P2E 2.0: Designing game economies that can evolve themselves

P2E 2.0: Designing game economies that evolve themselves

In my previous article, “P2E Is ​​Unsustainable – Seeking the Next Axie Infinity,” I predicted that the first-generation P2E gaming economy is likely to collapse in the short term. This prediction has been validated, with Axie Infinity’s revenue down more than 95% from its peak. I believe that P2E as an industry is slowly entering the “construction stage” and have a lot of confidence in the development of Crypto games in 3-5 years. After talking with over 200 Crypto game founders over the past 6 months, I would like to share some insights here.

First, a quick recap of why we’re bullish on Crypto games:

  • We believe that in the next decade, mutual entertainment will dominate the attention economy;
  • We believe that Crypto games will lead the prosperity of the creator economy due to the improvement of the incentive mechanism.


Based on these two arguments, we make the following suggestions to every P2E founder with the same vision to help everyone avoid some of the pits that have been stepped on by their predecessors.

In a nutshell it is:

  • Token economy leads the iteration
  • Weakening the position of NFT in the core economic model, and designing the game economy around governance tokens.

  • Decoupling ‘play’ and ‘earning’. Let players play for free, and don’t make large up-front investments a barrier to gameplay.

  • Allocation of value is refined based on the player’s individual performance and risk tolerance (bet level). 

  • Embrace public IP and build a diverse and dynamic economy around it

Iterative Mechanism of Token Economy

The Lean Startup by Eric Rees kind of started the internet revolution. The concept of “agile development” was first proposed by Eric in 2011. Why have internet companies grown so fast over the past few decades? Because they abandoned the traditional waterfall model behind closed doors and embraced techniques like MVP and A/B testing. Internet companies no longer shy away from mistakes, but instead embrace them. They learn how to make mistakes faster and correct them faster. The emergence of agile development has increased the speed of evolution of Internet products by an order of magnitude. When I was working at Tencent, it was normal to iterate one version a week.

For Crypto games, the industry is just getting started and PMF is not there. Founders are bound to make mistakes in their pursuit of success. It’s almost impossible for any team to get the in-game token economy perfect on the first try, yet most games only have one chance to try and fail. In fact, games like Axie Infinity and Thetan Arena already have the aforementioned issues. Taking SLP as an example, the original intention of the token was to try a new cold-start customer acquisition channel. After the rise of the P2E narrative, the SLP token economy has proven to be no longer sustainable in the face of a large user base. However, Sky Mavis needs to be extra cautious if it wants to make changes, as these tokens are real assets in the hands of users. A little carelessness can lead to a PR crisis.

I believe that rapid iteration is extremely important for exploring new directions. On the other hand, however, as founders, they also need to be accountable to the community. So how do we resolve this conflict? Here I propose another alternative idea.

In traditional games, there are different servers. For MMORPG, each server is similar to a country, they have independent economy and player ecology. Many Asian games, such as Legends, have spawned a package of ‘private servers’. The publishers and managers of these ‘private servers’ are usually independent organizations other than game developers. Different ‘private servers’ have different rules and even different business models. However, in the long run, the operation of the legendary private server is flourishing, and the century revenue contributed by the private server far exceeds the official server.

Drawing on the legendary operation model, as a Crypto game developer, if we only issue the main token representing the intellectual property rights and governance rights of the game, and let third-party operators/guilds/traditional game big R release its own auxiliary agents in independent servers What if the currency runs its own economy? Think of the game itself as Layer 0, and the publisher/guild/whale as Layer 1. For example, if YGG wants to participate in a game, they can set up a server and manage this server with their own MIRYGG tokens, and MC, Perion, or other companies can adopt a similar strategy. Ultimately, the guild is responsible for setting the rules, such as what are the barriers to entry, how much money players can earn, player unlock times, anti-cheating rules, and more. This architecture has two main benefits:

  • By allowing guilds and publishers to run their own instances, we create a cooperative/competitive dynamic between them, enabling faster iterations globally to discover the best token economy. For example, if Perion’s innovative design for revenue sharing is successful, other guilds can quickly build new servers based on that innovation.

  • This structure will make the game party no longer have too much headache for P2E market value management. A game developer’s primary focus should be creating a fun, engaging player experience. If the founders are busy dealing with people’s doubts and complaints about the payback cycle, it is difficult for them to fully focus on the development of the game.

Problems with NFTs in games

NFTs are now at the heart of almost every game economy, but I think there is a systemic risk of NFTs being abused in games right now. The logic of our investment in Crypto games is that they bind the interests of various roles (players, developers, investors) in the ecosystem through the token economy. But ironically, incentives are largely misplaced under the existing model. Developers and private investors mainly hold governance tokens, while guilds and players hold NFTs due to aggressive token issuance strategies. In the long run, the development team has no motivation to do the market value management of NFT and auxiliary tokens. Since the team and investors do not hold Axie NFT, its floor price has fallen from a high of $400 to $15.

Solution: Games should build economies around their core governance token. Players should be able to earn such tokens like founders, and the amount of tokens awarded should be related to their contribution (Axie Infinity is moving in this direction, they try to reward more players with AXS, not SLP). Player income should be unlocked offline like teams. Additionally, NFTs can be used more creatively in games. Vitalik proposed the concept of “soul binding” borrowed from World of Warcraft. Also, ‘Perma Death’ and ‘Medal of Honor’ are also NFT design mechanics worth checking out.

