Behind the financial properties of DeFi and GameFi, participants adjust the game strategy to play by evaluating the average action consensus of other participants (that is, the action that most participants will take).
Why is it not a simple decision, but a dynamic game?
Because player A’s decision affects player B’s decision, which in turn affects player A’s own decision. As a result, players will experience the complexity of the game as their decisions (or sometimes expected decisions) happen to all players at the same time. The development of the game will be multi-dimensional and happen in real time, especially in a market with sufficient depth and liquidity.
Participating in the market means participating in the game. After evaluating the average consensus of all players in the market, an action below the average consensus must be chosen to win. If participants behave above average consensus, it will fail.
This article discusses the unique capabilities of GameFi and its inherent system properties, which are used by multiple parties in a gaming system to facilitate consensus. Take GameFi’s various interest groups as an example, including developers, guilds, and ordinary players. Players in the game can see a panorama of the entire market, they can act by anticipating the actions that other players may take, and choose the action route with a greater chance of winning to gain an advantage in the game.
In this article, we will analyze the most typical GameFi game Axie Infinity and the most important guild YGG in the GameFi field. We hope that through our efforts, we will take you in-depth understanding of GameFi’s main functions and internal logic.
1. “Guess 2/3 of the Average” game
- 1.1 Two players guess the game “2/3 of the mean”: the minimum number of “strict dominant strategy” is “0”.
- 1.2 Multiplayer “Guess the Average” game: After evaluating the average of the numbers chosen by all players, the winner can win by providing a number 1/3 lower than the average.
2. The consensus game of DeFi+GameFi
- 2.1 DeFi: After evaluating the average consensus of all participants on the project, the winner may win by acting below the average consensus.
- 2.2 GameFi: The emotional value of NFT and the game function of GameFi make it easy for various interest groups to manage the consensus of players in the market. Unlike DeFi, which adopts a single-token system, GameFi’s value is not only reflected in its token price. The complexity of player interaction patterns and consensus games are also growing.
- 3.1 Axie’s economic model: Player consensus is divided into three types of assets, and the consensus game focuses on maintaining the price of SLP.
- 3.2 Axie team and YGG: YGG has more ability and motivation to manage the consensus of players, but it still needs Axie to introduce adjustment measures of economic model.
4. The consensus game will never stop
Richard Taylor, in his Nobel Laureate Economics book Misconduct, proposed an interesting game: guess 2/3 of the mean.
Participants were asked to choose an integer from 0 to 100. The participant whose number is closest to 2/3 of the average of all the chosen numbers wins the game. For example, suppose there are 3 participants who guess 20, 30, and 40, with an average of 30. Then the person who chooses 20 is the winner.
1.1 Two-player “average 2/3” game
In this game, if there are only two players, there is a “strict dominant strategy” (meaning that no matter what number the other players choose, each player will have an optimal strategy to win the game). Picking 0 has a higher chance of winning than picking any number greater than 0.
For example, if two players provided numbers 0 and 100, 2/3 of the average would be (0+100)/2*(2/3) = 33.3. The number 0 is closer to 33.3, so the player chooses 0 to win.
Reduced to its most essential form, a two-player game is actually a “whoever picks the lower number wins” scenario. Due to the low degree of freedom of the game, players simply choose a smaller number than other players to win the game. Therefore, for all players, the “strict advantage strategy” is to choose 0.
1.2 Multiplayer “average 2/3” game
When the game has more than two players, we face further complications, as the presence of new players forces all players to rethink the other players’ motivations. The winning strategy changed from a “strict dominance strategy” to a “weak dominance strategy”.
A rational gamer would reason like this:
- In the beginning, I can make a reasonable assumption: Let’s say the player choosing 0-100 will follow a normal distribution with mean 50. 2/3 of 50 would be 33.3. So in order to win, I’ll choose number 33 as my answer.
- Based on the previous reasoning, I can dig a little deeper: if there were players like my reasoning above, they would provide the number 33 as an answer, which means the actual average would be slightly lower than 50. Of course, if every player Doing the same reasoning as above, then the actual mean becomes 33. To win, I put 22 as my answer (ie 33 * 2/3 = 22).
