Original author: AIKO
With the recent recovery in the market, some interesting projects have emerged before our eyes. It also presents practical cases following web3 game design theories such as IAT (In-app Taxation) and BLOG.
So, this article aims to accomplish two things:
1) Take Gas Hero and Lumiterra as examples to illustrate the new flywheel of web3 games under the IAT business model, that is, the top-level get-rich-quick game.
2) Take Gas hero, Lumiterra, and Crypto Raiders as examples to analyze the governance model in web3 games.
If you are not familiar with the concepts of IAT and BLOG, you are welcome to read our previous research reports (thanks to Jason and Kydo for their help in making these cutting-edge theories possible):
The theory and shortcomings of IAT
We’re happy to see that in-game taxation is taking hold as a means of monetization. As we have described, the total value of in-game value carriers * transaction turnover rate is expected to greatly increase the value of the entire life cycle of the game, bringing higher value to both ecological participants and game companies.
In the process of writing previous IAT research reports, we focused on describing how to transform the design thinking of traditional closed/semi-closed economies into tax-based business models and matching gameplay, thereby increasing transaction activity. and tax revenue.
However, due to the limitations of web3 game practice and theory a year ago, we did not continue to describe what areas these taxes should be used for after tax collection, so as to form a closed loop and more reasonably support the long-term expansion of an ecosystem.
In the past, our imagination about taxation was limited. We saw sufficient taxation and cash flow to support the teams development of the next project and the construction of the entire ecosystem (look at Axie Infinity and STEPN now), but there was no idea or mention. To: ActuallyTaxes can serve as a powerful incentive layer that stays within the game and creates a larger flywheel.
Before getting to the point, we should also agree on a major premise - that is, the sense of purpose of web3 games.
Maslows hierarchy of needs in web3 games is completely different from traditional games. Although the top level is to gain social recognition and be admired by thousands of people, social admiration in traditional games may come from a sword of 999 and a gorgeous winged car, but in the crypto world, most of the admiration comes from envy of the myth of sudden wealth.
Therefore, the correct way to tax-incentivize the ecological flywheel is to allow top players to realize their desire to get rich through the huge profits generated from in-game organic transactions, making them the envy of all players.
Well learn more about this in the next two games, Gas Hero and Lumiterra.
The new flywheel for Web3 games
Gas Hero
The Gas Hero game is basically an idle combat SLG game with five Gameloops. When players play in different gameloops, various assets will be dropped, which respectively represent the players most important combat power system in addition to heroes ( Weapons, pets, and various upgrade props). At least 100 of these assets can be combined into 1 unit of NFT for trading in the secondary market. At the same time, officials have provided auction houses in different regions to sell goods that may be in short supply locally.
So, the first type of player -Brick-moving playerThere are players who use lower-level heroes to play various game loops, buy goods from the auction house, and sell them in the P2P market for arbitrage. The large transaction taxes of these players (4% of the auction house tax and 2% of the P2P market tax) become the source of the IAT reward pool funds.
There are two stages in continuing to pursue higher profits and power, gradually dividing players into official players and PvP players.
For official players:In areas such as cities and below, those who want to become leaders must go through intense PvP and convince others with force; while in areas above cities, those who want to become leaders must participate in elections, spend large sums of money to donate GMT, and strive to be among the top 15 in the world rankings. Because the higher the donation, the greater the probability of being selected successfully (probability lottery), so the game played by players is: donate more GMT to ensure that they do not fall out of the 15th place, and at the same time increase the amount of money appropriately to win a higher prize. rate, donations are likely to gradually increase.
For PvP players:PvP has always been a major gaming point in the game. In order to compete for the donated gold prize pool, they must fully arm themselves and polish their strategies, combinations and positions. The large-scale purchase and consumption of heroes, pets, and equipment has promoted the activity of the trading market, and also allowed lower-level players to have a sustained and stable income (apy 30% ~ 50%).
As shown in the figure, the entire flywheel is to bring abundant taxes through more and more NFT transactions, pushing up the reward pool for official players, further stimulating players to donate more amounts in the official election, (the higher the amount, the better the prize will be won) The higher the probability); and these gradually accumulating donations also serve as PvP rewards to attract players participating in PvP competitions; in order to arm themselves and upgrade themselves, PvP players will become the main buyers of NFT, bringing a huge and solid market share. Buying orders further encourages brick-and-mortar players to produce NFTs in the game and buy and sell them from the auction house.
In the end, Gas Hero used two bonus pools, a trading house, and an auction house to successfully and accurately motivate three types of players and continue to operate.
Lumiterra
The design of the Lumiterra game itself is actually very similar to the design we presented in IAT: three gameloops correspond to three professions, but the growth of each profession must rely on the resources obtained by other professions in the corresponding gameloop, and this interdependence is perfectly integrated The relationship progresses and maximizes commodity transactions. Lumiterra chose a commodity economic society to present this interdependence, with a lower threshold for players to understand, and farming SIM games (take Stardew Valley and Animal Crossing as examples) are also the longest-lived category.
