RE: SPS Governance Proposal - Restructure Ongoing Development Contracts
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Honestly the way this post was written was not easy for me to understand what was really going on. So I fed both proposals into ai and it pushed out something I understood (double check it's all correct @clayboyn)
Assuming it's helpful I'll share it below no alterations from Gemini:
Okay, let's break down this proposal in simple terms.
The Background (Why this is happening):
- The Problem: The Splinterlands company was struggling financially (due to the "protracted bear market"). They couldn't afford to keep paying developers to work on essential background technology for the SPS token (called the SPS Validator software or SPS Chain). This software is needed to make the SPS token truly decentralized, which was always the long-term plan.
- The Temporary Fix (Started July 2024): To keep development going, the SPS DAO (the community organization funded by SPS token holders) stepped in. They agreed to hire a company called JPTR Corp (run by a Splinterlands lead developer and employing former Splinterlands developers) for one year.
- The Cost of the Fix: This deal cost the SPS DAO $40,000 per month, totaling $480,000 for the year. The DAO paid this in cryptocurrencies like USDC, ETH, or BNB.
- Current Status: This temporary arrangement has been running for about 9 months. There are still 3 months left on the contract, meaning the DAO still owes $120,000 ($40k x 3).
The New Proposal (Posted May 1, 2025 by Clayboyn, the DAO's Project Manager):
Purpose: To find a cheaper, more sustainable way for the DAO to ensure this vital development work continues without interruption, while reducing the DAO's expenses. This was always intended as a temporary measure, and now it's time to transition.
What the Proposal Suggests:
- End the Old Deal Early: Stop the current $40,000/month payments to JPTR Corp immediately, cancelling the last 3 months of the contract.
- Make a One-Time Payment: The SPS DAO will give the Splinterlands company a lump sum of 120,000,000 DEC tokens. This amount is valued roughly at the $120,000 remaining on the old contract.
- Shift Responsibility: The Splinterlands company will take over hiring and managing these developers directly for the next year.
- Keep Things Going: These developers will continue working on the exact same projects (crucial Splinterlands infrastructure and the SPS Validator/Chain).
- DAO Still Guides: Importantly, the SPS DAO will still get to direct what these developers work on. Splinterlands manages them day-to-day, but the DAO sets the project priorities for their work.
- Streamline DAO Contracts: Going forward, only Clayboyn (Project Manager) and Cryptomancer will be directly contracted by the SPS DAO.
Why Propose This? (The Benefits):
- Huge Cost Savings for DAO: Instead of spending another $480,000 over the next year (if the old deal somehow continued), the DAO spends the equivalent of $120,000 once, paid in DEC. This cuts the DAO's development support cost by about $360,000 (or 75%) for the year compared to the previous rate.
- Ensures Development Continues: Guarantees these key developers keep working on the necessary SPS projects for another full year without stopping.
- Protects DAO Funds: The DAO pays the final obligation using its DEC tokens instead of spending more of its valuable ETH, BNB, or USDC reserves.
- Fulfills Obligation: Settles the remaining $120,000 owed from the previous agreement.
What Happens if the Proposal Fails?
- The current deal with JPTR Corp continues.
- The DAO pays the remaining $120,000 ($40k/month for 3 months) using its ETH/BNB/USDC funds.
- After those 3 months, the contract ends, and the funding stops. Development on the SPS Validators could halt unless the DAO makes a new plan or the Splinterlands company finds a way to pay the developers themselves.
In a Nutshell:
The DAO is currently paying a lot ($480k/year) via a contractor (JPTR) to fund essential SPS development that the Splinterlands company couldn't afford. This new proposal suggests the DAO make a one-time payment (using 120M DEC tokens, worth ~$120k) to the Splinterlands company. In return, Splinterlands will hire these developers directly for the next year, saving the DAO a significant amount of money ($360k) and allowing it to preserve its cash reserves (ETH/BNB/USDC). The developers keep working on the same projects, and the DAO still directs their work priorities. It's essentially shifting the management back to the company while fulfilling the DAO's remaining financial obligation in a more cost-effective way using ecosystem tokens.
That sums it up pretty well. Basically we don't have enough non-SPL assets to fulfill all outstanding obligations, so instead of just running out of money, pushing the DAO to sell tokens or pulling liquidity out of pools, the deal is to pay Splinterlands in DEC and have them take on some of the cost directly.
But now it's gonna cost 120k a year instead of 360-480k a year?
Seems maybe we overpaid for the first year? What's the story here?
It's possible. One of the main points here is that the team is going to have to make up the difference or work out a streamlined contract themselves. Simply put, the DAO helped get past the biggest financial hurdle and there's a new pack sale now. Unless we can get agreement from top holders to start selling DEC/SPS or pulling funds out of liquidity pools (I don't think we can from the conversations I've had) then it's do something or just go until we run out of money, which means no Validator development, no Land development and I'd be gone too I suppose.
I ran the numbers even taking myself out of the equation entirely, the DAO still can't afford both JPTR and mancer to contract completion. Just trying to do my best to help offload some of the costs the DAO has taken on and hopefully get us net positive at some point in the next few months. I'd like to see bridging set up so the DAO can start capturing a few thousand dollars a month there at least. If we make some strategic LP plays, we may be able to start generating enough to cover both me and mancer, we'd need to like 4x our current non-spl earnings to do that.
We could do one sided LPs to sell tokens, we could try to work out promo card sales for stables or something along those lines. I've been exploring a lot of options to try to figure out how to get the DAO net positive, but yea it's way harder trying to budget $60k a month than it is under $20k a month. This proposal is what I was able to work out to help us better position ourselves to have the time needed to explore those options.
Why when that proposals were put up, no one risen the hand and said hey guys not enough founds for validates and lands?
When this proposal was put up, it wasn't an issue. It became an issue with subsequent proposals like the DHF agreement to buy a million HIVE and 130,000 HBD, which was still fine. Then the DAO passed a proposal to hire cryptomancer as well. It all adds up and when the DAO chooses to budget pretty much every dollar it has, that doesn't allow much room for things like market fluctuations. I'm pretty sure people did point this stuff out as I made it clear to Matt when he ran the cryptomancer proposal that this proposal we're getting now was a very real possibility. Unless the DAO wants to start selling DEC or SPS we don't have a lot of options. Regardless of who said what and when, we currently have a budget problem and need to fix it.
How much hbd per month do the 130000 give? I am just thinking why not sell non hive assets and just switch full to hbd and pay whatever else with it? It's a stable and 15% apr is great
2.5 months it's made about $4,700. Not enough to cover this for sure. Usually we just compound it.
https://peakd.com/@sps.dao/wallet
Well shit, that sucks... but it makes sense.
Maybe another Runi like project (cross chain?) to a chain that can also pair with marketing. 👀 .
Honestly, this has always kind of been on my mind taking funds without effecting price is hard. But the team needs DEC anyways for credit purchases?
Yep, this is probably the best way to "sell" DEC. Let the team trickle it out for credit purchases. They can use the cash to pay the devs. We don't have to market sell DEC or SPS.