For the past year, I have been immersed in the world of crypto gaming. This is where I am most interested in the field, and where I feel most qualified to have an opinion.
Fortunately, I see the crypto game from more angles than most people. I’m a big fan of games like Runescape, World of Warcraft, Diablo 3, and DOTA 2, all of which showed early experiments in what we now call crypto gaming. These experiments include a gray market for in-game currency in World of Warcraft, “NFTs” for rare items in Runescape and DOTA 2, and a brief foray into real-money auction houses in Diablo 3.
I’ve experimented quite extensively with past, present, and upcoming crypto games, spending at least $100,000 in capital on imaginary lands, sneakers, characters, and tokens. Over the past few months, I’ve started writing more crypto gaming-related analysis on this site.
I also helped build a crypto game economy. I am an advisor to Crypto Raiders and I assist with game economics and token economics. I’ve tested a few different theories by building a crypto game economy myself and seeing it work online. Over the past few months, I’ve also gotten more exposure to these ideas in practice by working with other games’ economies.
The crypto game is completely new, and almost no one has more than a year or two of experience in it. So while I’m still very new to all of this, I still feel qualified to ask some of the problems I’m seeing in this space right now, and some of the ways we might improve them.
I am very bullish on crypto games. It’s something I’ve wanted for over a decade, even though I didn’t know its name until recently. I believe gaming will eventually grow into a trillion dollar industry in cryptocurrencies. So while this article is currently critical of the field, don’t take that to mean I don’t believe in the industry. Quite the contrary, I deeply believe in its potential and want to help it be the best it can be.
Therefore, this article is not a clear rule for all games. It’s more like a list of problems, and a list of possible solutions or experiments. I share as much of my opinion on crypto games as possible in limited content, hoping that more crypto game teams can actually implement some of the ideas in this article, iterate on them, and hopefully make the field stronger .
Without further ado, let’s take a closer look. If you have any thoughts after reading this post, I would love to hear your feedback on Twitter.
Problems in the current crypto game
There are some common problems in crypto games at the moment, which I will analyze in no particular order:
– NFTs set a bad precedent for games
– DeFi sets a bad precedent for gaming
– Earnings in most crypto games are unsustainable
– The cost of playing the game is too high for the life of the game
– A lot of content is crap
– People with money (capital) have much more power than people with leisure (time)
– “Play and Earn (P2 E)” sets wrong expectations for players
NFTs set a bad precedent for gaming
The NFT wave kicked off in early 2021. It started with art, then moved to profile pictures, and started to trickle down to gaming.
What I need to emphasize here is that the popularity of NFTs started with artworks and collectibles with rarity and fixed supply. The strategy for investing in these collectibles is simply buying and holding them. If you pick it right, the price of your NFTs will go up, and once you sell them to the next buyer, you can make money off of them.
This standard of NFT investing sets a bad precedent for gaming. Creating NFT characters in the game that players can speculate on would move the game in the same direction, waiting for the price of the NFT to rise. At the same time, the idea that you can buy a base account for a game, hold it and expect it to become more valuable is absurd.
Nonetheless, in the NFT game, there is a lot of focus on the “floor price”, which is the cheapest buy-in price for an NFT. A game with a falling floor price is seen as dying, even if it means the game’s barriers to entry for new players are getting lower and lower.
When crypto games start with 10,000 NFTs worth thousands of dollars, it is very difficult to build an economically sound game and a happy community. You need to significantly lower the price of NFTs to get a larger number of players into the game. And if the game starts with a high-value asset, it attracts more speculators than players, which is very different from what the game party wants to be in the early game community.
DeFi sets a bad precedent for gaming
The first wave of crypto games was essentially a combination of NFTs and DeFi. These games take the Ponzi scheme that exists in DeFi (buy in-game tokens, exchange it for more tokens, sell the tokens you earn, and hope you get a return on your investment before everything collapses!), just adding extra steps. The breeding cycle that exists in many NFT games is essentially the same as DeFi mining, except that the way in the game is to attach colorful characters to it.
