Level 8: Sustainable Web3 Game Economies is a Cursed Problem
We should aim for long-lived games & monitoring economic relevance of assets
Sustainable game economies are the wrong goal to have.
Long-lived games is the reframe we need.
We introduce a new heuristic for designing web3 game economies: economic relevance of game assets.
Cursed Problems
A cursed problem is a problem with an inherent contradiction of goals (Alex Jaffe, Riot Games, GDC).
We can solve cursed problems by relaxing some assumptions and player promises that we’ve made. (see: Level 7 — We Expect Too Much From Blockchain Games)
Countless NFT games will try hard to ‘balance their economies’, maintain ‘asset’ values for their NFTs through cycles. They will get lambasted, dumped and ridiculed — why? Because game resources are seen as ‘assets’, and when asset prices plunge, buyers are unhappy!
Many current web3 game users anchor expectations of wages and return on investment to gameplay. (Play-to-earn)
Some games will make it through by virtue of being a brilliant game, but some players will be unhappy, and perceive it as ‘rugs’. A successful system doesn’t regularly make the intended stakeholders feel unhappy. (Note: no one calls a poker game a ‘rug’.)
The concept of economic relevance will help us navigate these murky waters.
Economic Relevance
The time horizon of economic relevance of game assets (i.e how long will this asset be relevant and valuable in a certain economy?) is an excellent heuristic to have in mind.
Economic relevance is scarce, and therefore competed over by different game assets. When you introduce new assets into the economy, the relevance of other assets is naturally displaced over time.
Example: Copper Ore is economically relevant in World of Warcraft for players with level 1-75 mining, but quickly becomes irrelevant in serving player goals (see: winning in Arena, defeating raids). It can still have some relevance for those relevelling blacksmithing for an edge, & the players determine its value. Additionally, there are no expectations anchored to the continued success of the Copper Ore market.
Our core cursed problem with blockchain games, is that we are trying to give economic relevance to the majority of game assets! while balancing for new user growth, retaining existing user’s asset value, and also keeping everyone entertained.
The experience of “asset price goes up! earn assets!” has become only available to those who are willing to put out a capital outlay, because we are so attached to this desire to give permanent economic relevance. (Which negates all the great lessons we had from free-to-play — free games rock! Play is free! Billions of people play these games!).
Additionally, many web3 games have inherited economics from existing NFT projects — particularly, after selling between 1000 and 10,000 NFTs.
Others are NFT projects turned web3 games, and are chasing the goal of endlessly economic relevant assets.
Freeing ourselves from Skeumorphism
The skeumorphism from 10K NFT profile picture (PFP) projects has led us to believe that we can book revenue early and de-risk development. But how much of that revenue is consumption spend vs investment spend?
But if we want truly long-lived games, which can go for 10, or a 100 years, then we need to be thinking of how we can incentivize the community to stick around. Hint: it’s not multi-month / year staking games that keep people interested in the long-run.
Reframing the problem in terms of longevity of the game, rather than its economy, frees us from the constraint of making a game economy with permanently economically relevant assets.
It also reminds us that every NFT and token we sell, is an obligation to players, and to be really careful about where they’re embedded in the game!
We can still design NFTs with long-term economic relevance — the design of Crypto Raiders MOBs is a great example of this. But not every single NFT can, or should, be viewed as an asset. We need more granular vocabularies, for NFTs as well.
Recall the potential of blockchain games — we can now fund new experiences, where the community can stick around for the long run, contribute (create-value-to-earn), consume game content and transmedia, & make long-term friendships in these virtual spaces.
Games of Progression, Games of Skill
The narrative of true digital ownership in web3 Games naturally lend themselves to games of progression, over games of skill. (I own my assets!)
In the past few months of experimentation, we have clung to the narrative of the ability for players to take out their ‘value’ from the game.
But ‘true digital ownership’ is just one of the many angles that we can take towards these web3 games.
This, combined with the skeumorphism inherited from 10K PFP projects led to people raising via selling a limited amount of NFTs too, which again, is an obligation.
However, meaning in games comes from the effort we put in! the ability to buy our way into significant progression over others, is at odds with what makes most games fun.