- After a process of elimination, the answer will gradually approach 0. Finally, the integer 0 is the final answer, and the game reaches a “Nash equilibrium”.
A multiplayer game has a higher degree of freedom than a two-player game. Its basic mechanism is to predict the average of all players. Simply picking the lowest number 0 will not win the game.
Moreover, for multiplayer games, the point is not that the game will eventually reach a Nash equilibrium.
The point is how far the current system is from reaching a Nash equilibrium, considering all players in the game. The answer depends on the degree of information asymmetry within the system and the speed of information transfer between all participants.
For example, players playing for the first time follow the distribution shown in the image above: more than 6% of players choose 33, less than 6% choose 22, and the winning number is 19. Imagine if these players played the game a second time, the winning numbers would be closer to 0. When all players realize that 0 is the final answer to winning, no player will be the loser. Ironically, the games will end at the same time with no winners.
So for players who want to win, there are a few things to consider:
- How to evaluate the consensus of all players;
- How to win by acting below the overall consensus;
- How to interact with other players or influence the choices of the entire community.
As a classic game in the financial field, the game paradigm of “2/3 of the average guess” is reflected in the game of blockchain players’ cognition of project information, token price expectations and future business operations. In the subsequent chapters of this article, we will explain in detail how ordinary users, project parties, whales, game guilds and other players play consensus games in the DeFi and GameFi fields.
02. Consensus game in DeFi & GameFi
In the first part, we discussed the “strict advantage strategy” in which two players guess 2/3 of the average. But the actual dynamic games take place in multiplayer games. Players need to evaluate the consensus of all players, which is the average number in the market, and the final winner only needs to give a number that is 1/3 lower than everyone’s consensus. The consensus game in DeFi is a similar form.
DeFi participants need to assess the overall consensus on the DeFi project and all the information to be gathered in the market. Consensus can be reflected by a number of factors, including the average market behavior or the current trend of the token price.
When the DeFi swap form integrating DEX and AMM appeared, the market liquidity was greatly improved. Therefore, market behavior can be directly reflected by the opinions of users, and the token price directly reflects the quantitative market consensus.
However, the token price does not fully represent the average consensus of all participants on the project. The concepts involved in DeFi are much more complex than the game of “guessing 2/3 of the average”. DeFi project parties can directly participate in the design of the game system, and continuously introduce new concepts, values, forms of cooperation, and financing during the operation cycle, including but not limited to:
- Design a sustainable token economic model;
- Implement effective business operations;
- maintain community building;
- increase project value;
- Improve forecasting of the future value of the project;
- Grasp macro market trends, etc.
The DeFi project team is good at using the unique DeFi mechanism to improve players’ evaluation and expectations of the project, increase the average consensus of market participants, and ultimately prolong the project life cycle (ie, delay the Nash equilibrium).
GameFi has similar game mechanics. But unlike DeFi’s single-token system, GameFi adds the following two key features:
- Introduce multiple Token systems + multiple fund pools + NFT market
- As an interest-earning asset, NFTs also bring additional emotional value (i.e. non-financial products) to players. Additionally, the rarity grading and functionality of NFTs themselves introduce new ways to manage market consensus.
The ability to continuously inject value is GameFi’s most significant advantage: players’ evaluation of GameFi projects is greatly influenced by emotional factors and innate game value. Furthermore, a project valuation is not necessarily directly related to its token price.
When playing DeFi and GameFi games, project parties, whales and institutions often have a clearer vision, better channels, and higher risk tolerance than ordinary players, which makes them more proactive and available in the game The advantages. With rich market information and funds that can influence market behavior, these players can quickly accumulate in-game assets, influence the average expectations and consensus of all players, and ultimately determine their own winning goals.
For ordinary players, due to insufficient understanding of market information, they often cannot make optimal decisions. As far as the outcome of the game is concerned, careless decision making is the norm, and most players cannot maximize their own benefit. And sometimes, ordinary players are forced to get involved in vicious competition between project parties and whales.