F2P isn’t perfect, but it’s the only way to 10 million DAU

Web3 applications should promote network effects of healthy behaviors through fair, refined, and linear value distribution. But that’s not the case with Crypto games these days. In the case of Axie, users receive zero rewards until they earn a scholarship (or spend thousands of dollars on NFTs). After receiving the scholarship, the scholars will receive a certain reward every day according to the amount of assets. But their real income increases only once in their lifetime (when they get a scholarship) and the increase after that is non-existent (maybe from 50slp to 60slp). High barriers to entry are terrible for acquiring users.

Solution: Crypto games should consider ‘free to play’ and ‘pay to play’ models. Every user should have a fair chance to enter the game. Their ability to earn rewards should be linearly related to their mastery of the game and their risk tolerance. PvP games that are built on fun and fairness and step up the competitive threshold are a good example.

This design has several benefits: 

  • It allows more players to meaningfully participate in the game economy, not just as cogs in doing their job. 

  • It lightly integrates Defi into the closed loop of the player’s game. Make investing and risk management part of the average player’s gaming experience. 

  • For the sustainability of the game ecosystem, attracting real gamers is far more important than attracting speculators. Long-term retention depends on the players, not the speculators and gold diggers. 

  • Combined with the aforementioned ‘governance token-centric game design’, this can greatly increase token demand. Because for most players with a small budget, token investment is far more favored than NFT investment.

Don’t sacrifice user experience for game economy

From a game design perspective, the player’s gaming experience is largely sacrificed due to the poor coupling between economy and gameplay. Taking TCG (card game) as an example, there are generally two main parts that constitute the core experience of players:

  • Unboxing + building a deck 

  • Play with decks

However, in most Crypto TCGs, this organic symbiosis is artificially disrupted. Guild managers mechanically buy chests, draw cards, and build decks around them. The manager then distributes the deck to the scholar, and the only task left to the scholar is to play the game with the given deck. This results in players being disconnected from the core game loop, and the game’s replayability is quickly exhausted. The out-of-the-box mechanism can be said to be the most critical factor for TCG to generate revenue. As a former guild manager, I can appreciate the joy of unboxing and resource allocation. However, as just mentioned, it is unreasonable to deprive players of the full game experience, which will also weaken the willingness of lightweight players to consume games.

Solution: Again, it is unsustainable to rely on sacrificing the player’s gaming experience to obtain the stability of the game’s financial mechanism. Existing P2E games should couple and recombine core gameplay and economic mechanics to try to achieve a better balance between ‘playing’ and ‘earning’. In fact, traditional games have faced similar problems. In the early days, F2P games made their paid items too powerful. Although this promoted sales, it resulted in a poor experience for the vast majority of non-Krypton players, forcing them to abandon the pit and indirectly accelerating the death of the ecosystem. Modern F2P games have learned the lessons of their predecessors. Taking “Yuan Shen” as an example, the game design enables both non-Krypton Gold players and Krypton Gold players to have a complete experience, but relatively speaking, the time cost of Krypton Gold players in the later stage will be lower. Crypto games need to go through similar iterations. Introducing more non-Krypton gold players into the game is the general trend, as they bring huge value in terms of CCU, free promotion and long-term LTV. As an interesting analogy, if every football costs $5,000 and every basketball costs $10,000, then we probably don’t have a $700 billion sports market today. Skyweaver is an example of a brave attempt at F2P Crypto gaming. Although Sky weaver has not revealed their token design, the project team has made it clear that 100% of the cards in the game can be obtained for free without any fees.

Stake-based PVP may be a big hit

Because of the high cost of renting a car, taxi drivers tend to take little rest, and it is common for them to continue driving. Crypto gamers are currently facing similar issues. Due to the continued depreciation and opportunity cost of NFT assets, players feel obligated to “play” after acquiring the assets. If you don’t play for a day, you will lose money. How many people can really enjoy the game under such pressure?

Solution: Mechanisms that motivate players to contribute should be more rewarding than punishing. Players should have the right to opt in or out of high-risk, high-reward competitive games at any time. Another way is to do away with the mechanism that potential NFTs bring eternal benefits. For example, add durability attributes in NFTs like Thetan Arena. Or simply ditch functional NFTs altogether and design the game around fair and stake-based PVP. The NOR developed by Consortium9 is a forerunner in this direction.

Activating the creator economy with an open IP policy

BAYC is a great example of opening up IP effects. Similarly, Mihayou has also adopted an extremely tolerant policy for the IP of Genshin Impact. Mihayou not only allows third-party developers to develop games using Genshin’s characters, but even allows them to make money from derivatives. As a result, Genshin Impact quickly established an active and influential community. Compared to other web2 companies, I have a lot of respect for their boldness. I believe that every Crypto game should explore deeper, not just to allow for creativity, but more to motivate and reward such attempts.

At present, all P2E economic models can be classified into two categories: 1. Ponzi model 2. Casino model. Obviously, both types of models are based on zero-sum games. On the other hand, the creator economy can be understood as a positive-sum game. The creators of high-quality content can capture higher profits, while the creators of ordinary content lose the time cost. In the long run, the overall efficiency of the market is constantly increasing. If in the game ecosystem, we can make more players become valuable creators and contributors, then P2E can be established for a long time. MixMob is a good example. In order to empower players and creators, they are making many innovative and bold attempts. In MixMob games, NFTs designed by players will be subtly integrated into the P2E economic system.

write at the end

We are very optimistic about the long-term development of Crypto games, although we also see many problems in the industry in the short term. Just as in 2011 everyone was questioning whether mobile games were false propositions, the current Crypto gam

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/p2e-2-0-designing-game-economies-that-can-evolve-themselves-2/
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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