Usage Added to Terms of Use
With the emergence of third-party tools capable of deploying high-performance bots, there was a period where humans could hardly ever win. To realize battles between humans, a decision was made to add a clause prohibiting bot usage in the terms of use. This is another area where game administrators often make unilateral decisions, isn’t it?
Increase in Market Transaction Fees
It was agreed to raise the transaction fee rate from 5% to 6%. The fee rate taken by the in-game market or third-party markets was reduced from 5% to 4%, with the additional 2% of utility tokens being burned.
Burning Unsold Card Packs Daily
The forecasted number of pack sales exceeded actual sales, leading to a surplus of unsold card packs in the market. Instead of waiting for these to sell, a decision was made to gradually burn them daily.
Adding Staking to Increase DAO Income
A proposal was made suggesting that the DAO Foundation should stake its vast amount of governance tokens to earn staking rewards and increase its assets. It may seem better for the community’s wallet to flourish, but there were concerns that a large amount of staking would decrease individual player returns. Additionally, with increased staking, the DAO Foundation would hold a significant amount of voting rights, which seemed counterproductive to some.
Supporting the Utility Token with Purchases
There was a proposal to use approximately $280,000 worth of governance tokens to support the utility token’s price. However, this was rejected.
Expenditure for Cryptocurrency Exchange (CEX) Listing
To increase token awareness and liquidity, and to encourage new entries into the ecosystem, it was decided to spend up to 30 million tokens (worth around $670,000 at the time of voting) to get the token listed on a CEX.
Promo Card Airdrop According to Token Staking Amount
It has been agreed to distribute one promotional card for every 1,000 staked governance tokens. This decision not only encourages token staking but also raises awareness that after token issuance, the DAO provides rewards.
Delegating New Card Pack Development & Sales to the Game Administration Company
Until now, the game operation was managed by Steem Monsters Corp., which developed and operated card packs. However, going forward, the DAO (Decentralized Autonomous Organization) is poised to take center stage. A vote was held on whether the DAO should “delegate the development and operation of new card packs to Steem Monsters Corp. for a payment of $250,000 and distribute 50% of the revenue from pack sales,” and it was approved. This move will likely bring Splinterlands closer to becoming a more autonomous game.
Lastly, The World After Token Issuance
Many Web3 games don’t discuss their state after token issuance. Reading various Web3 game white papers, I wonder, “What will the rewards be after token issuance?” During the token issuance process, it’s straightforward as tokens are directly distributed to players. However, who will pay the players once all tokens are in circulation?
In Splinterlands, funds accumulate in the DAO foundation, and after token issuance (5 years later), the DAO foundation will support the “Play to Earn Ecosystem”. Honestly, whether this will work remains unknown. It’s unclear whether games even need a DAO. I’m interested not only in the gameplay of Splinterlands but also in the challenge of community-driven game administration. I want to continue enjoying this as a community member.
Game Overview:
- Game Name: Splinterlands
- Genre: Trading Card Game
- Release Date: May 2018
- Official Website: https://splinterlands.com/
- X(Twitter): https://twitter.com/splinterlands
- Discord: https://discord.gg/splinterlands
- Operator: Steem Monsters Corp.
