# Tokenomics Explained: Splinterlands By [Fernweh](https://paragraph.com/@fernweh) · 2022-01-18 --- ![](https://storage.googleapis.com/papyrus_images/7553149aa4d00d1ce6c09d9b0af4cc9b27be7b7a371630d10df9d21a8fc9ee12.png) One of the most newbie-friendly blockchain games, [@splinterlands](https://twitter.com/splinterlands) quickly gained momentum and crowned as THE top play-to-earn (P2E) blockchain game by users (530K unique wallet address) as of 18 January 2022, stealing thunders from other popular DApp games such as [Axie Infinity](https://axieinfinity.com), [The Sandbox](https://www.sandbox.game/en/?__cf_chl_jschl_tk__=fW6JDc.CL8OodjBk5XYkOm8HFSmKW0GNUgjTJI5imxo-1642647727-0-gaNycGzNB30) and [Upland](https://www.upland.me). In today’s volatile and competitive P2E game market, many compete to win attention and crowds. However, do not forget that most of the population have not migrated to Web3.0 yet. The prize of winning the sprint is nothing comparable to winning the marathon. The long term growth starts with effective tokenomics design to create healthy cycles and provide the right incentives for community. Many challenges lie ahead of Splinterland’s roadmap, and users may be be harmed by risks that they’ve never spotted. The Macros ---------- ### Tokenomics cycles The tokens involved in Splinterlands are not too complicated. All you shall remember are Dark Energy Crystals (DEC, in-game), Splintershards (SPS, governance token), and Credits (in-game). The token cycles are as follows: ![Created by @Fernweh](https://storage.googleapis.com/papyrus_images/a6343e30c483d36c95288c9d292ac1114a94300823eeae49418b98c90c785550.png) Created by @Fernweh The conversion between Fiat (via credit card), cryptos and tokens pretty is pretty straightforward - via crypto exchange such as Uniswap, Hive Engine and Pancakeswap. As of today, * 1 SPS = $0.1418 * 1 DEC = $0.0037 * 1 Credit = $0.001 (constant) Although SPS is the governance token, its use now mainly is to boost holders’ daily Total Airdrop Points. The in-game governance would only be launched in 2022 Q2 where 1 SPS = 1 vote. ### SPS release: Behind the schedule In the SPS [whitepaper](https://sps.splinterlands.com), the team has released the token distribution schedule over 65 months since its launch, that’s roughly until summer 2026. As of 18 Jan 2022, 10 months into the launch, the total supply of SPS is only 453M with circulating supply around 360M (80%) and around 54% staked. We are clearly behind the schedule. ![Source: Splintershards Whitepaper](https://storage.googleapis.com/papyrus_images/36db892121fbf45125f04173b9c5f8e6e7e4eca02d78d038c4f686726348e4eb.png) Source: Splintershards Whitepaper The Micros: in-game ------------------- The game is newbie-friendly as you do not need a cent to play (with limited access but still good fun). However, if you want to trade/rent cards, and earn DEC, you have to buy “Spellbook” for $10, aka paying for the entry ticket to an amusement park. An smart feature is that the Spellbook could be bought using credit cards, this helps the game attract many who do not have crypto wallet yet and try give it a shoot out of curiosity. The Spellbook sale generates considerable income for the game. There is no official data on how many players have paid for Spellbook. Let’s assuming only 50% bought, that is around $2.65M income. ### The illusion of Play-to-Earn Many blockchain games use “P2E” to attract new users. However, when everyone believes in P2E, the game is a Ponzi scheme. The game design has many features to limit how much a player could earn. Some features wouldn't even be noticed. First of all, the most useful trick is to manipulate TIME or TIME-dependent factors since time is a universally scarce source. 1. **The time taken to find an enemy increases as you win more games** This is an accidental observation that as I win more games in streak, the time taken to pair me with an enemy increases. The longest waiting was 1min+ for me. 2. **Manipulate waiting time for enemy to pick up cards.** The official time allowed to choose cards is 3 minutes. On average, it takes about 90s for both parties to decide on cards. However, there is a probability that both parties were told to wait further when they could have started the game. 3. **Use animation of a battle while outcome is predetermined** The outcome of the battle is predetermined the moment both parties decide on cards (although some factors are probabilistic, for example, the chance of missing your enemy = 10%\* difference in speed). Still, it takes up to 3 minutes to finish 1 battle. The players have to watch the fancy animation, which creates excitement to increase their attachment to the game. Hence, roughly each game takes about 5 minutes. ![Waiting game](https://storage.googleapis.com/papyrus_images/5b602e68b746e499f5cd62e296aed3c500158625ade4597e473011d35041ca7a.png) Waiting game Secondly, you cannot immediately start earning DEC. You have to go through: Novice (0-99 ratings)→Bronze III (100-399 ratings)→Bronze II (400-699 ratings) Winning each game at Novice level gives ~20 ratings. At this rate, a player has to win 20 games to enter Bronze II League and starts earning DEC. Assuming 50% chance of winning, that is 40 games in total, at least 200 minutes invested in the game. ![Players can only earn DEC from Bronze II onward](https://storage.googleapis.com/papyrus_images/412b8352e108f821b9480d696f3bc7b5c1d1947b3d11839620a8eb83623205d6.png) Players can only earn DEC from Bronze II onward Next, theoretically there is a limit of how much DEC one player could earn per day as DEC has decaying “energy capture rate (ECR)” which decreases by 1% of current ECR. Assuming we start with 100%, the ECR of n-th game is: `100*(0.99^n)` We found a table from [Peakd](https://peakd.com/splinterlands/@knightsage/splinterlands-dark-energy-crystals-dec-gains-and-capture-rate-mathed-out) that nicely summarise the profits for first 30 ranked games daily: ![Source: knight sage @ Peakd](https://storage.googleapis.com/papyrus_images/6d99fc067da7c1fdea25bf1a075a13b615aab3c4eba40d22cba2e050e533f49b.png) Source: knight sage @ Peakd At the current exchange rate, 632 DEC = $1.96. The investment is: * $10 Spellbook * At lease Gold II Level (2200 ratings, at least 100 wins ~ 1000 min) * 150 min (for the 30 games) * (Optional) Card rental or Card sale. It’s optional, but without special cards it is hard to win Really not worth it. ### Illusion of scarcity Splinterlands has announced upcoming landsale to allow users craft their own items and spells for use in Splinterlands battles. You may wonder why all crypto games are obsessed with land sale, but the answer is that it is the easiest way to profit from the psychologically blurring boundary between reality and Web3.0. The land on Earth is limited, but in the game the developers could unlimitedly expand the land, from Earth, to Moon, to Mars. Especially given the vacuum of power from SPS holders, now it is the prime time to manipulate the tokenomics and get buckled for bear market. Conclusion ---------- Currently, the economy of Splinterlands is planned and controlled. But we’re behind the schedule. Its tokenomics structure is not transparent nor incentive, hence its growth is unlikely to be sustainable. Splinterlands will be another NFT game that flourish and perish. But I really hope not, because it is the first crypto game I played and will always remain special to me. --- *Originally published on [Fernweh](https://paragraph.com/@fernweh/tokenomics-explained-splinterlands)*