Additionally, DeFi yields and staking set player expectations for what a token should do. People expect that they can buy a game’s token and earn passive income from it without having to play the game. So, introducing this passive benefit ends up destroying the in-game economy.
Crypto games need to move away from expectations for NFTs and DeFi. Copying these paradigms helps get a new game off the ground, but these ways are hurting it very clearly right now.
Earnings in most crypto games are unsustainable
If all the nascent resources in a game increase the income of game participants, then the game’s economy must eventually collapse. You can’t keep increasing everyone’s earning potential without massive inflation of the reward currency, which will eventually cause the reward currency to collapse in value.
An easy way to test this question is to ask what the main tokens are and what impact they have on the economy when they are used. The game is not sustainable if all major nascent resources increase people’s earning power. If the main nascent resource doesn’t increase revenue, the game may have a sustainable economy. It is necessary but not sufficient.
This is my main criticism of STEPN. While the game is fun and has better economic design than most games today, most of the nascent resources in the game now add to the player’s earnings, so unless they can alleviate this problem, it’s going to end up in some way. way to collapse.
Game cost is too high for game life cycle
How long does a good game last? two years? Five years? Few games last more than 10 years. Therefore, we must take into account the short lifespan of most games when evaluating the value of game assets.
Currently there are basically three ways to judge the value of an item:
– Inherent non-monetary value (status, happiness, etc.)
– Cash flow (it makes money for you)
– Appreciation (guess you can sell it for a higher price)
The Boring Ape Yacht Club (BAYC) Metaverse Otherside has 100,000 lands. The floor price of these lands is $6,000 now, and it will get more and more expensive in the future.
Assuming that the average price of all 100,000 parcels of land in the future is $10,000 each, Otherside’s market cap is roughly $1 billion. If we’re very optimistic about assuming that the BAYC Metaverse will be popular for 10 years, assuming you’re not happy to spend $10,000 just to play with no promises in return, then you have to ask if you can at least make it on your land within that time frame break even.
The only way you can get a return is if you can sell your land to someone else at a higher price, or if you can generate good cash flow from the land. But selling it to someone else for more benefit is the traditional Ponzi economics we are used to and want to get rid of.
Maybe you can see the problem here soon. Assuming you want your BAYC land to generate at least 10% annual cash flow, the entire ecosystem needs to pay the landowner $100 million per year. Assume that BAYC can match the popularity of Fortnite, which generates about $5 billion in annual revenue. The question is can BAYC give 2% of its revenue to landowners?
It’s not impossible, but we have to weigh whether BAYC can build a game as popular as Fortnite and then maintain that popularity for a decade.
is it possible? Yes, but it’s not a direction I’d like to bet on. I think we have to admit that most of the value of these assets is the expectation that it will appreciate. People expect the asset to go up in value by holding it, and when the fantasy is defeated, they get very upset. Yes, it must end eventually, and no game can last forever.
Many “play” and earn jobs are bullshit
In an ideal play and earn version, you’ll be able to cash out some of the value you’ve accrued from playing a fun game.Alternatively, you can get paid for making some meaningful financial contribution to the game, such as designing a popular skin that other players buy.
The “earning” of most encrypted games is not like this. The majority of crypto gaming revenue comes from doing some form of pointless work, usually a series of button clicks. To be fair, this is a very common situation in games, especially online games: copper mining in Runescape is a bit boring. But if your income comes from logging into the game every few hours and clicking a few buttons, not playing the game but just doing the basics, then you’re just creating a weird job.
Some farm-style looping and land management games are common examples of this. To put it bluntly, I’m not saying it’s necessarily a bad thing, but if most of your game revenue comes from logging in and clicking something every few hours, you’re not really building a fun game that people make money from. Unless you can make land management complex to a Simcity level, or compete in some way. I do think it would be interesting to create a Web3 SimCity game where you can create trade agreements to share resources between different cities.
Whoever owns the capital has instant power
Now, most of the power in P&E games is immediately available to those with a lot of capital. They can buy massive amounts of resources, run economic cycles faster, and quickly gain significant control over the market.
This is a blow to real players, who may have more time than capital. The highest earning potential should go to those who put the most time and effort into the game, and there should be a limit to how close some players can get to this goal by deploying significant capital.
