What inspiration does the Token economy of mainstream GameFi give us?

Original title: "Interpreting the Ecological Development of Chain Games from the Perspective of "Government"—Taking stepn, ilv, Axie and Star Shark as Examples"

Original Author: Jack Ding, W3.Hitchhiker

Original revision: Marina, Evelyn, W3.Hitchhiker

The core point of this article is that the positioning of future chain games must not be that of traditional game companies Charges are made in the form of selling goods and services, and their positioning will be transformed into a "government". Through the implementation of appropriate fiscal and monetary policies, the ecological balance within the game and the expansion outside the ecology will be achieved, so that the vitality of the game will be strong and lasting.

This article takes the most common dual-token model in the GameFi field as an example, and will explore the feasibility of two ideas:

- Keep the gold mining Token stable in a certain range

- Make the governance Token achieve price growth as much as possible

Using a simple and easy-to-understand metaphor as an example, if we compare the game to a small country, Dajin Token represents a country’s currency in circulation, U still represents the US dollar, and governance Token represents the country’s sovereign fund. No country in the world, whether it is a fixed exchange rate system or a floating exchange rate system, will not allow the exchange rate of its currency to increase in value. One of the impacts of the appreciation of the local currency is the difficulty in exporting. Corresponding to chain games, external incremental funds cannot enter due to high thresholds, and newcomers cannot enter, which leads to the collapse of the economic system within the ecosystem.

This is what the author intercepted on Twitter, and I agree with it:

If you agree with the author's above point of view, then you can continue reading.

Let’s first look at:

The first idea: keep the gold token at a certain Interval stability

The picture above The early GameFi life cycle diagram drawn for the author shows that at the same time, there must be two forces in the market that cause the currency price to rise and fall. Most of the early GameFi projects attract funds through the early high-yield and low-return cycles. Influx and promote the first wave of rise in the currency price, and then when the early players continue to sell at a profit and cause Token inflation, and the new funds are not enough to bear the inflation (the lower power continues to be greater than the upper power), the project will gradually move towards die.

Let's think about it, in fact, the Token of a country is also constantly inflating, so how does the government solve this problem? The author believes that the way a country reduces inflation has the following behaviors:

1. **Increase consumption C: **Consumption is divided into survival consumption (eating and drinking in daily life expenditure) and spiritual consumption (purchase of luxury goods);

2. **Increase investment I: **Investment is divided into investment in means of production and real estate investment;

3.** Increase government spending: **Government issues treasury bonds, carries out infrastructure construction, and gathers money together to do big things;

4. **Increase the effectiveness of monetary policy, common monetary policy operations: **Adjust currency issuance

The above behaviors actually have certain guiding significance for blockchain games:

1. Survival consumption

In fact, the blockchain is already very high for users’ survival consumption education. Behaviors on the chain need to pay gas fees, and most of the games are currently operated on centralized servers, and the user's expenditure on this part is actually reduced. However, illuvium introduces the concept of travel fees. When users enter the P2E area to capture illuvial (elves), they need to consume travel fees, and elves are the cornerstone of players playing games, so this part of the expenditure is attributed to survival consumption;

Second, spiritual consumption

This part is not difficult for most gamers to understand, the simplest The best example is the skin in League of Legends. The skin itself has no bonus to the battle, but it can still attract a large number of players to buy.

The above two points actually require the game to have a certain degree of playability. A game without playability will not attract players, and players will not play in it. consumption. Players can obtain happiness and satisfaction (consumer utility) through the game, which is actually a manifestation of income, and this part of income does not need to be realized by Token inflation, but will lead to Token deflation due to the increase in consumption.

3. Investment in production materials

Take Axie as an example to breed new elves Re-voting is the simplest example. The key to this part lies in the length and complexity of the investment path. Axie’s reproduction path is actually very simple, and the profit point is relatively easy to calculate. During the investment process, too many inflation tokens cannot be stored, only to reduce the current inflation, but the potential Increased future inflation, I think this is not a good way.