The motivational flywheel in the game can be simply summarized as:
1) In the gamecontent playerA large number of transactions are naturally generated, in which transaction taxes are paidDeFi usersProviding liquidity rewards, the more players and transactions occur in the game, the more stable the APY income of DeFi players who provide stablecoins and $LUA liquidity outside the game will be;
2) These DeFi users also need to interact with the DeFi protocol. The protocol benefits from buying and selling friction and slippage, and uses these profits to pay the basic bonus of the AMM lottery pool. More and more DeFi users interact with each other, and the AMM prize pool getting higher and higher;
3) And high bonuses will motivateGamblerGo to the game and recycle a large amount of designated materials into lottery tickets to participate in the lottery, providing a large number of purchases for game content players.
4) Moreover, the participation of gaming users in the lottery will be the largest resource consumption point in the game. About 60% of the resources will be permanently consumed in this link, and the 5% tax generated by the lottery AMM will also be added to the prize pool.
If we remove all the intermediate links, essentially game content players motivate DeFi users, and DeFi users motivate gaming players. Gaming players are the largest buyers of NFT and the largest consumer of in-game resources, thus motivating content again. player. The ecological flywheel completes the closed loop.
If we assume that the APY for gamers buying and selling NFTs to earn the price difference is around 10-30%, then depending on their operation methods and in-game transaction volume, the APY for DeFi users may be around 50% -150%. Finally, the APY for lottery players It may reach over 200%.
Therefore, the game is always mobilizing all ecological participants with a very high probability of excess returns, and at the same time giving participants the appropriate and long-term stable returns they deserve as the ecosystem expands.
summary
Through the above interpretation of Gas Hero and Lumiterra, we can find some commonalities between the two games:
1) The excess return bonus comes from real transactions and taxes in the game, while all other designs revolve around how to increase transaction frequency and friction and how to design linkage relationships between various types of players.
2) The game always mobilizes some ecological participants with a small probability of excess returns, and at the same time gives other participants long-term and stable returns that match their labor as the ecosystem expands.
For example: more than 200% return for lottery players VS. About 30% APY for ordinary NFT players.
3) Players who have the opportunity to obtain excess returns must consume the most game resources in the form of gaming, and the entire process will become the largest sink.
For example: the official donation game and PvP game in Gas Hero, and the lottery game in Lumiterra. Numerically promoting the process of an individual winning the game requires consuming countless underlying resources, including a large amount of player labor and permanent resource burning of resources.
4) For other participants in the ecosystem, try to extend the time line and give them appropriate and stable benefits.
For example: Gas Hero NFT players normal price difference arbitrage and Lumiterra DeFi users liquidity mining are relatively stable incomes guaranteed by cash flow.
5) It is particularly important to shape the gamification mechanism of a commodity economy from 0 to 1.
For example: Gas Heros five gameloops and Lumitteras three gameloops. Creating an interdependent commodity economy is the basis for the operation of the entire economic flywheel and governance.
Through the above five design principles, we can see the significant differences between the new design concepts conveyed in Gas Hero and Lumiterra and the traditional GameFi design. Right now,As the ultimate pursuit, probabilistic excess returns are supported by cash flow provided by large-scale player arbitrage transactions and games. Moreover, players are given matching/probabilistic/slightly fluctuating long-term returns through their different roles in the ecosystem, rather than obtaining one-time returns of faster return on capital and unlimited mining by purchasing different levels of mining machines. .
Governance in Web3 games
Next, I want to briefly talk about governance in web3 games.
Analyze how Crypto Raider governance incorporated OHM but failed to launch due to game design flaws and flywheel disconnect.
Analyze the difference between the governance structures in Gas Hero and Lumiterra.
Crypto Raiders
Crypto Raiders is the first game to set game assets as ERC-20 and utilize AMM for transactions. It is also the first game to adopt OHM outside the game to try to govern.
This game first appeared in the eyes of researchers because they used the AMM for in-game resource transactions for the first time. The purpose was to reduce the presence of counterparties in traditional game transactions, create a real-time trading experience, and the team could start from the protocol. Earn handling fees.
Subsequently, Crypto Raiders also started cooperation with Olympus Pro, hoping to transfer all liquidity rewards to bonds in the next few months. In order to meet two purposes: 1) LP pledge mainly attracts farmers. Moving to protocol-owned liquidity (POL) will allow the game treasury to earn an additional $7,500 per day (approximately $2.73 million/year), which can be used to fund game development; 2) reduce selling pressure on RAIDER. But it seems that this governance model has not yet been successfully launched, and the game has gone downhill due to the reduction in the number of players.
Today, the price of $RAIDER has dropped to $0.02, with a 24-hour trading volume of about $3,000.
The current liquidity is less than 200,000 US dollars.
So, now when we review this game after watching Gas Hero and Lumiterra, apart from force majeure factors such as market cycles and speculative currency price fluctuations, is there anything that can be improved in the design?
