Conceptualized digital nation: bullish on avatar and bearish on reality

Most of you have probably read/watched Player One (Player One) and were shocked and shocked by what life in the Metaverse would be like. While the term “Metaverse” has recently become a buzzword for people to randomly throw money at junk projects, the concept has been around since the 1990s. John Perry Barlow was an internet rights activist who in 1996 published the Declaration of the Independence of Cyberspace.
He said: “Governments of the industrial world, you weary giants of flesh and steel, I come from cyberspace, the new home of the mind. On behalf of the future, I ask you from the past not to bother us. You are not welcome among us. , you have no sovereignty where we gather. We do not have an elected government, nor are we likely to have one, so I speak to you with no greater authority than freedom itself. I declare that the global society we are building Space, naturally independent of the tyranny you are trying to impose on us. You have no moral right to rule us, and we have no reason to fear any method of enforcement.
While we may have strayed slightly from this vision, the overall point still holds, The need for a sovereign digital space has always been important. Today, we call this “cyberspace” the Metaverse. Most people conceptualize the Metaverse in Zuckerberg’s way. Zucker wants you to live in one for the rest of your life In a pod with a VR headset and glasses while you’re eating bugs and meeting your office mates over coffee in some Metaverse. I’m not saying it can’t happen, I’m not going to let a basically The billionaires who control social media fade. However, I think a more appropriate iteration of the Metaverse is driven by games, more specifically GameFi.

Let me explain why and let’s take a look at the evolution of the game. You have board games and card games, then arcade games, and then the transition to console/PC based video games that really pushes gaming into the stratosphere.In the current phase of video gaming, you’ll see the lines between gaming and social begin to blur. With the popularity of battle royale games, sandbox games and RPGs, games are starting to become more social. If you go to a Travis Scott concert in Fortnite, are you still playing the game? Or live a full virtual life in GTA NoPixel (Vice City)? You come and tell me.

For the younger generation, gaming is their “third” place to hang out. The older generation will hang out in homes, schools and malls/parks. The younger generation is now hanging out at home, at school and at games/online. Most people may find it difficult to conceptualize this virtual life, but for the next generation, it will be second nature. After all, we are all products of our environment.

As the game becomes more and more social, I think it’s at least the first version of the virtual world, if not the final state.
So, what does GameFi have to do with this? Essentially, GameFi makes the fake game economy we’re currently participating in a reality. Supported by the decentralized and open infrastructure of the blockchain, the community-focused approach has created a major breakthrough in creating new gaming areas, Play-to-earn & Play -and-earn).

Personally, when I take a bird’s eye view of the GameFi ecosystem, I think of each game as its own country, making the entire GameFi ecosystem a virtual world where these digital nations reside. Games at this stage are far from being smooth or fun to achieve this, but if you look at games like Axie or SecureDAO, you can get a glimpse of what gaming would look like as a digital nation. A strong community that continuously participates in economic activity and governance, while building mini-games on top of existing games to create a broad ecosystem of activities.


There are three core elements that make up a country .

  1. population
  2. Economy and Government
  3. territory

I know that in the real world, the economy and government are separated to some extent. But from a GameFi perspective, it makes more sense to group them into one category, and you’ll find out why later in this article.


For a country to exist, it needs people. The people participate in the economy, occupy the land, and make the country productive. For our digital nation, the population is the community. Building a strong community whose values ​​align with the project is a top priority. Community building can be successful, it can fail, and it can be lost. This applies not only to GameFi, but to encryption in general.

The difference between the population of a real state and the community of a digital state is that the community owns and manages almost everything. Traditional games are controlled by the developers, and while they may have a thriving ecosystem, the developers have the final say on what happens, and the community has no real ownership when it comes to a critical moment. The introduction of DAO into the game has completely changed the situation of traditional games. Now the community has a positive say in the development taking place in the country through token voting, and NFTs hand over the ownership of in-game assets to the community. This version of the Metaverse is representative of the economy of ownership. Communities own part of the economy they build and participate in.

