06/03/2024
Feb. SLP Stability Fund Update ⚖️
In January, we introduced a supply cap of 44B and a buyback & stability fund with a goal of 2% deflation.
What do we seek to accomplish through targeting 2% deflation?
• Relatively stable value: past inflationary periods of SLP introduced volatility into the Axie ecosystem and huge fluctuations in the value of in-game rewards which had far-reaching effects on axie price, breeding fees, and economic expectations.
• Deeper liquidity: if supply dynamics are more predictable, liquidity providers and market makers can have greater confidence in supplying liquidity for SLP, thereby creating a healthier market for the SLP earned in game.
• Acceptance and spending: in 2021, we saw many merchants/store owners accept SLP in their shops but a key requirement for merchant adoption is not having to swap immediately into another currency. The system implemented aims to induce more confidence in all SLP holders, including merchants.
• A system of reserves: in the bear market of 2022/2023 many players called for buybacks of SLP and we actually agree that in certain market conditions, when SLP inflation is higher than desirable, buybacks are warranted. The new stability fund allows us to create a stockpile of reserves that can be deployed to modulate supply in times of higher inflation.
Read more about the plan here with an added FAQ based on questions we've received since the first announcement 👇
🔗: https://blog.axieinfinity.com/p/slpcap
February's results are in:
• Achieved .86% annualized deflation
• Net Burnt SLP: 29,694,176
• 5,938,835.2 M SLP (20% of net burn) added to stability fund
• Result: no action taken
We’re encouraged by this progress and will continue to follow the path laid out in the document above.
Note: We calculate SLP burn numbers by looking at SLP spent in-game via both Origins and Classic. On-chain numbers reflect SLP bridged into the game but not actual spent SLP.