Folius Ventures: Ten suggestions on the P2E blockchain game economic model

Author | Aiko Jason Kam

This article is reproduced with the author's permission

After two months of questioning and deliberation, the ten suggestions on P2E game economy are finally finished. This process is accompanied by the continuous emergence of new things and the signs of paradigm shift. We have repeatedly debated and written these contents as carefully as possible, hoping to provide some inspiration for developers, explore the possibilities of blockchain game economy together, and go to No Man's Sky together.

Abstract: With the help of Web3 value network, the game economy has moved from slavery to independence, and from foreign exchange control to free capital circulation. After players have the following rights, the past free-to-play economic design will be greatly impacted. At the same time, we believe that the industry's embrace of this new paradigm is irreversible.

Establishment of in-game property rights (i.e. ownership of game props as NFTs)

Establishment of human rights in games (i.e. the right to legally rent-seek and generate income from the game ecosystem)

The free flow of capital in the ecosystem and the establishment of the right to freely exchange value

If the game is not limited to a negative-sum game similar to a casino, but can directly produce the game currency in a simple interactive gameplay (such as PVE), once the user growth slows down, it will inevitably lead to the risk of a substantial and continuous depreciation of the currency and in-game assets against legal currency. In addition, the design of users seeking rent through governance tokens also makes the game economy system prone to further deterioration. In this report, we try to give 10 major design ideas for P2E game economic design, so as to achieve the goal of making the exchange rate more stable, the economic model more sustainable, and the game able to develop in the long term. We hope that this report can be a source of design inspiration for any project party interested in this field.

From the supply side, asset returns should be implicitly restricted and diversified as much as possible, and non-investment attributes should be strengthened to make simple rent-seeking difficult.

From the demand side, the threshold for capital outflow should be appropriately raised, valuable savings products should be provided, and internal circulation income should be opened up to keep economic value within the ecosystem as much as possible. In addition, by controlling internal fees within the ecosystem and levying taxes on commercial activities, its cash flow can also stabilize the ecosystem. Finally, the project party should also actively introduce external business development to achieve the introduction of non-investment cash flow into a stable ecosystem.

In addition, we believe that governance tokens should be entitled to voting and rent-seeking rights only after they have deeply participated in the game and assumed the obligation of growth. Its distribution should also adhere to the same principle. Finally, the financial attributes of the game mean that the project party has the responsibility and necessity to form expectations of exchange rate stability.

1- Set a potential return cap or permanent reinvestment cycle for assets: Whether it is Axie's unlimited output once and for all, or Thetan's limit on the number of hero uses, it is not sustainable and deviates from the original intention of the game. It is necessary to introduce a variety of basic consumption such as upgrading/forging/repairing under the premise of moderate negative feedback, set a utility decay curve, and design an interest-bearing asset model based on an unpredictable return formula.

2- Make the investment and return of interest-bearing assets more diverse: If interest-bearing assets are designed based only on a simple quantitative APY approach, the game will inevitably become a one-time gold rush. The design of game asset investment requirements and return output should be more complex and diverse, abandoning the tiered reward model to make simple and crude rent-seeking difficult.

3- Keep value within the game ecosystem as much as possible: Whether it is setting a departure tax, designing value-saving assets, or promoting internal resource exchange, it can promote the value to remain within the ecosystem for a long time, and the circulation and survival of these values ​​will create more contributions and value for the ecosystem in a longer life cycle.

4- Identify the profit-seeking user profile and try to educate and convert them: We should change the traditional player classification ideas, face up to the phenomenon that the P2E game field is full of ROI-driven players, and fully recognize the risk of capital outflow caused by user inertia, and guide them to become ecological value contributors by meeting community/identity recognition/playability and other needs.

5- Own infrastructure autonomy and stabilize the economy through its revenue: Compared with selling game assets themselves, taxing from FT+NFT transactions/lending is simpler, more sustainable, and more profitable. Teams are encouraged to own ecosystem infrastructure and financial components and collect fees from them, and use the revenue to stabilize the ecosystem.

6- Create a more sound and complex game business system and impose taxes to stabilize the economy: For open world/MMORPG, there are many ways to create profit space for players in games with diverse resource systems. Designers should create a more sound business environment, encourage transactions between players and impose appropriate taxes to stabilize the overall economy.

7- Create more emotional consumption after the user base is stable: when the fake becomes real, the real becomes fake. Based on the narrative-driven game immersion, the utility of virtual assets is naturally established. Whether it is rare weapons or limited equipment skins, guilds or home achievements, non-profit-oriented investment is guided by the player's value recognition and emotional binding, and rewards are precisely placed to thank the player for his trust. This is the fair value exchange closest to the essence of the game.

8- Try to import external cash flow: It is very difficult to achieve economic balance purely by relying on internal consumption. The introduction of external cash flow can not only avoid excessive consumption mechanisms within the game, but also avoid ROI-driven speculative behavior, and can play a good role in economic regulation. In this process, the team can obtain stable currency foreign exchange income, or guide external resources to sink internal currency.

9. For tokens with strong financial/political attributes, the boundaries of investment, speculation, and governance should be clarified, and more targeted distribution strategies should be formulated in the early stage. The second token in the dual currency model: "governance token" should be regarded as a quasi-state equity. The continuous and stable operation of the game ecology requires not only professional and rigorous teamwork, but also a long-term, stable, deeply involved and non-speculative user ecology. Therefore, the utility and continuous distribution mechanism of governance tokens in the economy will directly affect user activity, stickiness, and growth, and further affect a series of core indicators such as the effectiveness of macroeconomic regulation.

10- Learn to manage a country: Although this sounds irrelevant to game design, this is exactly what we hope the game team can try to understand - today's games are like a country with freely floating foreign exchange and freely circulating currency. Preventing financial crises/minimizing financial risks is as important as providing a better gaming experience. There is no other way except to manage expectations, formulate policies, and prepare intervention measures.

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