Play2Earn - Revision history

Tebaldi at 09:54, 28 November 2022

2022-11-28T09:54:05Z

← Older revision		Revision as of 09:54, 28 November 2022
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	Extracted by Dan Dubokovic BSc Thesis entitled 'Tokenomics of Play-to-Earn Games' Spring 2022		Extracted by Dan Dubokovic BSc Thesis entitled 'Tokenomics of Play-to-Earn Games', Spring 2022,

	== Introduction ==		== Introduction ==

Tebaldi at 09:53, 28 November 2022

2022-11-28T09:53:34Z

← Older revision		Revision as of 09:53, 28 November 2022
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	~~extracted~~ by Dan Dubokovic BSc Thesis entitled 'Tokenomics of Play-to-Earn Games' Spring 2022		Extracted by Dan Dubokovic BSc Thesis entitled 'Tokenomics of Play-to-Earn Games' Spring 2022

	== Introduction ==		== Introduction ==

Tebaldi at 09:46, 28 November 2022

2022-11-28T09:46:36Z

← Older revision		Revision as of 09:46, 28 November 2022
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	extracted by Dan ~~Dubkovic~~ BSc Thesis entitled 'Tokenomics of Play-to-Earn Games' Spring 2022		extracted by Dan Dubokovic BSc Thesis entitled 'Tokenomics of Play-to-Earn Games' Spring 2022

	== Introduction ==		== Introduction ==

Tebaldi: /* Critical Issues Under Discussion */

2022-08-20T16:02:32Z

Critical Issues Under Discussion

← Older revision		Revision as of 16:02, 20 August 2022
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	To make the discussion of game tokenomics objective, avoiding qualitative judgements on how "fun" something is is necessary. Fun, in the case of P2E games is relative to the approach you take to playing the games. If one plays the game to put food on the table, fun is not of primary importance anyways, and yet P2E games describe their long-term aims as creating a game that is actually fun<ref>[https://whitepaper.axieinfinity.com/gameplay/axie-population-and-long-term-sustainability ("Axie Infinity Whitepaper", 2021)]</ref>. This makes sense from an economic standpoint, as attracting a new generation of wealthier gamers that actually play for fun is imperative for sustaining the current game economy on the long run, with a healthy influx of new capital to pay for the play-to-earners who stick around only if the game is more profitable than the other games on the market. If the possibility of earning should remain, it could represent a powerful marketing driver for the game as people might value playing and earning higher than just playing, which happens with traditional games.		To make the discussion of game tokenomics objective, avoiding qualitative judgements on how "fun" something is is necessary. Fun, in the case of P2E games is relative to the approach you take to playing the games. If one plays the game to put food on the table, fun is not of primary importance anyways, and yet P2E games describe their long-term aims as creating a game that is actually fun<ref>[https://whitepaper.axieinfinity.com/gameplay/axie-population-and-long-term-sustainability ("Axie Infinity Whitepaper", 2021)]</ref>. This makes sense from an economic standpoint, as attracting a new generation of wealthier gamers that actually play for fun is imperative for sustaining the current game economy on the long run, with a healthy influx of new capital to pay for the play-to-earners who stick around only if the game is more profitable than the other games on the market. If the possibility of earning should remain, it could represent a powerful marketing driver for the game as people might value playing and earning higher than just playing, which happens with traditional games.

	Having said that, there will be no further discussion on the fun aspect, as it's not measurable and comparable across games~~.<span id="header-n79"></span>~~		Having said that, there will be no further discussion on the fun aspect, as it's not measurable and comparable across games.<span id="header-n81"></span>
	~~===Critical Issues Under Discussion===~~

	It is a lot more informative to illustrate the key issues surrounding P2E tokenomics with concrete examples from a game like Axie. The design of its economy displays some of the common problems with tokenomics and its well-documented history and technical documentation makes it easy to accurately analyze. Topics are also approached in a more general sense and potential solutions are proposed, despite not having a practical example implemented in Axie.<span id="header-n81"></span>
	=== Where do governance tokens and utility tokens get their value? ===		=== Where do governance tokens and utility tokens get their value? ===

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	The price of the utility token has another effect. Demand for playing a game is somewhat automatically balanced based on the profit one can expect, versus the expected profit from playing competing P2E games. If a new game pops up some players might leave game 1 for game 2, thus creating less competition in game 1 and increasing returns to players that remain. Eventually an equilibrium point is reached. There are other effects like time spent increasing one's skill in playing the game, investments made into in-game assets and how liquid the markets surrounding them are.		The price of the utility token has another effect. Demand for playing a game is somewhat automatically balanced based on the profit one can expect, versus the expected profit from playing competing P2E games. If a new game pops up some players might leave game 1 for game 2, thus creating less competition in game 1 and increasing returns to players that remain. Eventually an equilibrium point is reached. There are other effects like time spent increasing one's skill in playing the game, investments made into in-game assets and how liquid the markets surrounding them are.