Not only that, but the community will be at the forefront of the creator economy. Through the power of modding, community members can create their mini-games on top of the existing game infrastructure to create more economic activity and drive the growth of the country. Think of retrofit as using the nation’s infrastructure to build different businesses that people can participate in.
For those who don’t know, modding refers to modification. This is when a community member changes some element of the game or adds something to the game to make it a whole new experience. Games like Roblox and GTA ( Vice City ) are very popular because of this. Even Day Z (Arms 2) is the result of multiple multi-purpose mods, and this type of modification helps retain players, increase player engagement, and create new user streams. In traditional games, some publishers don’t really support modding because it doesn’t directly benefit them, whereas in GameFi games, modding is actually incentivized and seeded because it drives demand for the game’s underlying token. DAO vaults can also benefit by collecting additional revenue from transaction fees generated by modded games as they use the game’s infrastructure.Treasury ureDAO is very popular for facilitating this.

Measuring the success of a modification depends on the overall system created by the developer. This means that the entire system of mechanics and features must be constructed to allow flexibility. Knowing how a game is going to be accepted by an audience is a predictive game, you won’t always be right, so being very rigid and deadly to the system means you’re restricting players from accepting the game the way you want, which is usually not building community good way. If you have Flexibility enabled in your system, it allows the game to be updated based on how you accept it. By following the community, you can keep tweaking and adding more features to grow your user base.

While this sounds interesting, we have to be cautious. It’s still early days for GameFi. We’ve never seen an open, free, game economy with real monetary value in action for long. When the developer has full control over the game, management is relatively easy. When it is open and managed by the community, it is 10 times more difficult to manage. There are probably hundreds of problems that haven’t been encountered yet, because GameFi hasn’t scaled to this level yet.

Economics and Government, Governance

Every country needs a functioning economy. The economy of a digital nation may appear simple on the surface, but it is actually intricate. The ultimate goal is to create the right balance between the sink and the faucet. Balance capital inflow and capital outflow. The faucet is the mechanism for creating tokens and items, and the sink is the mechanism for removing/using tokens and items. For defi deegens (decentralized gamblers) this can be thought of as burning and minting.
Examples of sinks include utilities such as small players upgrading or buying some public goods, regular auctions of rare collectibles, players paying to gamble in hopes of getting ultra-rare items, taxes on land or trade that can act as token items and sinks Artifacts, donations/events that incentivize people to pay for a certain experience or rare item, and staking currency, faucets mostly include token release schedules and rewards for completing certain tasks.

The task is to build the features and mechanics of the game so that there is a proper balance between the tap and sink.These features should motivate users to maintain that balance. Too much stuff in the faucet and you lose player retention because in-game stuff becomes less valuable, which reduces player motivation. Too much sinking and then it becomes too difficult for members to do anything, finding balance is key.

As you probably know, most games follow a two-token model. One token is the governance token and the second token is the utility token (eg: axs/slp, cra/TUS, raider/auum). Holders of governance tokens essentially become the government of the digital nation, voting on proposals and taxing them through protocol revenue redistribution (this is why I tie economics and governance together). Utility tokens are used to drive the in-game economy. It is released as a reward for completing quests and used in the in-game sink. But current economies are not perfect, and they lack some elements to take the user experience to the next level.

This is where DeFi steps in

In the virtual world, if games are the activity and social layer, then Defi will be the supporting financial layer. Currently, most games already use Defi primitives such as AMMS and STAKING, but they have not fully unlocked the potential of Defi. To better understand what this might look like, I’ll refer to an article by @0xAikoDai & @0xkydo. They blog with ideas. I highly recommend reading this article, especially if you want to explain the concept in more detail, however, I will give you a very brief overview.
Blog stands for Repo, Lock, Omni and Governance. The overall goal is to improve the trading experience through an all-encompassing AMM, reduce selling pressure through long-term locking, increase locked token utility through governance controls, and increase buying pressure through efficient buybacks.

Improved trading experience with Bancors omnipotent pool. Omnipool AMM (Automated Market Maker for Omnipool) is very suitable for the game, because the game has many tradable items and tokens and the liquidity is not very good. With OmniPools, you have a central liquidity pool, which makes your transactions without a real counterparty, so everyone’s trading experience will be smoother and liquidity won’t be fragmented.

