In-depth analysis of the P12 white paper and mechanism
0x1Bce
June 22nd, 2022

This analysis will be divided into the following points. Game currency issuance method, CastDelay, Meritocracy management system, economic growth.

Game Token distribution method

  • CPMM model technology

    First assume that game developers use the CPMM model to release game coins, then the pool prepared by the developer will contain 50% of P12 Tokens and 50% of game coins. As players use P12 to buy game coins, then the pool of P12 Tokens will The number will continue to increase, and likewise, the coins in the pool will decrease. The value of P12 Token and game currency is 1:1, which belongs to the Anchoring Effect.

    Using the CPMM model to sell game currency is the most concise way, but this method has another disadvantage, that is, the publisher or developer needs to prepare more P12 Tokens for initial liquidity.

  • Distribute game Token using Curve Offering (BCO)

    Combining the curve, the player will mint new game coins when buying new games, on the contrary, when he sells the game to Swap (which can be understood as a refund), he will burn the new game coins, which will produce an autonomous fluctuation. Interaction, in which game currency and P12 Token will be actively adjusted. Another simple way to explain it is that when the player buys the game currency, the price will rise, and conversely, when the player sells the game currency, the price will fall. But because the bonding curve equations are consistent, the price of the game is predictable and calculable and depends on market supply.

    In addition to the ease of buying and selling, there are a few other benefits of combining curves, such as customizability, flexibility of manipulation, and fair distribution.

  • LBP Liquidity Guidance Pool

    Liquidity Bootstrapping Pools (LBPs) are pools that can dynamically change token weights, LBPs use weighted math with time-dependent weights. The start and end weight times are chosen by the developers, who also have the right to suspend the redemption. LBP usually starts with a deliberately high price. This greatly inhibits whales and bots, scooping most of the pool liquidity from the start. This helps to increase the breadth of token distribution when LBP is used for game currency. Developers who use LBP to start liquidity of game coins that are not yet well distributed can do so with minimal start-up capital. For developers running LBP with in-game currency and P12, starting with 10% or 20% P12 instead of the 50% P12 they might need in another token issuance method significantly reduces their start-up capital Require. Moved from 80/20 in-game coins/P12 to 20/80. And ultimately lead developers to hold more P12 Tokens at the end of the LBP, while reducing the price volatility experienced by game coins when launching the CPMM 50/50 pool.

  • Gebesis Liquidity

    Gebesis liquidity can provide lower slippage and ample token supply. In the process of Swap, game developers must provide sufficient initial liquidity while issuing tokens. This mechanism is called GLP. While issuing each game currency, it also adds liquidity to Swap. The explanation here is based on CPMM, and it can also be used for other models. If a game developer wants to design a game and issue a designated token for it, it needs to A liquidity pool of P12 Token and designated tokens is established while issuing tokens, which can be understood as a group LP here.

    During this process, the total value of developers will increase, developers are obliged to provide initial liquidity and pledge their game currency (LP: designated game currency - P12 Token), they can remove liquidity, but must announced.

    If this game is popular and players come to this mining pool to buy more game coins, the number of P12 Tokens in the mining pool will increase, while the number of game coins will decrease, that is, the number of P12 Tokens corresponding to each LP will increase. The amount of game coins will be reduced. When developers act as initial liquidity providers, the value of the P12 Token they own increases, and they can sell a portion of P12 for profit in exchange for developing valuable games. As the number of game coins in the pool decreases, the price of the game coins will increase (AMM algorithm). After the developer mints the game currency and establishes a liquidity pool, anyone can exchange between the P12 Token and the game currency in the corresponding pool. It is important to note that while initial liquidity is provided by developers, once the pool is established, anyone can contribute liquidity to the pool and earn transaction fees. At the same time, liquidity providers can also choose to pledge their LP tokens to receive P12 Token pledge rewards.

CastDelay

In the game world, P12 Token is like an important gold reserve in the ecosystem, and game currency is another currency. P12 has the right to formulate its policies to ensure the economic stability and sustainability of the game. In order to ensure the stable operation of the game, in-game currency policy must be circulated and paid attention to in advance: especially when it comes to token issuance (when correlated with expected inflation rate) and token supply (pool liquidity).

