How to build a healthy and incentivized GameFi economic model?

Original Title: "Thoughts on a Healthy and Motivating Gamefi Economic Model"

Original Author: Alex, Foresight Research

Summary

The healthy development of Gamefi's economic model must satisfy itself that it can continuously introduce external asset inputs and diversified non-monetary income outputs. The key point is to solve the cyclical contradiction between the new demand of players and the new supply of Token, and pay attention to the utilization efficiency of currency and game resources. Considering several factors such as guilds and leasing, we can get an economic model with the most incentives for healthy development.

In the summer of 2021, the Gamefi boom started by Axie Infinity swept the Philippines, making the concept of P2E (Play to Earn) popular Familiar, but with the fall of Token price, Axie finally became the tears of the times, and its economic model cannot escape the blame. And the hottest Stepn in 2022 will bring global users into the era of M2E (Move to Earn), announcing the opening of the X to Earn mode. So what exactly is at the heart of a healthy Gamefi economic model? Before that, first we need to clarify the relationship between Gamefi, P2E and M2E:

As shown above, Gamefi's The scope is the largest. Just like in English, Game actually includes both games and sports competitions. The first refers to pure games, such as hide-and-seek or various electronic games, and the second refers to sports such as football. , basketball and even track and field, so P2E is a subset of Gamefi. In addition, there are a series of modes such as M2E, B2E (Bike to Earn), etc. We put them together with P2E under the framework of X2E (X to Earn). As for M2E, it also belongs to the P2E mode to a certain extent. The difference between the two lies in the form of direct action, one is running while the other is playing; if we introduce Stepn into the mode of racing competition, we will find that M2E will There is a shadow of P2E, and the same logic can be applied in many other X to Earn patterns. The F2P (Free to Play) mode is more focused on gameplay, players can pay to get a better gaming experience and potential revenue, so it is also a subset of Gamefi.

In addition, there are many blank parts in the above picture, this is because Gamefi is not just for Earn, or this Earn is no longer only for money in the narrow sense, It is an asset. It can be a monetary tangible asset, but it can also be a non-monetary intangible asset such as health, happiness, friendship, and identity. This process is collectively referred to as game-related Crypto financialization, that is, Gamefi.

Major premise: diversification of non-monetary income output & external asset input

After understanding this crucial point, let’s explore why the initial chain games like Axie Infinity are unsustainable? The most important reason is that it lacks the input of external assets and diversified income output, so it is just a zero-sum game, and it will gradually decline in the end, becoming a Gamefi that runs faster than anyone else.

Most people who play Axie are not attracted by its gameplay, but by the wealth effect it brings. This shows that almost everyone who is willing to spend initial funds to come to Axie is just to mine and sell for gold in the end, as long as they sell before others, they can make money. The wealth earned by the initial player is the principal spent when the Pan Xia enters the game later; if you become the last stick of drumming and passing flowers, and no external funds from new players enter later, then you will lose all your money. Therefore, a healthy and sustainable Gamefi economic model should first consider how to attract external assets. The investment of external assets is purposeful. For the Axie project, it is only for making money, and making money means that when you leave, you will take away this part of the money left in the ecosystem, and even take some more. Then In a zero-sum game, there must be players who will lose money, which violates their original intention of entering Axie, so the rapid decline of the game is doomed from the very beginning of the model, and it is only a matter of time.

On the other hand, Stepn still has countless new users. The influx of new funds can be used for blood transfusion; but more importantly, at the beginning of the establishment of the model, Stepn introduced a non-monetary income output into the model, which is health. This makes the return on investment no longer the only factor for users to consider. Whether their physical condition can improve after insisting on using stepn has also become an important motivating factor, and this non-monetary benefit will make this Gamefi ecosystem not A zero-sum game that generates a positive benefit called "health" in the Game, making people more willing to enter this Gamefi. In addition, Stepn is gradually seeking more non-monetary benefits, trying to diversify its income. For example, the recent Stepn May podcast revealed that it may involve more social gameplay, helping users build a social platform, which enables people to make more friends and fellow runners who love running, so that they are not only concerned about the return on money investment Rate.

A gamefi with sustainable and good development must meet a major premise in the design of the economic model, that is, the game must Give users non-monetary benefits, such as health, social networking, or entertainment, otherwise it's a pass-and-drum scam built on Ponzis, not Gamefi.