Long-term locking is achieved through Curve’s (CRV) Voting Escrow (VE) model. The longer users lock up their tokens, the more rewards and governance power they gain, like putting money in a bank, which effectively reduces selling pressure.

Governance controls come from the ve(3, 3) model outlined by Andre Cronje (AC). Assuming the token in question here is XYZ, users can use their veXYZ to buy GovNFT, which will give them governance rights and other capabilities, providing a locked token Dapp It can also be used to control where liquidity goes in interesting ways .

Buybacks are made through the Bancors Vortex system, which allows the agreement to buybacks at a discounted price instead of 1:1. Vortex basically creates a market to trade XYZ/veXYZ. Since each veXYZ represents one or more XYZ, veXYZ can be sold to XYZ for a discounted buyback.
This is just one example of how Defi can be used with GameFi, which will underpin the economic structure and activity of the Digital Nation, which will serve as a critical piece of infrastructure.


The beauty of digital states is that they don’t have to worry about territorial disputes or threats of violence. The war here is to get attention, and that country can attract or retain more talent. The real world is limited in terms of available space, and countries can only have so much. But on the Internet, you can have an infinite number of countries where people can choose to live with their favorite neighborhoods. Regardless, whether the game engine runs on-chain or off-chain, there is room for everyone.
Since digital nations are not limited by physical land, we can think of occupying territory as capturing people’s attention and keeping them within your community, a product of identity and culture. The culture created around the Olympics, and how people identify in their communities. In a digital country, you have choices, you are not born in a place you don’t know, just forced to fit into that community. You join a community that fits your vibe. People are eager to fit in, and the way the identity of the digital nation is portrayed helps to expand the nation with the right people. The more people who end up integrating and staying in your country, the bigger your footprint in the virtual world will become.

investment country

In my opinion, the best way to judge the long-term potential of the digital nation is to engage with the community. It’s a cliché, but it’s important. If you’re lurking in the community’s Discord or Telegram, then you start to understand how people see the project, are they famous members, whether they want to build their own mini-games on it, etc. The early information you get basically gives you an early look at what’s going on in this country. You can also measure how many people are in the business for a long time and how many are in the business to make a quick profit and leave. You can interact with the core team to see their vision and depth of knowledge, and if you’re lucky, get a sneak peek at the project’s roadmap and master plan . Crypto Raiders and TreasureDAO checked these boxes (projects) for me, which is why I’m bullish on them. I’m sure there are more such communities, but I just haven’t found them yet.

Another way to look at it is through the lens of the game-centric FAT (fat) protocol paper, investing in L1 tokens is the best deal in 2021, as the infrastructure it all happens in L1. Projects on L1 have never been more valuable than the L1 projects on which they are based (meaning the value of projects in the public chain is higher than the value of the public chain), although cross-chain and multi-chain applications may change this.

Also for the Metaverse, you have virtual worlds. Projects like SAND and NFT World act as infrastructure on which people can build anything. You can buy land and create anything on your land to boost economic activity. If games base their digital nations on these virtual worlds, then by investing in infrastructure, you can tap into the benefits of everything in virtual worlds, and do it well.

Another area to study is game design and game economics. I touched on them briefly above, but I recommend checking out the resources below for a more detailed outlook on how to evaluate game economics and game design. As has been mentioned repeatedly, the main question you have to focus on is whether there is a proper balance in their economy. It takes time to figure out, but once you figure it out, you can understand the sustainability of the game. In addition to sustainability, you can also measure incentives driven by creators. Are they trying to attract users quickly, or are they liquid for short-term hype or a potential exit scam, or are they trying to gradually build something that will be big in the long run?

Summary thinking

This framework is a useful thought experiment to conceptualize what virtual worlds will look like in a few years. I think the reason the Olympics will be the nation, at least in the short term, is because people need some activity to participate. The game has proven itself, with a user base of over 3 billion people worldwide. Monetizing games through P2E&P&E (Play-to-earn & Play-and-earn), a virtual world powered by GameFi, looks very possible.
I do understand it’s a little dark because technically being bullish on incarnation is bearish on reality, but when change is happening and most people seem to value it, it’s foolish to ride against the current.

As Bruce Lee said:Be like water, adapt to what’s going on and make the most of it “.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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