Gaming Guilds, Part 3: Guilds as Min-Maxers; The Future

In the previous installment in this series, I left off on a note about raising the money needed to fund a guild.

Well, this article isn’t about funding a guild!

Part 3 will touch on the concept of guilds as massive min-maxers, and my vision of how the business model will evolve in the future. This will crystallize some of the themes from the previous pieces in this series and my article for the Kapital DAO on guilds and games in a post-ponzinomics web3.

Part 2 Revisited: Fundamental Flaws Resulting from P2E

In Part 2 of this series which focused on Quantifying the Business Model, we built up a bare-bones business model of a guild whose core operations revolved around playing Axie Infinity. There, I outlined “the general gaming guild business model today” which consisted of:

1. Gather a treasury of liquid capital.
2. Invest liquid capital into gaming NFTs.
3. Gather a community of gamers and people interested in web3 gaming.
4. Distribute scholarships to your community using your gaming NFTs.
5. Split income earned through your scholarships with your scholars.

The key strategy that comes out of this is to recruit as many scholars as possible to maximize the guild’s cash flow.

Fundamental Assumptions of P2E

This relies on a consistent set of assumptions, namely:

1. Each new scholar represents a dependable source of cash flow.
2. There is no minimum skill level required to earn significant amounts–that is, you don’t need to invest a significant amount of time in training a newbie.
3. Scholars are externally motivated for cash rather than internally motivated for fun.

Something that needs to be held true for the game, however, for these assumptions to hold true, is:

Demand for the game is ever-growing.

However… if you have to assume demand for the game is ever-growing, that’s trusting in ponzi-like dynamics.

Running it back, if you are operating in a system whose goal is to encourage ponzi-like dynamics, and those ponzi-like dynamics result in an easy opportunity to earn money, a business model naturally forms to take advantage of this opportunity.

Game Design and Imbalances Inform Organizational Design

And what was the seminal P2E game that has repeatedly been lambasted for its ponzi-like nature that defined gaming guilds in 2021–2022? Axie Infinity.

Here is the axiom I believe will drive the organizational design of guilds: They will design themselves to optimally benefit from the structure of a game.

Put another way: guilds adopted their current business models due to the design of P2E games.

I’m not entirely blaming games, however, as I agree there are some guilds that take this to the extreme, effectively grinding players down in cold so-called “communities” to extract as much value as possible. However, I believe that by adopting P2E structures, games created the opening for such extractive “communities” to exist.

This means my take is games can’t blame players for taking advantage of what are effectively bad balancing decisions, and that it is a prerogative of games to design effective tokenomics systems. After all, gamers are competitive minmaxers.

Minmaxing

What is minmaxing? For the uninitiated, minmaxing, sometimes called powergaming, refers to the practice of extremely optimizing a character to exploit imbalances in a game and progress extremely quickly. TVTropes has a great article on this.

This can be seen at different scales. Here are a couple examples to illustrate:

• At the character level, Kassadin in League of Legends: in season 3, he had a ridiculous ban rate of 99.55%. His silence mechanic and kit utility made him an absolute menace to play against, and he was an insta-ban in competitive play until he was reworked.
• At the mechanic level, strafe jumping / bunny hopping in Quake: the Quake Wiki has a great article, but to summarize this mechanic is an unintentional one that enables players to increase their movement speed.
• At the meta / team level, the various Overwatch metas: the meta around team compositions has changed as Blizzard has released new patches, logged in extreme detail in this summary created by nweatherservice. If you didn’t play these optimal team compositions, you were much less likely to win.

So let’s define a broad goal of minmaxing as maximizing access to a limited resource. Minmaxing has an extreme impact on the competitive end, as competitive scenes are focused on gaining even the slightest edge over another team. The limited resource in competition are the prizes and ranks on the competitive ladder or some related titles and benefits that only go to the winner / top few.

And the results of minmaxing — highlighting completely broken or unbalanced characters, identifying harmful or beneficial game trends, or pushing new angles of play — are beneficial to the game because it shows to them ways they can improve and evolve.

Minmaxing is an expression of the internally consistent laws of the game. It’s not something to which game developers say “please don’t do this”, as it’s part of devs’ prerogative in creating a great play experience to address these issues, especially since it’s their game and their balancing rules they’ve developed. Indeed, the Quake Wiki page shares that John Carmack, creator of Quake, expressed his dismay at the strafe jumping / bunny hopping mechanic that “goes against the intent of the games” — a demonstrable example of a game’s developer actively disliking an emergent mechanic that has become a staple in the series.

Tokenomics as Game Balance

What other systems do web3 game developers create? Tokenomics.