Compared with Axie's inflation model, Star Shark has made certain improvements, which are reflected in the following points:

Changing reproduction into synthesis

This means that the means of production cannot pass Players can only upgrade after manufacturing, and the motivation for upgrading comes from the high SSS rewards in qualifying and higher gold-making efficiency (high-star sharks will have more energy);

Star Shark PVP Reward Chart

The optimal solution and The lineup configuration of the PVP optimal solution is conflicted.

The optimal configuration of star shark gold is 3 1 1 1 1 1 1, one 3-star shark, and six 1 A combination of star sharks. But on March 25, Star Shark will introduce the Grand Prix mode. The entry threshold is at least 3 4-star sharks, and the market price of 3 sharks is about 18,000 to 20,000 dollars. This is very different from the optimal gold mining configuration, which complicates and diversifies the user's investment, thereby stimulating consumption.

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You can see the grand prize from the picture above After the news of the game was announced, the daily synthesis consumption of SEA increased significantly.

Fourth, introduce land instead of real estate to undertake the bubble

Many games will be developed before they are developed The land is launched, and the price is exaggerated. In fact, the author does not approve of this kind of behavior. First, the excessive hype has created an excessively high threshold for new gamers; second, if the land is launched when the game Token is inflated, it will be a trump card to undertake the bubble. Star Shark launched the land gameplay in June. I don’t know if this is the idea. The pure P2E mode will eventually decline. (Refer to the author's previous article:)

5. Increase government spending

Chain game project parties use their own income for part of Token repurchase. This method itself is not new, and the key The point is how to increase the non-ecological income of the project party. At present, the only thing I can think of is to obtain sponsorship and in-game advertising revenue by holding game events.

Sixth, increase the effectiveness of monetary policy

The author observes that in addition to stepn, The monetary policy of most games is ineffective. Axie’s multiple adjustments to game output and breeding consumption have not changed the outcome of the decline in SLP currency prices due to high inflation.

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For this, The author believes that the reasons are as follows:

In real life, only the central bank has money printing machines, so the central bank's control over this aspect is absolutely powerful. But the game is different. In the game, each player is a money printing machine, the gold player is a high-load money printing machine, and the script is a high-tech money printing machine. The game project party can only control the daily output of each money printing machine. There is an upper limit, but it cannot control the number of new money printing machines, the speed of production, and the cost of each Token produced by the money printing machine.

 **Three ways to strengthen the monetary policy of the project party (that is, the control of gold Token):**

**Foreign exchange reserve capacity:**During the entire running process of the game, the project party agreement will include a large amount of income, that is, the income from selling NFT and the handling fee income from NFT transactions. A large part of this income is collected in the form of ETH or U.

Taking Axie as an example, in this process, 165 million income was obtained through transaction fees, while the market value of the entire SLP is only 673 million. Is it possible that this revenue will have a longer life cycle if the SLP is properly repurchased and controlled? This kind of behavior is actually not new in DeFi. For example, Sushi will draw 1/6 of the 0.3% handling fee generated by each transaction for Token repurchase.

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**Production speed of production materials: **From the perspective of the game, this part of the control is relatively difficult, because the player's behavior of breeding is spontaneous, but stepn and star shark can give us some inspiration.

stepn has been very popular recently. The governance TokenGMT has achieved an 8-fold increase in the secondary market, but the price of its NFT assets has remained stable at 10% since it was listed on Binance. Around SOL, the daily new shoes fluctuate between 1100-1400. Such stability is inseparable from the strong control ability of the project party. In addition, there will be a chance of twins when breeding shoes, that is, one breeding will produce two NFT. The author boldly guesses that the probability of this twins is constantly regulated by the project party to control the profits of the breeders, so that the number of new shoes added every day is relatively stable, and the selling pressure of the gold-making TokenGST is relatively controllable. Starshark, on the other hand, adopts the method that NFT can only be sold by the official, and users cannot reproduce by themselves. However, the purchase of the entire NFT has not been subject to any restrictions. More than 90% of the income of players buying NFT will be destroyed. Through this A way to achieve a good deflation of Token.