Assuming that those who have a lot of money into the game are doing it to extract money, not to play it, then they plan the game accordingly. If mining is possible in the game, then these people will dig all the value to the greatest extent, and the losers will be those who are actually playing the game.
“Play and Earn” Sets Wrong Expectations
For a game to continue to grow, players cannot immediately start getting a good ROI on their investment in the game.And the easier the math on how to achieve ROI, the easier the game is to be exploited by those with a lot of money.
That’s where the “play and earn” term is quite endearing. The gameplay of most crypto games shouldn’t be meaningless work in disguise, it should have actual gameplay. And the game’s earnings should be difficult to calculate, especially for new players.
Finally, the income of the game should be irregular, and the game should have large bonuses instead of steady income.The harder it is for players to predict the steady income of the game, the more you can build the game around the actual gameplay of the game rather than the DeFi loop.
Well, these are most of the problems that I think exist in the crypto game. Now let’s see how we can solve these problems.
How can we fix the issues with current crypto games?
As I said in the introduction, this article I wrote is not a comprehensive analysis, but rather a list of ideas and things I think crypto games should try. It’s still very early days in this field, and we’re all trying and figuring it out.
– Substantially lower entry costs
– limits the power of new capital
– Prioritize bonus games over clicks
– Cancel pledge
– Build a fun game first
– Separation of external and internal economies as much as possible
– Mask ROI
– Readjusted expectations for P&E
– Unlimited games
Significantly lower entry costs
It’s stupid to spend ten thousand dollars to play a game. Almost everyone now knows that if you don’t have some spare cash, don’t play crypto games. The only reason people recognize the feeling of crypto gaming now is that we are all excited about the NFT boom and replicate those patterns.
But the idea of a game party creating an account that costs $10,000 to start the game is absurd, and it turns away a lot of players who might be tempted to try your game but don’t have the ability to invest in a decent used car.
This also puts a lot of pressure on the in-game economy, as the game’s revenue has to justify this huge startup cost. If you want to try to get your money back in 3 months, you need to make $3333 per month from your startup account. So either someone else needs to put $3333 a month into the ecosystem in order for you to make money from it, or you have to benefit from the Ponzi, which is almost certainly the latter.
People joining a crypto game should be free or cost as much as a regular game (less than $60). I’m partial to the free-to-play game mode, and some teams are doing interesting experiments in this direction (eg Genopets and Sunflower Land).
This will greatly reduce the amount of money people can earn from the game at the start, but that’s a good thing, there’s less pressure on you to try to keep the token price high so people can earn crazy money from the game. And that means people’s expectations are much lower. They’re not going to put up a $10,000 investment, they can really enjoy the game.
If you’ve launched a game with a high $10,000 threshold, what do you do? We tried to deliberately lower the price of characters in Crypto Raiders, but that didn’t get great feedback. People are prejudiced against NFTs, mainly because people are too concerned about the floor price of NFTs. So while we’re making progress on our goal of lowering the cost of game entry, many people are very unhappy that they hold an NFT and then can’t be bought by someone else at a premium.
But I’m in favor of doing something similar. What I’m thinking is that if you can turn 1 $10K character into 10 $1000 characters over time, or even 100 $100 characters, then you’re going to drastically reduce people coming into the game threshold without destroying any value to the original buyer. This is probably your best bet.
Some would say that leases and scholarships are a solution here, but I don’t like them. The whole point of crypto gaming is to own your own game assets, to borrow from others or to apply for scholarships, which is almost meaningless.
The economy of Runescape and WoW works well with people constantly creating new Tier 1 accounts. Access should be free or very cheap, and income should be earned through enough work.
Limit the power of capital
Someone with a lot of money should not raid and dominate the game or the game economy.
One way this happens now is by breeding. A person or guild with a lot of money can buy many assets, start a breeding business, and have a huge impact on the market without actually having to play the game.
Another area we might see is the marketplace for game items. If someone can come in and buy the rarest item in the game, they can start winning matches or generating the best rewards right away without a lot of effort.