Therefore, starting from 2022, more and more Gamefi began to pay attention to the game and playability of the project itself, and there has been a 3A blockchain The investment boom of masterpiece games. At the same time, the X2E mode is also popular, because this mode can at least attract fans who focus on X, making them willing to pay for this hobby or the gains it brings, instead of playing games with the mentality of "I am here to make money" Mid-digging and selling.

There is another way, that is, the game itself can attract the investment of external assets to increase the monetary assets in the game ecology. This form generally includes but is not limited to IP operations, in-game and in-game advertising placement, professional event operations, and game co-branding, etc. For example, traditional Web2 Moba games such as Dota2, League of Legends, and Glory of Kings all have their own global events, and have built an Esport industry chain, and have also obtained huge profits by selling skins and other peripherals. This path is more suitable for F2P games, but at the same time, it also needs to set up a corresponding "cool point mechanism"-so that players who are willing to pay for F2P can get a better game experience or a sense of game identity. For example, although Yuanshen’s monthly card party does not cost much every month, the excess income obtained by players is enough to support a high probability of getting a big guarantee every time a new hero pool is opened, which greatly improves the player’s comfort. Entice players to pay for a free game. A game that takes this path must aim to become an oligarchic game in a certain region or even the world, so as to have the potential to attract external capital investment. In other words, it has extremely high requirements for gameplay.

Currently, because the development of Gamefi is still in the early stage, there has not been a game that can really get out of the circle with gameplay, so it is difficult to attract the investment of external assets. But I believe that with the passage of time, there will be games that meet the gameplay needs of players, and make some players willing to pay instead of making profits. At the same time, external sponsors and traffic can be used to supplement the funds of the ecosystem.

After avoiding the pure zero-sum game, the current Gamefi still has many problems to be solved. The most difficult and most critical thing is how to avoid currency price Death spiral on the way down. This is not a game problem in essence, but an economic Token supply and demand problem.

The key: Solve the cycle contradiction between the new demand of players and the new supply of Token

Resource: https://pro.nansen.ai/multichain/ronin

Here we still take Axie as an example, as shown above It shows that the rapid increase in the number of new users of Axie at the very beginning made the demand for currency rise rapidly, and drove the development of the game itself so that it quickly broke through the circle, and then absorbed more users; a large influx of new players took over the game Old players’ demand for cash, and due to the rapid growth of players’ demand, the amount of currency they consume far exceeds the amount they produce, so the currency price has been soaring all the way in the early stage. However, in the mid-to-late period, unlimited issuance of currency, everyone's daily gold deposits are too fast, APR can no longer maintain a high level, and new users are not enough to take orders, resulting in currency consumption far less than output, and currency prices begin to fall. Axie tries to increase the difficulty of currency acquisition and the speed of consumption in the game to regulate the demand for currency. However, due to the serious oversupply of currency, even if the supply is reduced, it still cannot prevent long-term panic selling due to fear of currency prices continuing to fall, and even squeeze The living space of the original interest-bearing tool Axie NFT has been squeezed, and the demand side of its currency consumption has been squeezed, the balance of supply and demand has been broken again, and the currency price has been falling all the way. Players are also lost, and finally the economic model fails, leaving only a death spiral. (As shown in the picture below)

In order to solve this problem, the following core points are summarized:

Core point 1: Pay attention to the changes in the number of players, focus on the dynamic adjustment during the period of player surge, control the growth rate of players and the speed of money supply; Total control to control the inflation rate

The collapse of the Gamefi economic model is usually after a short-term influx of a large number of users, when the money supply It suddenly increased several times, but the subsequent increase in users could not keep up. As a result, the game currency, which rose sharply due to the large increase in users, went through a sell-off stage (as shown in the figure below), and eventually players lost confidence due to the collapse of the currency price quit. Therefore, when the number of players increases sharply, we need to impose certain restrictions to prevent the number of players from growing too fast, especially when the game has not really cultivated the consensus of core players, which is dangerous; at the same time, it is necessary to adjust the way to obtain currency at any time And upper limit, so that supply and demand can be balanced. Axie did not restrict the entry of players after the fire, causing a large number of gold mining guilds to enter in batches. Although it can usher in a prosperous scene in the short term, the currency supply mechanism has not been adjusted in time. Finally, the digging and selling mode caused Axie to plummet, and then Lost the new user to take over, and fell from the altar. Stepn, on the other hand, has been using invitation codes to expand steadily, and actively adjusts the rules to match the currency supply with the growth of the number of players in a timely manner, avoiding mining and selling during high-growth periods as much as possible. Although adjusting the rules seems to be too centralized, it is a necessary means to maintain the healthy development of the game in the early stage.