Take Axie Infinity for example. When the GameFi project endows its NFTs with interest-earning assets, the rise of game guilds is inevitable. The three-way consensus game between guilds, project parties and ordinary players has become more complicated. Due to Axie Infinity’s own dual-token and its NFT economic model, the consensus goals of market participants are relatively scattered, which provides more operability for project teams and guilds and injects project value into the community.
3.1 Axie Economic Model: Dual Token + NFT
By establishing a sustainable economic model and a manageable consensus system, AXS can continue to create project value and help Axie NFT expand SLP usage scenarios. Ultimately, the market consensus will mainly focus on the price of SLP.
Axie Infinity assets are divided into three categories
- AXS: The total number of ecological governance tokens is 270 million, and 100% of AXS tokens will be circulated in 2026.
- SLP: Spend tokens required for Axie Infinity gaming events. It has no supply cap and is the main source of income for players. Players can obtain SLP through character daily tasks, battles, PVE-adventure mode, PVP-arena mode, daily rewards, etc.
- Axie NFT: The main method for game content. Inside Axie Infinity, it is an interest-earning asset that can generate SLP and a way to burn AXS and SLP tokens.
As a card battle game, Axie Infinity’s gameplay requires players to obtain SLP by combining three Axie NFT teams through the PVP/PVE battle mode. SLP can be used to upgrade and multiply NFTs. Excess SLP can be sold on the secondary market, which is the source of income for most players on the secondary market.
In the Axie Infinity economic model, AXS and Axie NFTs are more valuable (in the long run) than unlimited supply SLPs.
- AXS: A lot of AXS is controlled by the Axie team.
- Axie NFT: YYG holds a large number of NFTs. NFTs are similar to means of production. YGG rents out Axie NFTs to ordinary players who use NFTs for gold. In return, YGG will take a percentage of the acquired tokens.
Until the output of AXS and SLP fails to meet the consumption, the prices of both tokens will continue to rise. In effect, players burn AXS and SLP to generate Axie NFTs, which are then used to generate SLP. However, SLPs don’t have much in the way of reducing inflation, causing SLPs to take on the full selling pressure of all three assets.
Given the high inflation economic model of the SLP, it is inevitable that the SLP will continue to decline. When the number of new players joining starts to decrease, so does the demand for Axie NFTs. Without more ways to consume, SLP prices will fall, which will further reduce the productivity of NFTs. The growth rate of Axie NFT will become 0.
Although SLP prices continued to rise in the 2021 DeFi summer, it only lasted 4 months. After peaking in July, SLP never returned to its peak.
In fact, the decline in SLP prices is an inevitable trend. But as mentioned earlier, the Nash equilibrium is not the most important issue for us. As a direct participant in the market, we are more concerned about the following issues:
- How to evaluate the consensus of all players.
- How to act below average consensus to win;
- How to influence the consensus of the project with other players or even the entire community.
Due to the limited space of this article, we will only discuss YGG for the time being. We will discuss other related topics in subsequent articles.
3.2 Team Axie and YGG
Axie Infinity has exploded, and YGG’s role cannot be ignored. YGG is responsible for operating the community, introducing and educating new players, cultivating player needs, and tapping the potential of NFT games. When YGG holds a large number of Axie NFTs and SLPs, the main responsibility for operating user consensus is transferred from the Axie team to the YGG guild.
From a risk management perspective, the Axie team holds a significant amount of AXS tokens. Compared to SLP tokens, the economic model and distribution of AXS makes it less likely that the price will drop significantly. Having said that, in order to extend the life cycle of the project, the Axie team does not want the SLP to drop. However, for YGG, the need is even more pressing as it has even more Axie NFT and SLP tokens.
From the perspective of consensus management, maintaining the SLP price is also one of YGG’s important tasks in community governance. YGG members are mainly low- and middle-income people in Southeast Asian countries. The close interpersonal relationships of the Asian cultural community make consensus management optimization possible. Through the offline development and governance of the community, the guild can effectively manage the expectations of gold users, and gradually transform gold users from SLP producers to final NFT users and recipients.