In terms of breeding and economic cycles, there should be some limits on how fast someone can deploy capital. STEPN has an interesting barrier built into the sneaker hierarchy. Since sneakers have to be level 5 to be minted, and you can only forge one pair of sneakers at a time, and since breeding has a 48 hour cooldown, you can actually only cast once every 36 hours or so, no matter how much money you have. This is very different from breeding in other games where you can theoretically buy 100 characters and breed 100 from them. And in STEPN’s sneaker collection, there’s no way to achieve that kind of multiplier.
Another way you can build control for this is through soul items. The best gear in the game should be bundled up, so it can’t be sold. It can be used to win games and generate low-level sellable gear, but it cannot be sold by itself. This ensures that the highest earning and competitive potential is held by those who actively play the game and cannot be bought by newcomers. Get people to buy up to 80-90% of their gear, not the best gear.
Finally, you can make certain ROI-enhancing activities non-transferable, like investing in time-bound land upgrades.
One small criticism I have with Crypto Unicorns is that the land can still be transferred through sales after the upgrade, and new players can buy it outright. So you can buy a piece of land on OpenSea, put in some money, and instantly compete financially with those who have been playing the game for a month. I don’t think this is ideal. A game that’s been played for a while should have some perks.
Prioritize reward games, not CTR
For a game to be primarily fun with revenue, revenue should come from activities that are closer to “playing” rather than repetitive clicks.
That doesn’t mean breeding games are bad, just that they should have a decent strategic and tactical layer attached to them. Games should have trade-offs, it should be difficult for players to draw up a spreadsheet and figure out the best way to play. And buying resources to click “breed” and sell new NFTs should definitely not be the main monetization mechanism.
If reproduction is the primary monetization mechanism, it means that instead of paying to play games, people pay to play breeding Ponzi schemes. A game succeeds when people pay for premium gear, or extra ground runs, or cosmetics. These things allow them to play the game more, or allow them to be flexible in the social context of the game.
Limiting the best rewards to PvP, end-game content, challenges, leaderboards and other more competitive activities will help ensure this is the case.
An analogy I often bring up is that someone signing up for a brand new Runescape account can’t expect to make an immediate impact on the big exchanges. A person who bought an NFT character or signed up to your game should also not receive immediate financial rewards.
Staking tends to be implemented in one of two ways, neither of which makes sense.
First, you pledge governance tokens to get more governance tokens. This is stupid because you are now rewarding rich DeFi miners, not real players. And, aside from slowing down token sales, which is great, it doesn’t improve the game.
Alternatively, you stake governance tokens to get a share of the game’s revenue. It’s also kind of silly because now you have to make the in-game economy even more loss-making so that most players can’t really earn anything in the game because you pay out the rewards to speculators instead of real players. You can take a portion of the fee from the in-game marketplace, but in doing so you affect your own ability to generate income.
I think it makes more sense to use governance tokens as the most valuable limited resource in the game and use them for the most impactful upgrades to characters or accounts. This allows characters to accumulate value over time, as these upgrades are necessarily limited, and gives the token a reason to exist and be held. Rather than locking the supply by having people put it in a staking contract, lock the supply by having people put it in the game.
Build a fun game first
It seems like a revolutionary idea, but I think for crypto games to work, it first needs to be a really fun game.
If no one wants to play your game, when players aren’t making money out of it, they’ll get out of the car and sell everything the first time things go wrong in the market. If the game’s internal economy cannot function without the influence of external token activity, the game will be in an unstable state from the beginning, and it will be difficult to build up later.
It seems like a stupid thing to do, but very few people do it. Probably because launching tokens is an incredible way to raise money, and games are expensive to make. So you do have some challenges here. How do you wait to incorporate your tokens into your game until you build a fun game, and how do you build a fun game without using tokens as a fundraising mechanism?
Well, of course you can raise money in the normal way. But I also think community members can be more patient than we assume. Illuvium does this very well right now. They have a token that has been out for a while and they are now bringing people into the beta phase of their game, but there is no way to make money in the game yet. That is a future matter.They focused on building a really fun game first, and then introducing money-making elements as it became more mature.