Therefore, the currency supply should slow down as the number of players increases. It is recommended to implement a fixed distribution system for the total amount of game currency, which is determined by the official daily or monthly distribution The total amount of Token, and then carry out macro-control according to the proportion, so as to control the monthly Token inflation rate, so that the increase rate of Token supply is lower than the increase rate of the number of players, thereby prolonging the life of the game. Because once the new number of players cannot support the supply of currency, it will quickly lead to nowhere to consume the currency and depreciate, which will trigger a vicious death spiral that accelerates the exit.

Core point 2: Diversify and complicate the reward mechanism, introduce probability, so that the reward APR cannot be established 100%

Games such as Axie will definitely become a digging, withdrawing and selling mode in the end, because players have already calculated the formula and payback cycle before entering Just to be able to sell it back in the future. Therefore, in order to enable players to be better motivated to participate in the game, we should establish a variety of incentive mechanisms, making it difficult to directly calculate the APR of players under different incentive mechanisms. For example, in many Moba games, a ranking mechanism is introduced, and corresponding skin rewards can be obtained when reaching a certain level; in some MMO games, a copy race ranking is carried out, and the top ranked Teams can obtain additional title rewards and add to future rewards. These rewards are no longer pure monetary rewards, but Buffs; these non-monetary rewards will allow players to better integrate into the game and make APR difficult to calculate simply.

It is more important to introduce probability. Why are the economies of many traditional MMO games less likely to collapse than current blockchain games? Because a major feature of MMO games is: the drop of equipment is random. No one can accurately calculate how many times I can buy a good equipment to make a dungeon, and how many times I can get a good equipment to return the cost. As the saying goes, when you open the box, you will know whether you are a non-chief or a European emperor. Naturally, it is difficult to calculate the APR. The specific pricing of all items will be priced in the original trading market in the game. It is difficult for players to judge the real cost, but the project party can clearly calculate the real cost of the equipment through the background data. It is this information gap that enables the project party to better To carry out macro-control in a timely manner to stabilize the economic ecology of the game.

Core point 3: Use the dual currency system to curb inflation, establish widely recognized savings, and establish a closed loop of currency internal circulation, introducing time and quantity

It is necessary to distinguish between the governance currency and the game currency that is consumed in large quantities, because the governance currency The difficulty of obtaining it should be significantly higher than that of the game currency, and the governance currency needs to have application scenarios that have to be consumed at key nodes of the game so that it can also be used in the inner loop to fully develop its empowerment, so as to stay in the game and slow down the game. rhythm, thus prolonging the life of the game. The game currency must be relatively independent and governance currency. If the inflation rate is too fast, it can be handled flexibly by adjusting the ratio of the two currencies required for consumption, so as to achieve the economic and ecological balance in the game. There should also be a gold-like deposit that counters in-game inflation. When people encounter the inflation of the game currency, they can exchange the currency for savings, which can more effectively keep the funds in the game ecology instead of flowing out quickly, and help stabilize the price and ecology of the currency.

Establish a more diverse consumption and acquisition mechanism for game currency, not just a single PVP/PVE, which will only cause the currency acquisition speed to be much faster than The speed of consumption needs to form a closed loop so that the distributed currency can have consumption scenarios in the game, such as introducing upgrade systems and multi-system systems (such as weapon systems, rune systems, heraldry systems, talent systems, etc.) to increase consumption scenarios , and higher rewards can be given to depleted characters to positively motivate them to consume reasonably. Whether it is Axie, Stepn or other Gamefi, they are currently too simple, there are too few ways to consume Token, and it is difficult to have high-level items that make players willing to pay high costs to obtain excess returns. The slots and Axie equipment Runes & Charms have had little effect. It can be seen that they are not doing well, so players will only sell them at the right time. In fact, a variety of consumption mechanisms can be introduced similar to the design of MMORPG games. (As shown in the picture below)