YGG holds high-quality NFTs on the market. Axie NFT is not only an interest-earning asset, but also represents its gaming experience. YGG improves the average consensus of players to a certain extent by controlling the NFT market, and provides additional usage scenarios for Axie NFT and SLP tokens.
But as the project moved toward a deadlock, YGG’s control over SLP gradually waned. Until recently, the Axie team released SLP tweaks as follows:
- Adjusted Axie NFT breeding formula: SLP cost increased by 3 times, AXS cost decreased by 50%.
- Eliminate SLP rewards for players after rank 800 in daily missions.
- Removed SLP rewards from Adventure Mode; reduced SLP rewards in PvP Mode; higher MMR, higher SLP rewards.
- Add more SLP usage scenarios.
- Gradually reduce or even cancel daily quests and SLP rewards in PvE mode.
Although the above method increases the burning amount of SLP, reduces the market circulation, and causes the price of SLP to rise.
However, reducing SLG’s output to increase its token price won’t last long and will be counterproductive. Ordinary players know it, so does the Axie team, and so does YGG. When token demand and prices can only rise through production cuts, the average player consensus on a project falls.
We know that dips only bring more dips, just as players know they are in a game of “2/3 the guessing average” and have to find a way out below 1/3 the market consensus.
In the words of Richard Taylor, the participants give numbers under the condition of information asymmetry and limited speed of information dissemination, and the final winning condition depends on the participants’ access to the information and the judgment based on the obtained information. .
With each round of elimination, information will be further diffused in the system. Until the end, when all players “know everything”, when all players realize that the integer “0” is the final answer, the game ends. Until a new game restarts and new players come in.
For the Axie development team and other participants with more complex identities in the community, they have a better understanding and estimation of the direction and final result of the project when playing against ordinary participants. At the same time, they have a panoramic view of the consensus of all participants, enabling optimized consensus management. They can continue to bring in outside funding, create new ways to play, turn speculators into value investors, and find new applications for tokens and in-game assets.
Additionally, Axie Infinity is actively exploring new identities. The launch of the Ronin sidechain and its native infrastructure, along with the development of several new projects, has transformed Sky Mavis (parent company of Axie Infinity) from an application developer to an infrastructure provider. That is, players of the current “game” can seamlessly participate in the next round of new consensus games.
Every consensus game will always have an ending, but at the same time, new consensus games will continue to emerge.
Everything may come to an end, but the lessons learned along the way are valuable. Whether it is DeFi or GameFi, there will inevitably be short-lived projects in the process of development.
But the consensus game is always there. As game participants, we will persevere and hope that a new round of Dapps can break through.
Stay tuned for our follow-up coverage. GameFi projects will become increasingly complex and diverse, but we strive to describe game behavior in a simple, quantifiable way.
In game theory, there is the most classic case “Prisoner’s Dilemma”, which is also the origin of the DeFi2.0 concept Olympus (3,3) theory. The Prisoner’s Dilemma probably tells about such a case. A and B were arrested for committing the crime together and brought to the interrogation room for interrogation. A and B were told: ①If you both plead guilty, both of you will be sentenced to 3 years; ②If one of you pleads guilty and the other does not, the one who pleads guilty will be sentenced to 1 year, and the one who pleads not will be sentenced to 10 years; ③ both of you will be acquitted.
At this time, A will analyze: If I plead guilty, my result is 1 year or 3 years. If I don’t, the result is acquittal or 10 years. Judging from the results, there is a high probability that A will choose to plead guilty. Similarly, B will analyze in this way, so the result is high probability that both A and B choose to plead guilty. Although the result of neither pleading guilty is the best for the community of the two, but under the protection of their own interests, pleading guilty is the best choice for oneself.
Therefore, in this market, there is a game of interests between individuals. The best result of the individual does not represent the best result of the whole, and sometimes even conflict. We can use this kind of thinking to look at the words and deeds of others and choose our own actions. route.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/consensus-game-among-gamefi-players/
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.