The Case Against a Coinbase Listing for $SPS

There'a popular idea that $SPS should be listed on Coinbase. Obviously, there are many advantages to being listed on one of the biggest exchanges in the world and one that allows people in the U.S. very easy access to the token. As it is, there's a learning curve to being able to buy SPS and there's not a lot of liquidity for whales who may want to buy or sell the token. Many whales outside of Hive would likely not touch SPS due to the fact that they may not be able to get out of it once they get in.

There are three downsides I've seen discussed about a Coinbase listing.

1. The multimillion dollar cost associated with getting listed and then maintaining the listing.

2. Opening up the token to regulatory scrutiny.

3. And its just a way for whales to dump their SPS on the rest of us.

To me, I'm not very concerned with any of those. The cost concerns me a little but ultimately I think we'd bounce back. What concerns me is probably the thing most people want to see - a sudden price spike in SPS.

Getting Left Behind in the Dawn of Web 3 Gaming

If you go back to 2021 and look at the hundreds of tokens that listed on coinbase in the middle of the bull, you'll see a common trend. Most of the tokens listed have never seen their listing day prices again. Even those that were in the first few months of 2021. In fact, many of them were down by over 50% from their listing price when Bitcoin was hitting new highs toward the end of that year.

Here's SKALE, for example, that listed in March 2021, but you can see it in many other tokens. I looked at several and every one of them but MATIC followed a similar pattern as SKALE. There are probably some other winners but based on my 20 minutes of checking various charts, I couldn't find them.

As we move into the dawn of Web 3 gaming, and the expected bull run around it, there is already concern that the old guard of games will be pushed aside by the armies looking to "invest" in the next 1000x empty promise. This is crypto after all. Hype about exciting things that will likely never exist usually wins out against the "but just wait til they see that we have a real product!" crowd when trying to attract capital.

But what if SPS lists on Coinbase, pops to 30, 40, or 50 cents based only on front running the listing and then proceeds to sell off for the remainder of the bull market as other games are popping off? What if the most profitable thing to do with SPS after an artificial pop in price is to sell it and go play a different game?

What if Splinterlands players are just seeing headline after headline of games 10-100x'ing while the SPS they are holding is just dropping 10% per month since the listing? There becomes a very real possibility that Splinterlands misses the most important adoption wave for web 3 gaming ever. And if it does keep falling, will we even want to keep the listing we paid millions of dollars for?

SPS Is a Special Case Because the Flywheel

The flywheel is a sensitive thing. If you think about the way SPS is structured with the flywheel, the higher the price of SPS, the less of it you need. The less you need, the less upward pressure on the price. The flywheel actually acts to limit the upward pricing pressure on SPS. And the effect of that moves quickly.

At 3.4 cents, if you need $100 in DEC, you need to burn 2940 SPS. But at 10 cent SPS you only need to burn 1000. At 50 cents, its only 200.

The flywheel aspects of the token are meant to follow the direction of in game demand - not investor demand. If players in the game have an increasing demand for DEC because more and more players are coming in, we could see the amount of SPS needing to be bought and burned stay pretty consistent even as the price of SPS rises. However, if the token heads north due to investor/speculator demand (or front running a listing) suddenly, the flywheel gets neutered as far less SPS needs to be burned to meet DEC demand, and DEC demand hasn't changed since investors and speculators aren't playing the game.

I wouldn't be surprised to see a few savvy long term players burn a ton of SPS for DEC on the day of the listing, expecting price to trail off for a while. We could effectively shut down the flywheel with a flood of new DEC on the day of the listing. We could suddenly be straddled with billions and billions more DEC coming into existence in one day, leaving the flywheel dead for months or years.

And let's not forget, we have 5 billion DEC out there right now. What is staked can easily and in most cases, instantly be unstaked and dumped.

To Coinbase or Not to Coinbase?

I'm not saying a Coinbase listing is a bad idea or that we absolutely should not do it. But I do think we need to look at all the angles. There is a world where SPS does what so many other coins have done after a Coinbase listing, and we miss the greatest bull run for the industry the world will ever see. Of course the other possibility is that we are one of the exceptional coins who gets tons of traction on a listing and we go from a few thousands players to tens of thousands of players due to the exposure. Or we could list to crickets.

Best case scenario if the one where the token pops higher and a bunch of players run in to play the game because they can earn more. But, the potential problem there is, those players will likely sell almost everything they get and exacerbate the problems we've already talked about.

Which fate awaits us is anyone's guess. But we should be aware of every possibility and look for ways to avoid the worst possible outcomes.

What do you think? Is Coinbase the road to SPS going mainstream or could the unintended consequences of a listing hurt us more than it helps?

Posted Using InLeo Alpha