All kinds of endogenous exchanges should be established in the game, including equipment and currency exchanges, Taxes are levied on players who want to realize arbitrage to replenish the treasury. And encourage equipment transactions to be settled with game currency as much as possible, so that the game currency stays in the game ecosystem; and establish a pledge mechanism that can provide monetary and non-monetary diversified rewards to encourage players to pledge, so that the currency stays as much as possible Within the system, a closed loop is formed. For the sale of equipment, the following considerations can be introduced to treat them differently, so that players are more willing to stay in the ecosystem:

- Time: After obtaining the equipment, the longer you sell it, the lower the tax

- Quantity: The more you sell within a certain period of time , the higher the taxation will be carried out

- Seniority: The more game time and honors the player has received, the more tax reductions will be made

Core point 4: Core assets must introduce a replacement mechanism or a durable upgrade consumption mechanism, not once and for all

The core asset must be upgraded, otherwise it will become a perpetual money printing machine, which will greatly damage the economic model. Therefore, it is necessary to establish a mechanism for core assets to consume currency, so as to achieve a dynamic balance and curb inflation.

The demand for Axie's interest-bearing assets in the middle and late stages is getting lower and lower, because the demand for Axie replacement is very low, which leads to the extra Axie has been in the market Selling on the Internet has affected the currency consumption mechanism of the game. Therefore, when different versions are changed, a mechanism must be introduced to guide players to be willing to purchase new core assets, so as to achieve the purpose of consuming original assets, effectively prolonging the life of the game and improving player retention.

If you frequently "generation version generation god", it may kill the player's enthusiasm, so you can also introduce an upgrade consumption mechanism so that core assets can be consumed in a short period of time The game currency is used to meet the requirements of the current version, but it needs to be limited by adding durability to ensure that there will still be a large market demand for the core assets of later versions, and promote the internal circulation of the economy.

The models that can be referred to are:

-Introduce a level mechanism for both equipment and characters, Players must upgrade their equipment to get a better gaming experience

- There is an upper limit for equipment upgrades, so that after a certain version, players must replace new equipment instead of unlimited Patching

- With the change of the game version, a certain degree of value expansion will be performed to encourage players to replace equipment

- The necessary rare high-level equipment cannot be obtained directly by participating in a game, but should be synthesized through multiple materials

Above the four-point core They are all considered from the perspective of currency supply and demand balance, but we still need to be clearly aware that Gamefi is an ecosystem based on the actual needs of players, and its development may cause more practical problems. Therefore, in order to better fit the reality, improve the utilization efficiency of currency and game resources, and make the ecological development more balanced and sustainable, the following supplementary core points are proposed:

< p>Core point 5: According to user portraits, meet different needs, establish a small society with clear division of labor to operate, form a healthy pyramid structure, and form a culture of self-identity

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For different user portraits (as shown in the picture below), such as Gandi, Divine Exercise, Work Party, Student, Krypton, and Moon Card Party, develop different game modes and types, and Diversified rewards are not just game currency or governance currency, but can also stimulate the vanity of players. (Only individual players are considered here, and game guilds are not discussed for the time being)

Obviously, Krypton is unique in MMORPG , it can bring a huge inflow of external funds regardless of returns, supporting the positive cycle of the entire game. When designing the economic model, it should be designed for different user portraits, and their payment power should be stimulated as much as possible. For example: the repair costs for different copies are different, and the output benefits are also different. The probability of failure in the advanced copy will be greatly increased, but you can experience the latest gameplay and have the opportunity to obtain more advanced equipment, so that players can enjoy being admired by others when standing on the street, which will make players with strong paying power such as Krypton Willing to pay to obtain psychological pleasure and form self-identity; while low-level dungeons should consider increasing cumbersomeness rather than difficulty, so that players must be able to complete it but it will not cause huge selling pressure on the game ecology. The initial material of the system, which promotes the progress of advanced equipment. In addition, we should also consider setting different modes in the game according to the degree of contribution to increase the game experience of different players. Paying players cannot only be considered. The total value of game items created by bottom players may not be less than that of upper players, even because they Layers of processing can make items generate a premium and be sold, which drives the progress of the entire ecology.