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**Try to put each coin Consistent production cost control: **Previously, most P2E games such as Axie, Star Shark, and dxct could be completed in batches through scripts to complete daily gold mining. The studio paid for this was only a few degrees of electricity and script fees, while ordinary Players may need to spend 1-2 hours of game time in order to complete the daily gold mining. Compared with the output of ordinary players, the batch gold production of the studio is undoubtedly the party that has a greater impact on the market. Due to the low production cost of Token, they sold a large number of Tokens in their hands, which led to the price of the currency falling off the cliff. of fall.

The stepn adopts the GPS positioning function, and the exercise process/user status/exercise result can be mutually verified. Aiko (stepn economic model designer) said: "If you can't even do "proof-of-move", how can you ensure the fairness of "move-to-earn"?"

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Of course we believe that the follow-up game will be more complicated, and there may be more arbitrage links in the middle, not just limited to the breeding link, but the author believes that at least the arbitrage efficiency and risk of different links must be proportional Yes, because risk itself is a cost.

The above is the author's humble opinion on how the project party can maintain the stability of the gold token. The idea of governmentalizing the chain game project party may not conform to the blockchain The spirit of decentralization, but the users facing chain games in the future must not be limited to the current users. Do new users really care about decentralization so much? Maybe what they desire more is a stable game ecology, in which they can gain money and happiness.

Second idea: let the governance Token achieve price growth as much as possible

Discuss this Before asking the question, let's think about it, where does the value of a game's governance token come from?

The author believes that the value of game governance Token comes from two parts: use value and consensus value.

- The use value is easy to understand. Most of the game links require the participation of governance tokens, such as the reproduction of Axie and the synthesis of star sharks. This part of the Token is In fact, in the process of game development, it was used and consumed by players and entered the national treasury. Taking Axie as an example, as of March 23, the cumulative breeding income was 21.88 million AXS, and the current circulation of AXS is 77.24 million, accounting for 28% of the total usage, which means that only about 1/4 of the Token There is a real need for use, and the author believes that the remaining 3/4 of the value comes from the consensus value.

- consensus value, It can also be called expected value or hype value. The author thinks this part of the value is invisible. It is the expectation of the entire market for the project. It may come from the value of the 2.67 million holding addresses, the value of the Ronin chain, and the recognition of its future scalability. The existence of 2.67 million holding addresses has traffic value in itself, so axie has become the leader of P2E. The author believes that the value of consensus is equal to the value of traffic. The more traffic and users a protocol coerces, the more it will be of great help to its subsequent development, because the world of web2 has told us that traffic is everything. How to coerce more traffic to allow more players to participate needs to be considered, but in any case, it is inseparable from a stable economic endogenous system, which is what we discussed in the first point. Only by living longer can we coerce more traffic!

For many early game projects, the price increase of governance Token in the early stage was not as fast as the market value of NFT. Let's take Xingshark as an example. The current circulation of SSSToken is about 3.23 million, and the game has been running for 3 months, and the cumulative synthetic consumption of tokens is only 86,000, and the usage rate is only about 2.6%. When the game is in the early stages, the consensus value has not been formed, so the low usage rate will not bring about the price increase. In fact, this situation also occurred in Axie in the early days. Before July 21, the price fluctuation of its governance token AXS was relatively small, and it had been in the state of accumulating users. On July 1, the project adjusted the breeding fee to reduce the AXS consumed by each breeding from 1 becomes 2, plus a certain number of users have been accumulated in the past, the price of AXS soared later and became a legend of chain games. I don't know if the same plot will appear in other games, but it is worth imagining.

Just like the government's efforts to regulate the economic market, chain game project parties also need to implement appropriate "policies" to stimulate the balanced development of the game ecology. If the chain game project wants to live better and longer on the basis of providing playability, it needs to constantly think and explore more effective ways. In fact, the stability of Dajin Token and the rise in the price of Governance Token are interdependent and inseparable. A stable price system of Dajin Token is conducive to coercing more users to enter, bringing stronger consensus value to Governance Token, and stronger The consensus value will further attract funds and players to invest in the game's ecology, making the price of Dajin Token more stable.

Like the mission of Lianyou is to explore the infinite possibilities of NFT as a creative infrastructure, subvert the existing content and value sharing model and create and share with the community, As much as creativity and value can flourish in the community again, GameFi is just getting started, and their future has endless possibilities.

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