Staking or unstaking most of the tokens can be a controversial act due to the disproportionate effect on the price of the game currency. Timelock1 2 is like a lock that prevents it from being unlocked before a set time, established as CastDelay in the P12 ecosystem. CastDelay delays the event for a period of time proportional to the size of the event.

  • Mint additional game Token

    The more game coins issued by the game developer, the longer it takes to lock the position. It is stacked linearly, so there is no way to break up a mint into multiple mints. During the lock-up period, gamers will know in advance that the additional supply of game coins will increase and can prepare for an increase in the total amount of tokens. For gamers, more minting is not necessarily a bad thing, it may represent an increase in the output of the game, the need to avoid deflation, or loose monetary policy.

  • Remove-Liquidity

    Under the Genesis liquidity provision mechanism, developers provide the initial liquidity of the (P12 Token-game currency) pool, and their LP tokens will be automatically pledged. When developers want to remove liquidity, they have to unwind their LP tokens and remove liquidity. CastDelay will be applied to the process of unstaking as a form of time-locking mechanism. The goal is to prevent developers from withdrawing liquidity suddenly. Since the developer's LP tokens are automatically staked (at the time of initial liquidity creation), P12 delays the unstaking step in order to let everyone know before the developer withdraws the liquidity. It should be noted that the CastDelay mechanism only takes effect for the operation of cancelling LP tokens. If someone acts as a liquidity provider to the pool, they can freely move in and out of the pool (add or remove liquidity), but unstake if they use their LP tokens for yield farming, i.e. stake their LP tokens The steps are also affected by CastDelay.

    The duration of the delay is related to the number of unstakes, and the greater the proportion of unstakes to the total LP tokens in the pool, the longer the delay.

Meritocracy management system

Meritocracy is a unique management system in the P12 game world. Of all P12 Tokens, 60% will be allocated to games to reward premium content and thriving economic activity. Rewards for quality games will boost the overall performance of the platform. Otherwise, according to Gresham's Law, bad debts will be driven out into good debts. Rewards can be grouped into three categories: statistics, economic activity, and Keynesian policies.

Usage Statistics: Rewards are distributed based on the number of users and proof of play.

Economic activity: Rewards are distributed according to the trading volume of Swap and NFT market (SecretShop).

  • Keynesian policy

    Keynes advocated increased spending and lower taxes to stimulate demand and pull the global economy out of the Great Depression. Likewise, in the P12 ecosystem, Keynesian policies refer to the concept of influencing aggregate demand through the active stabilization and economic intervention policies of the P12, thereby achieving optimal economic performance and preventing recessions. The multiplier effect is one of the main components of Keynesian countercyclical fiscal policy. P12 spending ultimately increases business activity, according to Keynes's theory of fiscal stimulus, which proposes that spending raises aggregate output and generates more revenue. If people are willing to spend their extra income, the resulting increase in ecological GDP may even exceed the initial stimulus amount.

    Additionally, in the game world, rewards are distributed based on two mechanisms: cold start and non-profit content. Cold start is the TMC support provided when the game is first released. For newly released games and individual indie developers, P12 will provide various support and assistance, including TMC and promotion. In addition, we will support non-profit games with public welfare value. For example, many indie games are about art, war, and culture, or about the history of the Internet and video games. In order to prevent economic recession, certain incentives will be given.

Economic growth model

The goal of the P12 economic system is to achieve price stability, high participant participation (similar to high employment in traditional economic systems), economic growth, financial market stability, interest rate stability, and foreign exchange market stability (stable exchange with mainstream crypto assets) .

  • Fiscal policy

    Fiscal policy includes fiscal revenue policy and fiscal expenditure policy. Fiscal revenue policy is mainly tax policy. Fiscal expenditure policies include preferential transfer payment policies and treasury purchase policies.

    Fiscal policies in the P12 ecosystem mainly include: taxes, fees, and seizure collections.