In addition, different players may have different identities and senses of identity, how to design different mechanisms to make different types of players have a sense of belonging and identity for the game This will be the key to Gamefi's foray into the social space. When something in Gamefi can give you more symbolic meaning or spiritual connotation, such as the first-pass list in Warcraft and the unchanging skin in League of Legends, the game has an internal culture, which makes players willing to To introduce external funds, so as to pay a premium to own it, the game can also develop for a long time.

Core point 6: Game guilds are double-edged swords, players should be encouraged to form guilds spontaneously, and professional gold-making guilds should be restricted

The game guild is a very soulful existence in MMORPG games, because it can quickly create bonding between ordinary players, and experience the joy of swimming in a new continent Fun, and that's the heart of an RPG. Therefore, we should encourage players to organize guilds spontaneously, because this will bring positive external assets to the game, and then promote the development of the game, and even start to enter the social field like Stepn, and firmly grasp the players.

For professional goldsmithing guilds, restrictions can be placed in the game to make it a reliable producer. Because the purpose of the professional gold mining association is only one, which is to dig, withdraw and sell to earn excess profits. Then we should find a way to restrict it so that it can develop in the game with peace of mind within a certain period of time. Because the upper-level players of the game need a huge amount of materials, the professional goldsmithing guild can just act as the producer, so as to avoid a situation where the supply of materials exceeds demand. But at the same time, professional goldsmithing guilds should be restricted by means of duration, durability, physical strength, etc., so as to avoid the collapse of the game economy and ecology caused by excessive exploitation of game resources.

Core point 7: The leasing of the economic system Gamefi develops to a certain extent, and the form of leasing will definitely be derived, even from the beginning lease. Because the existence of NFT makes the assets in the game separate from the game platform itself and belong to the player himself, this change of ownership is convenient for players to freely buy and sell their own equipment to exit. And renting equipment is to lend out your own equipment, let others do gold mining and collect the rent yourself, as shown in the picture below:

Under the leasing mode, if the cumulative income over time will be greater than direct selling, people will choose to collect rent instead of direct selling. However, the leasing model makes those players who enter are often no longer players, but just gold-making machines, because they have to rely on gold-making to cover their own cost of renting NFT, which leads to their certainty of mining and selling. Therefore, restrictions on the leasing model are necessary, such as limiting the number of leasing and raising taxes. But at the same time, we should also notice that rental players will actually undertake the infrastructure construction of the game. They are the key force driving monthly and daily activities, and they can generate some basic materials to revitalize the entire market.

In addition, there may be a high-end rental market in the future. This part is more conducive to the game ecology, because the player's demand for a sense of game experience may be far greater than the demand for monetary benefits. For example, in MMORPG, some high-level dungeons require high-level weapons and equipment to be played, and many high-level dungeons have a weekly brush limit, which can only be done once a week, so the cost of buying and selling high-level equipment is very high; and such equipment If you want to sell, the liquidity is very poor.

Then, in order to make reasonable use, you can rent advanced equipment to users who need it, and charge per use. For example, in the Dragon Nest of the traditional MMO, there are often players who can’t beat the advanced dungeon and choose to pay to hire players with superior equipment to take the advanced dungeon; Get advanced equipment, but this also loses the game experience. Assuming that if there is rental equipment, paying players can also experience the thrill of advanced dungeons, which is equivalent to increasing the non-monetary revenue output of gameplay, similar to renting high-level accounts. High-end leasing solves the problem of equipment liquidity for mid-to-high-end players, and also provides feasibility for low-end players to quickly update and iterate. In the long run, compared with buying and selling finished product numbers, the leasing model is more sustainable and can introduce non-monetary income. Out - gameplay, is a win-win situation.

人は何かの祭祝无しに何も得るこどはできない.何かを得るだめには is equivalent to の代価が必要になる (人If you don't make sacrifices, you get nothing; in order to get something, you must pay the same price) - "Fullmetal Alchemist" (Fullmetal Alchemist)

In summary, many Gamefi economic models try to hide their zero-sum game nature with gorgeous mathematical formulas and dazzling Ponzi blindfolds, but as the equivalent in "Fullmetal Alchemist" The law of exchange: "In order to get something, you must pay the same price." In order to be able to produce a healthy and incentivized economic model, we should look for that innovative non-product based on a full understanding of gameplay. The Alpha of monetary income output can usher in the summer of Gamefi, otherwise you will only see the Ponzi game of cutting leeks forever.

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