Separate internal and external economies
It is tempting to try to balance in-game costs around the external value of the token, but it will be a distraction and lead to a frustrating gaming experience for players.
The two economies should operate independently. The game should function the same whether 1 gold coin in the game is worth $0.001 or $1. There will be periods when interest in games surges, people will flock to games and push up the price of tokens, and there will be lows when the price of tokens will drop. During these times, the player’s experience of playing the game should remain consistent. Otherwise, you’ll be constantly changing the game’s economy to chase the token price, which will make the whole thing pretty confusing.
An example of not doing this well, at least in my opinion, is STEPN’s recent decision to base minting costs on the relative price of its tokens.
This makes one of the game’s core loops extremely unpredictable on a day-to-day basis, and makes minting an annoying math operation. Maybe that’s the point, it makes minting less fun for players and more of a transactional experience. The main benefit of this approach is that it helps to increase the price of their governance tokens, while potentially making games more affordable in the short term by pulling down the price of GST.
Regardless, people shouldn’t check out Coingecko just to decide or know what to do in your game.
We again assume that any economic cycle that is easy to map will be exploited, and we should make the ROI of a game difficult to calculate.
Measuring ROI is important for many games these days because of their high startup costs. You don’t want to spend $10,000 on a character or a piece of land if you’re not sure how to make that money back. However, if games have low startup costs (which I think they should be), then this issue becomes less of an issue.
Still, it’s worth thinking about here how you can obfuscate the cost-benefit analysis of in-game activities. One way is through rewards with high variability.
Maybe the expected value of running a land in the game is $0.2. But 90% of the time, you only make $0.1, and 10% of the time you make $1.1. This is a very simplified version, but you should get what I’m trying to say. You can tell that a player should have some rough ROI over months or years of gaming that they can’t easily calculate in-game due to the variability of results.
This is already a common design standard in games with loot boxes, rare items, and other mechanics, but it’s odd that we haven’t seen so much in Play & Earn, probably because a lot of earning is based on “work” ” rather than “game”.
Reframe expectations around P&E
This will be the hardest, but also the most important. As an industry, we need to move the expectation from P&E games where you can make a quick buck, to really fun games where you happen to cash in some of your work.
Currently, DOTA2 is a good model. You wouldn’t think of it as a P&E game because it doesn’t involve cryptocurrencies and there are no “job”-like activities that allow you to earn any value. But in-game assets do have value in the game market, so if you get something from a loot box that you don’t want, you can sell it to someone else.
On a game, the vast majority of players end up spending more than they earn. Actually, I’m not sure anyone is netting in this market unless you have some very early very rare items. But it’s a great example of how a game can have a market without it ruining the fun.
If a game takes a significant amount of playtime before it makes money, and once it does, it’s hard for people to calculate the ROI, and it doesn’t affect the game’s playability, then you probably have a more sustainable game economy.
I hope our last change is to create P&E games that don’t limit the player’s ability to enjoy the game.
Energy, charging, and other time-based constraints are a great way to limit inflation in the game. But they do limit how much people can enjoy your game, and if you build a good game, you end up disappointing people who want to play it.
Instead, our goal should be to allow a lot of content in the game to be free to play without restrictions, with only restrictions on capital-generated activities. Other economically developed games in the past had very small restrictions on in-game economic activity. In Runescape or WoW, you can basically mine all the copper you want, and they turn out pretty good. But we can still limit activities that are extremely valuable, like end-game land or harvesting the rarest resources, which may also tie into the notion of building a fun game in the first place. If the game provides the player with a broad range of fun, and then adds money-making content, then the player has a lot of things to do that aren’t tied to making money, and that may end up solving some problems.
write at the end
This article is a bit of a brain teaser, but I hope it’s helpful to any team trying to build a “play and earn” game.
We all have an incredible opportunity to be the first to solve this problem. Build a World of Warcraft or Runescape-scale game of this generation, but with a real-world economy.
I am very bullish on this field. This is the area of cryptocurrencies that interests me the most. So if you’d like to share work you’re working on or other thoughts on similar topics, be sure to reach out to me on Twitter.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-dilemma-of-encrypted-games-and-the-road-to-breakthrough/
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