You shouldn’t purely be able to buy your way to a legendary; that often defeats the purpose of the game — gamers call this ‘pay-to-win’.
In future levels, we’ll discuss pay-to-win and how crypto and play-and-earn can actually help reduce the negative feelings associated with pay-to-win.
Instead, we should be turning our view towards games as engines of experience, and looking at web3 as a new set of toolsets.
Games as Engines of Experience
When the talented game designers (experience designers) come into web3, we’ll know. — Gabe Leydon, Designing Digital Economies, Colossus
There are plenty of new mechanics that we can unlock now, based on the new tools that we have: soulbounds, NFTs, ERC20s, AMMs, money markets...
I keep repeating this — we can use NFTs, crypto to engineer new experiences. Blockchain has a place in games: one, to change the business of games, and two, to create brand new types of gameplay experiences, with new types of mechanics.
We will detail two mechanics here before moving on to discussing some tactics on building games and ‘meta-economies’ that can survive in the long run.
Examples of New Mechanics
Uplifting
Instead of every asset being on-chain (creating asset bloat, and diluting relevance), lean into most assets being off-chain, and require a choice to be made before putting them on-chain. This mechanic I call “uplifting”. (AL calls this ‘elevation’).
The economy of Gods Unchained pre-GODS token had a resource called Flux. Flux was earned upon victory, and was untradable. It was used to fuse two cards to make one tradable NFT card. Now we can have tradable cards without massive market-bloat.
We can generate unique aspirational goals for players (to own NFTs through gameplay — visible, recognizable, and tradable).
Rewarding Player Knowledge & Skill
Playing the ‘market game’.
GameFi: because I have an edge in my knowledge of the metagame, and ability to play the game, I am able to get rewarded for my play.
At the far end of GameFi, we have ‘traditional’ eSports, but in its best light, GameFi allows for ‘eSports for everyone’'.
In Level 6, we discussed an example of a game concept like Star Atlas rewarding this skillset and ‘GameFi’ reinforcing the objectives of the game designer — putting the player in these intense situations.
Designing Long-Lived Games: Tactics
First: stop anchoring value, and ROI to in-game assets! Let players earn them. Let players put a value on these digital assets. Let those digital assets be uplifted by players themselves.
Try your best to not anchor players to a number or price (‘mint price’).
Attach direct utility to your NFTs if you must have them (whether internal or external to the game economy,). Consider whether your NFTs should be tied with the game, or external to the game.
Finally, be very careful of which assets have economic relevance and which don’t. Typically, your ecosystem token, or land NFTs, are great candidates for ‘long-term economic relevance’.
Most importantly — don’t be afraid to have assets that can lose economic relevance.
This allows for a constant renewal — prevents stagnation (and unfriendliness towards new players / entrants (which are the lifeblood of the economy in all games)), and also prevents ‘baron’ and snowballing behavior which kills game economies, and eventually, games.
Tokens that decay (berries that can rot…).
NFTs that can die and get burnt.
Seasonal Economies
Seasonal economies with resets — with seasonal economies, the economic relevance of game assets is expected to fade over time. The expectation of loss is baked in, and there is a cadence by which the value of new resources are renewed.
In Diablo II, after every ladder season, every ladder character gets converted to a non-ladder character, and the new season starts with brand new characters. In Escape from Tarkov, there is the wipe, which achieves something functionally similar.
In this way, cycles are expected and even telegraphed, and there is no strong expectation on permanent economic relevance of the asset.
You can always relive the ‘early days’ again. (You’re… still early.)
Take close to heart this concept of Economic Relevance.
If you fail to take this into consideration when designing your economy, you will disappoint players, and investors. The project will die a slow death, and soon, even the community won’t be around.
Manage Expectations
Everything is about managing expectations. Economic relevance is a concept that will help you with this.
The expectation should be: this is a game world I can get lost in for years.
The expectation should not be: this is a sustainable game economy where I can farm resources, and get a good return given my current assets, for years.
‘Sustainable Game Economies’ are dead, long live the Long-Lived Game.
h/t to Anthony Cheng for discussion on Cursed Problems, Devin Becker for reading drafts.