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How to design the economic model of chain game? Let's first look at how traditional games curb inflation

Time : 20/10/2021 Author : 8h9ni5 Click : + -
        Translator: how to build an economic model of a game to ensure its maximum vitality? Both traditional game manufacturers and gamefi developers need to seriously think about this issue. On the issue of curbing in-game inflation, traditional games and gamefi share the same pursuit, but their motives are different. We believe that now that the concept of gamefi has exploded, it is urgent to establish a more three-dimensional and underlying cognition in order to take the lead in the next layout. This article ponders from two aspects of traditional games and gamefi, has a new interpretation of the future development prospect of gamefi, and looks forward to the blockchain of traditional games, which has high learning value. Therefore, it has been translated for free for readers.
        Inflation is a problem between supply and demand. When there is more money circulating in the market and the demand remains unchanged, the purchasing power of money will decline, which means that inflation will occur. M represents the total supply of money, V refers to the speed (i.e. money circulation), P is the price level, which is an indicator of inflation, and T represents the total transaction volume, which is the total output in the economy. Whether Angola in 1991 or Bolivia in 1984, the consequences of runaway inflation have emerged in many market economies, and Zimbabwe has even become a model of economic governance failure and hyperinflation. Traditional games: most tokens will be rewarded for players' performance in the game.
        Players can burn tokens to upgrade their heroes or weapons. These upgraded heroes / weapons will reward players with more tokens, and the cycle will continue. Gamefi: players entering the game must first purchase in-game assets (NFT), which will produce tokens with an unlimited total supply. Although players can use these tokens in the game ecosystem, the existence of the market allows players to sell (tokens and NFT). With the passage of time, a large number of tokens have been accumulated, the market selling pressure will increase, and inflation is inevitable. Traditional games: the business model is to turn non paying players into paying customers.
        Inflation is encouraged because deflation may lead to a decline in the gaming experience and scare away gamers. Gamefi: p2e business model will attract more players to enter the game and stabilize the market price for a certain period of time. The token price is reflected in the average consensus of players on the project. At the beginning of the game, the price of items in the game and the exchange rate of legal currency to game currency are mostly maintained in a stable range. As the game enters the middle and late stages, this stable range will be broken: Although legal currency can be exchanged for more game currencies, it will also cause high prices in the game. Players cannot reduce their game costs in the process of currency depreciation.
        On the contrary, it is more and more difficult to accumulate wealth, which will damage the interests of guild players and lead to the overall decline of the game experience. This is the damage caused by hyperinflation to the game economy and ecosystem. We know that structural inflation in real society will push up wages. As a result, commodity prices and wages have become resilient. In the game society, the official will not increase the output of game currency in-game rewards due to the rise of market prices. This means that players need to invest more real wealth to meet the advanced needs in the game. On the premise of rising prices, the reward value given to players through additional content such as game tasks and activities will be reduced accordingly.
        Increasing the difficulty of accumulating wealth in the game will reduce the enthusiasm of players to participate. Ultimately, this process will lead to the loss of players. Despite the high contraction rate, the in-game price of high-end equipment / props will decline. Compared with legal tender, in-game currency will have higher purchasing power. However, under the condition that the price of the basic props provided by the official remains unchanged, the players' in-game survival cost will also increase. In the case of excessive deflation, the currency in the game will appreciate relative to the legal tender. Players' spontaneous demand for tokens increases, the value of in-game assets decreases, the in-game economic ecosystem becomes more fragile, and the overall in-game experience decreases. Deflation reduces players' desire to play in the ecosystem, and the game has to downgrade its expected business model.
        Players spend $100 on weapons. Affected by the depreciation, players later sold at the price of $70 worth of game currency. The $30 price difference is seen as a way for players to pay for her gaming experience. "I have this weapon, and my game experience is more pleasant.". Transactions based on this starting point will virtually complete the transfer of game experience costs. If the weapon is sold at a price higher than $100, it is equivalent to that the new buyer recognizes the value of the game experience brought by the weapon. Therefore, if the overall experience of a game is very good, it will attract more players to pay for it, which will eventually drive down inflation. At present, almost all gamefi projects issue cryptocurrencies on the blockchain and circulate on the secondary market.
        (even) some gamefi projects will issue twoorthree cryptocurrencies to complete the construction of complex economic models. For example, axieinfinity has a three token mechanism consisting of two currencies (AXS and SLP) plus axienft. Gamefi development team will seek maximum profits for themselves through the design of game mechanism and the management of common players' consensus. In gamefi, the team not only undertakes the task of game operation, but also one of the main participants in the complex consensus game of the whole game ecosystem. Therefore, the token mechanism in gamefi will naturally generate inflation and pass the consequences of inflation to players through the ecosystem.
        We take axieinfinity as an example, whose governance token AXS has a long-term deflation model. Its special two token (axs&slp) mechanism and the use of NFTs make SLP bear all the selling pressure of the three assets. On the other hand, officials also support the emergence of inflation: moderate inflation will stabilize the price of AXS, which will reduce the entry threshold for new players and expand the entry volume. In axieinfinity, the team holds a large number of AXS, while YGG of Dajin association holds a large number of axienft (NFT is similar to production tools, and YGG leases axienft to Jinnong to help them earn SLP and charge handling fees).
