Designing a Sustainable Economic System for Blockchain Games: Lessons from History

Despite a significant drop in transaction volume and user numbers, blockchain games still account for half of all blockchain usage, which demonstrates the continued demand for blockchain games. Designing a sustainable economic system has become a critical issue for GameFi projects.

In this article, we will use successful past games as examples to discuss the logic of in-game virtual assets & how to design a sustainable gaming economic system from different perspectives.

The values of in-game virtual assets follow the same logic as token prices on Layer 1 blockchains: they derive from the consensus of players. Therefore, the price of virtual props ultimately depends on how much and how many people are willing to pay for them.

Fundamentally, I argue that gaming economics is different from real-life economics. Because of the limited resources, people use economics to optimize the distribution of resources to create maximal utility for society.

An excellent in-game economic system must strictly control the player's effort-to-output ratio and carefully design the difficulty of obtaining virtual assets. Only if players accept these settings to speculate and play with each other, they can maximize the utility of the game.

After clarifying that the most important factor of the in-game economy is to limit the supply of virtual assets, let's analyze the structure of the in-game economic system. The in-game economic system has three basic elements: production, consumption, and market.

An excellent game producer will first design the demand side before the supply side of gaming economics. However, there are too many unpredictable factors. It is nearly impossible to design sustainable in-game economics in the long term under the influence of multiple parties.

To stabilize the in-game economic system, many "free-to-play" mobile games currently on the market have chosen to take a step back. The studios often play the role of "monopoly dealers" that act as the only channel for players to acquire new items to become better. However, this design is not good for players. Eliminating the trading link between players will directly lead to the rapid depreciation of in-game virtual assets.

Given the major feature of on-chain games is to leverage blockchain technology to confirm the ownership of players’ in-game assets and facilitate transactions, removing the inter-player transaction function would make the on-chain game lose its most important edge. Therefore, the current “free to play” mobile games model does not apply to on-chain games. Next, we will start with EVE Online and Fantasy Westward Journey games and analyze how they achieved a sustainable economic model.

EVE Online is a multiplayer online sandbox simulation game that was released in 2003 and developed by CCP Games. According to MMO-population, the current number of daily active users is 180,102 and the total number of users is 9,479,071.

EVE Online
EVE Online

EVE's is a true sandbox simulation game. As the game's economic system is created by the players, it better reflects player behavior and decision-making, and more closely simulates the real-world economic environment, making it more sustainable in the long run.

Fantasy Westward Journey is a turn-based MMORPG game that was released in 2003 and developed by NetEase. According to player votes and Baidu Index, the game still has around 500,000 active players today.

Fantasy Westward Journey
Fantasy Westward Journey

The team made two important design choices in its infrastructure layer: 1) Using point cards as an anchor to allow players to calibrate the value of in-game assets, and 2) Balancing the game to ensure that all players can earn profit throughout the game cycle.

So, how should the economic system be designed for blockchain games? Here are 4 suggestions:

1.Establish certain thresholds and restrictions for players: High-intensity production of game resources by gold farming studios can increase the production of virtual items (NFTs and tokens), which is destructive for online games.

Game providers should establish mechanisms like "point cards valued in in-game currency" and "step-by-step increasing fatigue value" to prevent players from unlimitedly producing in-game tokens and virtual items. Can control the inflation rate of in-game assets to a certain degree.

2. Stimulate player demand and create consumption scenarios: The core of the game economy system is demand. Game developers should lower the threshold for players to enter the game and create a rich social environment. Issue rare NFTs as high-level PVP rewards to stimulate demand.

Increase consumption by using mechanisms like gambling, taxes, synthesis, and item enhancement. Incorporate probability elements in item consumption, increasing cost for players to obtain perfect equipment, slowing down game content consumption, and recovering surplus resources.

3.Establish an official trading market: Since good asset liquidity is a major foundation for blockchain games, game developers should maximize this advantage by establishing and properly maintaining an official trading market for in-game items that are valued in in-game currency.

This actively promotes virtual item trading among players, which will not only increase the efficiency of player-to-player transactions but also monitor the market demand for various virtual items to ensure that the economy remains stable in future game updates.

4.Make every effort to improve the game content: The goal of the game economy system is not to expand production or allocate resources, but to make players feel interested. Fun is the premise of the game and interesting content makes players want to buy virtual items.

The premise of setting up any economic system is that game developers need to improve the game content as much as possible, making players feel interested. Without interesting content, even the most exquisite economic system will not stimulate players' demand for virtual items.

Overall, the gaming market is growing at a rate of 8.7% and is expected to exceed $200 billion by 2023. Currently, blockchain games are still in a very early stage, but as more capital and industry talent enter the field. It is expected that in the near future, there will be higher-quality content and more sustainable economic systems in blockchain games. We are looking forward to how this will develop in the future.

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