ICE Sustainability: Finite ICE Supply via Halving + All Access Wearable Bonus Rewards

Background

Over the past year, our central focus has been to attain balance in the ICE burn-to-earn ratio, with the ultimate goal of stabilizing the price of ICE. To achieve this, we have successfully implemented a series of governance proposals that have:

• Decreased emissions from Metaverse Challenge Mode
• Switched wearable activations from DG to ICE
• Committed 100% of Polygon Validator rewards revenue to buy ICE
• Committed 100% of secondary sale royalties revenue to buy ICE
• Committed 100% of metaverse advertising revenue to buy ICE

Additionally, we introduced an off-chain asset, Banked ICE (for delegated players), to reduce our direct liquid ICE emissions, and we gamified the burning of ICE with Tournament Mode to welcome organic ICE demand — all to offset the high daily emissions from Metaverse Challenge Mode.

Despite making solid progress on reducing emissions and improving burn, we still are not at a 1:1 burn-to-earn, and we must act in the immediate term to bring balance to the ecosystem and restore a positive narrative around ICE, ICE Poker, and Decentral Games.

Proposal

• We allocate Metaverse advertising revenue to purchase ICE.
• We allocate secondary sales royalties revenue to purchase ICE.
• We halve the ICE Rewards per challenge biannually with the first ICE Halving occurring on February 15th, 2023. Similar to the capped supply design of bitcoin, this would cap ICE supply due to the sum of the infinite series of (½)^n having a finite limit as n approaches infinity.
• We give the team the discretion to reduce ICE activation and upgrade costs, as well as the minimum claimable ICE after each halving event as needed.
• After reaching > 1 burn-to-earn without treasury purchases of ICE, we allocate 50% of secondary sale revenue and metaverse advertisement revenue to buying ICE and accrue the other 50% in the treasury. Additionally, we allocate economic surplus (net ecosystem spending) to All Access wearables holders weekly via a randomized ICE/Shine drip.
  • Economic surplus would be calculated as the net revenue from Shine and upgrades purchases minus the emissions generated from them via prizes redeemed. In other words, if burn-to-earn is 1.5, then 50% of the extra 0.5 (surplus) will be distributed to active owners of All Access wearables via bonus rewards.
  • Bonus rewards would be randomized and given to All Access wearable owners who have played the most in the last 7 days. Metaverse check-ins and SNG days played at least 1 tournament qualify an owner for the economic surplus bonus rewards. The more days you check-in/play SNG, the more wearables you have, and the higher rank of your wearables — the higher probability you would be included in the bonus rewards drop. This way, we incentivize our owners to play the bare minimum, while giving large guild owners an advantage from their larger collections.
  • The economic surplus would be calculated on a weekly time frame, and then distributed in ICE/Shine (Shine would be addable to a wearable of the owner's choosing).
• We allow the team to update the price of Shine in ICE based on ICE price appreciation to ensure 1 Shine doesn’t exceed 1.5 USD (100 ICE currently = 1 Shine, so this would potentially go into effect once ICE > 0.015 USD). In updating the price of Shine in ICE, we would also adjust the ratio of Badges to ICE, Shine, and All Access wearables accordingly. This way, if the price of ICE increases drastically following a new narrative, the entry price for SNG tournaments doesn’t balloon too high as well.

Rationale

By implementing a finite supply cap of ICE through bitcoin-style halving events, we can achieve a 1:1 burn-to-earn ratio after the first halving event, and reinvigorate ICE with a strong narrative of digital scarcity.

While the biannual halving in ICE per-challenge reward may be initially concerning for All Access wearable holders, it presents a significant opportunity for our community. At this point, All Access Wearable holders can absolutely understand that it doesn’t matter how much ICE they are earning if the value and narrative around ICE is constantly diminishing. It has become clear that a positive narrative around ICE is more powerful than any amount of ICE reward per challenge. A limited supply combined with growing demand for ICE via Shine purchases will push the burn-to-earn ratio above 1:1, establishing a new narrative of digital scarcity that can bring long-term benefits to our ecosystem.

Currently, our burn-to-earn ratio stands at 0.45, excluding ICE purchases from metaverse ads, secondary sales, and Polygon validator node rewards. With these purchases included, the ratio stands at 0.82. Of the 0.45 burn-to-earn ratio, roughly 0.3 comes from Upgrades and Activations and 0.15 comes from Shine purchases. If we assume that the total ICE burned via Upgrades and Activations is also halved, the contribution of SNG grows inversely with the reduction of emissions.

• After 1st halving on 2/15/2023 - 0.6 B/E w/o purchases; 1.23 w/ purchases
• After 2nd halving on 8/15/2023 - 0.9 B/E w/o purchases
• After 3rd halving on 2/15/2024 - 1.5 B/E w/o purchases

There are two reasons to be optimistic about reaching a 1:1 burn-to-earn ratio even sooner than this schedule: (1) the dramatic increase in ICE burned from Shine purchases to play SNG as we onboard more users, and (2) the launch of a new Flex-native prize redemption marketplace with irl prizes to provide larger incentives to play SNG — both of which will drive increased demand for ICE/Shine.

All in all, if implemented, this proposal immediately gives our ecosystem a clear set plan to get to and past a 1:1 burn-to-earn ratio, while paving the way for sustainable bonus rewards for All Access wearable owners as ecosystem spending (revenue) grows past base ICE rewards in the future.