    Taxes: Gamers have a better experience when the pool is more liquid, or the number of tokens in the pool is higher. In order to improve liquidity Swap charges liquidity providers (LPs) a fee per transaction.

    Cost: There is a certain amount of money required to list a game, especially if the developer wants the game to be advertised prominently on the platform.

    Seizure and seizure: If the initiator seizes the P12 Token, then the P12 will also receive a relative percentage of the token.

  • Fiscal spending policy

    Fiscal expenditure policy mainly includes transfer payment policy and purchase policy.

    The main form of transfer payment policy is Meritocracy, which corresponds to financial subsidies in the traditional economic system. The P12 Ministry of Finance will provide financial subsidies as an incentive to those who contribute to P12, such as providing high-quality content and gross consumption or investment output.

    Similar to the government's financial subsidies for high-tech industries and preferential policies for enterprises to invest in traditional economic systems.

    During the economic development of P12, the P12 Ministry of Finance may purchase P12 Tokens, game coins or other tokens in circulation to control inflation or make investments, similar to government purchases in the traditional economic model. The purchase decision will be made by the P12 DAO.

  • Monetary Policy

    In traditional economic systems, we often hear the words "inflation" and "deflation". Governments use policy tools through the central bank to adjust the money supply and interest rates, thereby affecting the level of macroeconomic activity.

    In the P12 ecosystem, monetary policy is implemented through code, avoiding credit problems such as central bank expectation management in the traditional economic system. The P12 ecosystem hopes to interpret monetary policy through code and build a well-developed economic system. In the ecosystem, the main focus of monetary policy is inflation and economic modeling.

  • Inflation

    P12 tokens will first be released linearly over a number of years. There will be a hard cap in a few years to reduce inflation and stabilize token prices. P12 tokens will no longer be issued after reaching the maximum supply, and in order to ensure sustainable economic growth, the distribution of P12 tokens will be fair. A significant portion of the tokens will be released into the ecosystem in the form of elite rewards.

  • veP12

    Through P12 GameMaster governance, P12 holders stake their tokens to obtain veP12, which is the voting weight in the P12 governance system. ve12 is a non-standard ERC20 function used in snapshots to determine the voting rights of each account. The longer the betting time, the more accurate the amount of P12 Tokens generated. veP12 cannot be transferred. The only way to get veP12 is to lock the P12 Token. As the remaining time until the P12 Token is unlocked decreases, the user's veP12 balance decays linearly.

    The ve economic model proposed by Curve Finance has a positive incentive effect on the liquidity provider (LP) of its project. Liquidity providers hold CRV and can stake it to veCRV, which can improve liquidity provider returns. In addition, 50% of transaction fee income will be distributed to veCRV holders in the form of 3CRV.

    The Ve economic model similar to Curve Finance forms incentives for game developers and players in the P12 ecosystem, including increased rewards and revenue sharing.

    Boosting Rewards: In order to encourage gamers to stake their P12 Tokens so that they can participate in P12 governance, the P12 ecosystem will try to provide some boosting rewards to staking gamers. For example, veP12 holders receive discounts for their attractiveness in the P12 ecosystem, or they have certain privileges in certain aspects of the gaming world.

    Revenue sharing: veP12 holders can also receive a certain percentage of tax revenue in the P12 economic system as pledge income. Tax revenue includes transaction fees for Swap and SecretShop (NFT marketplaces).

In summary, this article explains the economic mechanism of P12. Shows how the P12 economic mechanism facilitates the design goals of guaranteed true ownership, transparent prices, guaranteed liquidity, verifiable scarcity, and finally enforceable governance. Overall, this paper aims to lay a solid foundation for the P12 ecosystem and establish the sustainability and viability of the P12 economy.

With the popularity of the metaverse concept, buying and selling real estate in the virtual world has become more and more popular, and it has even set new highs in virtual real estate transaction amounts many times. The metaverse in the coming years will evolve into a fully functional economic model that provides an interconnected virtual experience for our real life, just like email and social media do today.

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