1) The lack of a commodity economy makes the entire economy unstable.
The materials produced by the gameloop experienced by all players in the game are very single, and there is no clear/intentionally designed supply and demand dependency. At the same time, the game content is insufficient and the update speed is slow. As a result, the utility token AURUM, which is produced too quickly, is sold by most players because there is no long-term circulation cycle and consumption scenarios.
2) Incentive misalignment.
The beneficiaries of RAIDER are LP stakers, teams and investors, but what game players actually get is AURUM. This shows that the game does not unify the interests of LP stakers and game players. In other words, the increase in the time/money spent by the player community in the game does not give any direct benefits to the governance token holders; conversely, the increase in governance token holders and liquidity cannot provide any direct benefits. The benefits of any strong connection between players in the game.
It can be seen that in Crypto Raider, there is no good cooperation and dependence between liquidity providers and players. Even if the governance layer is added or the external liquidity provision solution is improved, it still cannot bring a positive flywheel for ecological expansion. .
3) The ecological volume is not enough to support the long-term operation of a complete governance system.
Because the Dune dashboard data is invalid, only approximate data can be recalled. There were five to six thousand active wallets at the peak, and it remained around two thousand daily. Such a magnitude is not only difficult to support a commercial game with AMM transactions as its core, but also difficult to become the foundation of DeFi and governance.
Gas Hero & Lumiterra
Although Gas hero and Lumiterra both have the element of governance, the governance between the two is also different. The former uses an in-game governance structure, that is, governance is part of the in-game flywheel, is launched with the game, and is effective for game participants (governance donations can further motivate in-game PVP players); while Lumiterra adopts The governance structure outside the game, that is, governance is not part of the in-game flywheel and will not be launched with the game in the early stage. It is the future playground of LUAG holders. When the time is right, voting will be launched in the CRV ecosystem and its own game ecosystem.
The governance of Gas Hero is more like the income distribution of the official class, and entering the official class requires donating a large amount of GMT as a pvp bonus pool. Therefore, in-game governance can play a role in boosting the enthusiasm of the entire game. When regional officials want to encourage more players to actively participate in games and transactions, more meta-governance/meta-economic interaction processes will be triggered, such as unified management in private group chats (setting announcements and alarm clocks to participate) Auctions), and even red envelopes/monthly salary and other behaviors in the Land of the Sea, ultimately bringing better performance and generous returns to the guild and the region.
Governance in Lumiterra is closer to the governance logic of DeFi. It is speculated that it will be similar to the ve token/locking time of the lock-up to determine the voting weight. The voting results are related to the rate of return of all participating voters. Such external governance relies more on the natural operation of the protocol rather than the social and governance relationships between people. Therefore, it may result in a lack of good communication channels between upstream and downstream. For example, a player who provides liquidity does not understand the guild in the game. and other governance structures, it is difficult to produce organic mutual promotion and boost economic enthusiasm. Moreover, when allocating rewards in the crv governance framework, the risk is that the ultimate beneficiaries may be different from the players in the game. The benefits of governance will not return to the players at the bottom of society, but will still be controlled by the big players in DeFi. Participants in various links lack effective communication. The risk points for conflicts are similar to Crypto Raiders external protocol governance.
Although Gas Hero has just been launched and Lumiterra is still in the testing phase, the above conclusions are all based on conjectures, and various return rates are also estimates. The real practical effect requires long-term observation, but we still need to pay attention to the subtle design differences. It may also cause different ecological development and changes in the later operations of the two games. Moreover, although games with an inherent economic flywheel are different from the Ponzi model that required continuous new additions in the past, they still have higher requirements for user levels. The more players participate, the more likely they are to stabilize the ecosystem. Both parties should Try to expand the user base to support the continuous operation of the flywheel.
postscript
This article focuses on the analysis of the top-level get-rich-quick game represented by Gas Hero and Lumiterra and the design of the ecological flywheel mechanism, emphasizing the significance of aligning the interests of all parties in web3 game design and ultimately expanding the ecology through the flywheel.
But this article also has shortcomings, due to various missing data (Dune data panel failure), lack of research theory (currently only the IAT and BLOG designs we have written before), and the absence of the parties involved (the crypto raider team has already worked on the third project , loss of game players), it is difficult to write an article that summarizes the theoretical and practical development of the web3 game economic model with detailed data. Therefore, this article only serves to record and summarize the development process of the industry. It is hoped that it can help entrepreneurs who are still designing and exploring economic models to find new paradigms and quickly apply them, rather than a serious and documentary research report.
In addition, in addition to serving as a testing ground for new mechanisms, web3 games are still essentially playable/interactive investment targets. Therefore, in addition to the design of its own mechanism, external traffic operations, community consensus building, brand endorsement, asset management, etc. are also very important. In the words of our previous research report, a generalist team is still needed. The final development of a web3 game with a long life cycle and large traffic circle-breaking effect requires the joint efforts of all colleagues.