	As a last point, it has to be noted that cryptocurrencies in general are heavily cyclical<ref>[https://www.emerald.com/insight/content/doi/10.1108/SEF-08-2019-0302/full/html (Bejaoui et al., 2019)]</ref>. This affects also the markets of both governance and utility tokens of games. These effects can be a lot stronger than any "burning pressure" or supply reductions a game can design into its tokenomics model. In other words, the returns to players are also dependent on the general market sentiment. Huge tokens like Axie at its peak also require much more capital to move and create returns for late investors, while smaller cap tokens might move significantly with smaller capital injections that are easier to muster. This is part of the "hype" dynamic surrounding cryptocurrencies, where investors are attracted to disproportionate returns which are progressively harder to replicate as more people want in.~~<span id="header-n89"></span>~~		As a last point, it has to be noted that cryptocurrencies in general are heavily cyclical<ref>[https://www.emerald.com/insight/content/doi/10.1108/SEF-08-2019-0302/full/html (Bejaoui et al., 2019)]</ref>. This affects also the markets of both governance and utility tokens of games. These effects can be a lot stronger than any "burning pressure" or supply reductions a game can design into its tokenomics model. In other words, the returns to players are also dependent on the general market sentiment. Huge tokens like Axie at its peak also require much more capital to move and create returns for late investors, while smaller cap tokens might move significantly with smaller capital injections that are easier to muster. This is part of the "hype" dynamic surrounding cryptocurrencies, where investors are attracted to disproportionate returns which are progressively harder to replicate as more people want in.
	== Axie ~~in-~~game ~~economy~~ ==		== P2E tokenomics at work: the Axie game, ==

			It is a lot more informative to illustrate the key issues surrounding P2E tokenomics with concrete examples from a game like Axie. The design of its economy displays some of the common problems with tokenomics and its well-documented history and technical documentation makes it easy to accurately analyze. Topics are also approached in a more general sense and potential solutions are proposed, despite not having a practical example implemented in Axie.

	It's finally time to dive deeper into actual tokenomics design and analyze the inner workings of the Axie in-game economy. As mentioned before, the economy runs on 3 different assets: AXS, SLP and the Axie NFTs. This resembles the structure of most P2E games. On top of this another asset are Land NFTs, but they are not fully implemented yet and thus do not play a role in the economy<ref>[https://whitepaper.axieinfinity.com/gameplay/land ("Axie Infinity Whitepaper", 2021)]</ref>. Another asset that should be mentioned is Eth, the native token of the Ethereum blockchain the "sidechain" Axie runs on is connected to. The sidechain itself, called Ronin, also has its own token but discussing the details of the RON token is beyond the scope of this investigation. Eth plays an important role as the vehicle by which capital enters the Axie ecosystem, as well as being the currency for buying and selling the Axie NFTs, on top of AXS. Axie has introduced a Ronin-native Decentralized Exchange, Katana<ref>[https://axie.substack.com/p/katana?s=r ("Katana: The Ronin Dex Is Live!", 2021)]</ref>, so assets do not need to leave the ecosystem to be traded with each other. This does not have a direct impact on the in-game tokenomics, but it does improve the liquidity of assets and might change some user behavior.		It's finally time to dive deeper into actual tokenomics design and analyze the inner workings of the Axie in-game economy. As mentioned before, the economy runs on 3 different assets: AXS, SLP and the Axie NFTs. This resembles the structure of most P2E games. On top of this another asset are Land NFTs, but they are not fully implemented yet and thus do not play a role in the economy<ref>[https://whitepaper.axieinfinity.com/gameplay/land ("Axie Infinity Whitepaper", 2021)]</ref>. Another asset that should be mentioned is Eth, the native token of the Ethereum blockchain the "sidechain" Axie runs on is connected to. The sidechain itself, called Ronin, also has its own token but discussing the details of the RON token is beyond the scope of this investigation. Eth plays an important role as the vehicle by which capital enters the Axie ecosystem, as well as being the currency for buying and selling the Axie NFTs, on top of AXS. Axie has introduced a Ronin-native Decentralized Exchange, Katana<ref>[https://axie.substack.com/p/katana?s=r ("Katana: The Ronin Dex Is Live!", 2021)]</ref>, so assets do not need to leave the ecosystem to be traded with each other. This does not have a direct impact on the in-game tokenomics, but it does improve the liquidity of assets and might change some user behavior.