        The majority of players and gold users hold a large number of SLPs, that is, consumer tokens used in daily activities of the game. Since SLP is produced more than consumed, SLP is bound to flow into the "death spiral" of price decline. At the same time, the prices of AXS and axienft may continue to rise. This increases barriers to entry and reduces the income of gold users. Therefore, the falling SLP price will prompt them to leave the market. In the long run, the inflation trend will have a negative impact on the income of axie team. The team made a series of adjustments to the exchange ratio between the three token mechanisms and the market making in the secondary market. These changes (exogenous factors) cause the SLP price to rise temporarily, thus delaying the loss of players.
        Although inflation will not be solved, axieinfinity showed specific ideas to slow the inflation of gamefi project:. Multi currency & NFT model continues to transfer the inflation and selling pressure of a single currency to other relevant currencies, giving the game development team more room for supervision and regulation. In the long run, this rule will delay losses and try to retain users. Reduce SLP release — Cancel the daily reward slp&mdash after player level 800; Players no longer get slp&mdash from adventure mode; SLP output mode changes to PVP mode, gradually reducing or even canceling the daily task and reward PVE mode.
        Introduce NFT to lock the selling pressure in NFT with low liquidity. Creators reduce users' selling behavior through NFT concept empowerment (i.e. social avatars, new currency production, asset vouchers). The multi currency /token model conveys inflationary pressure and the selling pressure of a single currency. For example, players burn AXS and SLPs to generate axienft, and then pledge them in game activities to generate SLPs. The positive expected release of token is mainly aimed at token holders in the secondary market. Raising the positive expectation of tokens will reduce the selling pressure of token holders. On the other hand, new users may enter the market with positive market expectations.
        Gamefi's control of inflation is almost entirely focused on its tokenomics. This method lacks flexible control from the perspective of game content. With the gradual maturity of gamefi and the wide application of blockchain technology, gamefi games will bring players closer to the real virtual world. The concept of gamefi is considered to be an early prototype within the metauniverse. It is foreseeable that the number of play to fun gamefi will increase significantly. But if its token economics is still only regulated internally, its downward spiral effect may be too significant for the entire market to bear.
        Therefore, a stable pass economy is needed to guide a moderate inflation cycle. Combined with the common deflation methods in traditional games and the best token market design, gamefi project will enjoy a better development and operation cycle, so as to realize its market vision. The gamefi project is still developing and growing, so time will prove what is the best way for gamefi to control inflation and create a mutually beneficial game experience. In traditional games, the assets owned by players (i.e. rare cards, characters) are given different attributes. For example, color, race, level, occupation, skill, equipment, summoning beast, etc. are all examples of character attributes.
        The empowerment of multiple attributes increases the application scenario. Players need to invest many different digital assets to increase the deflation of game assets in disguise in order to obtain higher combat power. The "fatigue value" and "time card" of the game are the energy measures in a given game. These features prevent players from producing unlimited game coins and increase users' online costs. They are encouraged to play longer and spend money to upgrade. Specifically, in gamefi, the "loss" attribute should be added to NFT. With the generation of "loss", the wealth output per unit time of NFT should gradually decrease. The project party will charge auction fees and storage fees (5% - 15%).
        At present, most gamefi games have introduced the official trading platform mechanism. However, the deflation of huge amounts of money (in gamefi) means that there are no more innovative solutions than equity mining. According to some major festivals around the world, the project team can launch various activities that fit the theme at the same time. Moreover, on the day of the festival, officials can take the initiative to provide a large number of scarce materials to break the market balance. Although it will have an impact on the whole market economy in the short term, after the balance is broken, the official can stabilize the market by adjusting prices. In the long run, with the intentional guidance of the team, the market fluctuation of prices will become the average consensus of value.
        While the project team adjusts the token allocation internally, it should also explore different ways to use external resources. The exchange of rights and interests between traffic owners and advertisers, the publication of IP derivative films, and the functions of literary works and peripheral products are potential sources of value. The game project aims to get more attention on the Internet and attract potential players. At the same time, this can also enrich the presentation of game content, use the data collected by internal products, and improve the loyalty and willingness of internal players to pay. Newzoo believes that the game market will grow at a rate of 8.7% and is expected to exceed the $200billion mark by 2023.
        With more and more people willing to pay for virtual experience. Therefore, gamefi can also take advantage of the momentum to increase market share. At that time, gamefi, which has excellent economic ecology, self correction mechanism and a more scientific deflation model, is expected to stand out in the game competition. The behavior of providing benefits to users using gamefi game ecosystem is new to the game market. And asset tokens like AXS, which highlight the integration of Web3.0 and defi, will also become more and more. In addition, the integration of traditional game interfaces and the improvement of digital appearance and experience details are currently growing in gamefi.
        Therefore, gamefi has room for growth in UX improvement, player interaction, mechanism implementation, etc. The new game mechanism and tokenomics design can bring positive market response and player feedback to the game, and ensure the long-term sustainability of the gamefi ecosystem.
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