Tebaldi: /* Critical Issues Under Discussion */

2022-08-20T15:59:50Z

Critical Issues Under Discussion

← Older revision		Revision as of 15:59, 20 August 2022
Line 66:		Line 66:
	To make the discussion of game tokenomics objective, avoiding qualitative judgements on how "fun" something is is necessary. Fun, in the case of P2E games is relative to the approach you take to playing the games. If one plays the game to put food on the table, fun is not of primary importance anyways, and yet P2E games describe their long-term aims as creating a game that is actually fun<ref>[https://whitepaper.axieinfinity.com/gameplay/axie-population-and-long-term-sustainability ("Axie Infinity Whitepaper", 2021)]</ref>. This makes sense from an economic standpoint, as attracting a new generation of wealthier gamers that actually play for fun is imperative for sustaining the current game economy on the long run, with a healthy influx of new capital to pay for the play-to-earners who stick around only if the game is more profitable than the other games on the market. If the possibility of earning should remain, it could represent a powerful marketing driver for the game as people might value playing and earning higher than just playing, which happens with traditional games.		To make the discussion of game tokenomics objective, avoiding qualitative judgements on how "fun" something is is necessary. Fun, in the case of P2E games is relative to the approach you take to playing the games. If one plays the game to put food on the table, fun is not of primary importance anyways, and yet P2E games describe their long-term aims as creating a game that is actually fun<ref>[https://whitepaper.axieinfinity.com/gameplay/axie-population-and-long-term-sustainability ("Axie Infinity Whitepaper", 2021)]</ref>. This makes sense from an economic standpoint, as attracting a new generation of wealthier gamers that actually play for fun is imperative for sustaining the current game economy on the long run, with a healthy influx of new capital to pay for the play-to-earners who stick around only if the game is more profitable than the other games on the market. If the possibility of earning should remain, it could represent a powerful marketing driver for the game as people might value playing and earning higher than just playing, which happens with traditional games.

	Having said that, there will be no further discussion on the fun aspect, as it's not measurable and comparable across games.		Having said that, there will be no further discussion on the fun aspect, as it's not measurable and comparable across games.<span id="header-n79"></span>
			===Critical Issues Under Discussion===
	<span id="header-n79"></span>
	===~~'''~~Critical Issues Under Discussion~~'''~~===

	It is a lot more informative to illustrate the key issues surrounding P2E tokenomics with concrete examples from a game like Axie. The design of its economy displays some of the common problems with tokenomics and its well-documented history and technical documentation makes it easy to accurately analyze. Topics are also approached in a more general sense and potential solutions are proposed, despite not having a practical example implemented in Axie.<span id="header-n81"></span>		It is a lot more informative to illustrate the key issues surrounding P2E tokenomics with concrete examples from a game like Axie. The design of its economy displays some of the common problems with tokenomics and its well-documented history and technical documentation makes it easy to accurately analyze. Topics are also approached in a more general sense and potential solutions are proposed, despite not having a practical example implemented in Axie.<span id="header-n81"></span>

Tebaldi: /* Axie Tokenomics */

2022-08-20T15:58:43Z

Axie Tokenomics

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Tebaldi at 15:24, 20 August 2022

2022-08-20T15:24:01Z

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Tebaldi at 14:35, 20 August 2022

2022-08-20T14:35:36Z

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Tebaldi at 14:34, 20 August 2022

2022-08-20T14:34:44Z

← Older revision		Revision as of 14:34, 20 August 2022
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	Play2Earn		written by Dan Dubkovic

			== Introduction ==
			Play2Earn games have taken the cryptocurrency scene by storm in 2021, with the most notorious title, Axie Infinity<ref>https://axieinfinity.com/</ref>, reaching a token market capitalization close to 10B USD<ref>https://coinmarketcap.com/currencies/axie-infinity/</ref> at peak, compared to 31M USD at the start of the year. These games attracted a lot of attention from investors and speculators, as well as traditional gamers. The ownership over these games is distributed among many holders of governance tokens, but an important role is also played by the utility tokens used inside such games to interact with the game’s internal economy. What is interesting here is how such games attempt to attract capital to sustain such high valuations, while still maintaining a resemblance of a video game we know from the pre-crypto days.

			This is what the word “tokenomics” refers to, i.e. the inflationary and deflationary pressures of various game design features, which all play a role in the amount of circulating supply hitting the market and thus, holding outside demand constant, heavily impacting the token prices. An additional level of complexity is introduced to tokenomics with Non-Fungible Tokens (NFT hereafter) traded on marketplaces, as they play a fundamental role inside the game. The term Play2Earn (P2E hereafter) now gets attached to almost every new game launched in the crypto space. It seems like wishful thinking that someone could earn a salary just by playing a video game and it’s obvious that all these games and their economic models are highly experimental[4].

			At its most basic, P2E means a player playing the game to obtain tokens with some value inside the game that they own and have total control over, and that they can sell on the market. Where that value comes from, varies from game to game, but these tokens can generally be turned into NFTs, which are sold, or they are required to play the game in the first place, creating a feedback loop that is fed by new players coming into the game’s ecosystem. This might sound like a pyramid scheme and so far, games are still struggling to make their economies actually sustainable, as will be noticeable later in this analysis.

Tebaldi: Created page with "Play2Earn"

2022-08-20T14:14:06Z

Created page with "Play2Earn"

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Play2Earn