In the various papers and decks that web3 game developers release, there’s usually a section on how tokens will be used and how players will earn. It’s an integrated part of the game and a part of the play experience that players are aware of, and so it’s not something that game developers should throw in lightly or consider as an afterthought. The only difference between tokenomics and other in-game mechanics — and an extremely important difference — is the fact that it’s much harder to fix tokenomics on-the-fly and after launch without a careful plan.

Going back to the broad goal of minmaxing — maximizing access to a limited resource — it is only natural that players who minmax will be attracted to games that reward “gaming the system,” especially when success is tied to real-life financial rewards. And then, within those games that reward gaming the system, minmaxers will be competing against each other to find ways to get even more of an edge. I’d argue that game theory leads to the most competitive minmaxers exploiting every opportunity to maximize their access to these rewards.

I’ll stop here before I go on a tangent on game theory.

So how do we fix it? Where do we go from here?

Games of the Future

Let’s take a moment to rest here and roll up what we’ve discussed:

1. Game developers design tokenomics, and because tokenomics have a significant impact on gameplay they need to carefully think through and balance the system.
2. Gamers, especially competitive players, are minmaxers. They’ll take advantage of whatever mechanics they can to maximize gains.
3. Given the above two points, the rise of guilds whose business models are hyperspecialized to extract value from games such as Axie Infinity is inevitable.

How do we short circuit this? Let’s assume that telling gamers “don’t minmax” doesn’t work and is like herding cats. The best way to solve this issue, then, is to design games that are long-term focused and are built with sound tokenomics.

Let’s call back to the earlier assumptions outlined in the “Fundamental Assumptions About P2E” section in Part 3:

1. Each new scholar represents a dependable source of cash flow.
2. There is no minimum skill level required to earn significant amounts–that is, you don’t need to invest a significant amount of time in training a newbie.
3. Scholars are externally motivated for cash rather than internally motivated for fun.

Sound tokenomics helps eliminate point 1 — without a ponzinomics-based system, adding a random scholar doesn’t mean a consistent stream of cash.

Games can also help address point 1 and point 2 by focusing on some sort of skill-based gameplay, especially at the upper echelons of play. Some examples of how skill could be expressed are technical skill in play, creative skills in design and creation, and strategic skills in execution and broader decisionmaking. You’ll note that this has broader implications beyond games, as the creative angle applies really well to metaverses and UGC platforms.

Why skill-based gameplay? Skill-based games introduce levels of risk-reward as a spectrum–you can get low-risk, low-reward consistent earnings or high-risk, high-reward bets from skilled play. Sam Peurifoy has written a great piece on this dynamic of “Lumberjacks” vs “Gladiators” respectively here, where Lumberjacks represent players consistently grinding for low-risk, low-reward earnings and Gladiators are those taking on high-risk high-reward activities. I’d argue that ponzi-esque systems such as Axie where assumptions 1 and 2 are true represent a low-risk high-reward system with no incentive to go anywhere else.

See the below image for a visual representation of this situation: there’s a push / pull between Lumberjacks and Gladiators that represent two ends of a spectrum with different value propositions. In a situation like Axie, however, where the game generally sits in a low-risk high-reward territory there is no incentive for players to do anything else because going any other direction represents a net loss.

And finally, to address point 3… I’m looking forward to games that are actually fun. That way players will actually play because they enjoy it rather than just grinding for cash, and (ideally) the bulk of the playerbase will be people who enjoy what they do. I’d argue that this last thing is the most important in creating a sustainable game that truly leverages this risk-reward spectrum outlined above and takes advantage of skill-based gameplay to its fullest.

Guilds of the Future

How will the evolution of games and experiences in web3 lend to guilds and web3 organizations?

Here’s my breakdown of some of the categories and what they’ll look like:

High-Tier Competitive

• These organizations are entirely focused on top-tier competitive play. Usually they’ll be smaller but have focuses on getting the best players for a specific scope of games. Think many current web2 esports teams, but applied to web3 games. They maximize on the high-risk high-reward and underpin competitive scenes.

Low-Risk Collectors / Aggregators

• These organizations are almost the opposite of high-tier competitive orgs. They focus on diversifying into low-risk low-reward plays to accumulate dependable rewards, and will be essential to stable economies. Think of them as the yield farmers of the future.

Low-Tier Competitive / Social Play

• These organizations will be lower-tier competitors or people who play for social fun. They run the gamut of actual competitive spirit here, from the most competitive and serious high school teams with players looking to break into the high-tier competitive teams to relaxed groups of friends and like-minded communities having fun in the metaverse. Either way, there’s team spirit and the majority of the players at this level will fill the ranks of “average” players in web3 games.

Comprehensive Esports

• I believe these organizations will be the “mega-teams” where talent discovery and training will be greatly enabled by web3. They will be massive organizations that are essentially a combination of high-tier competitive orgs and lower-tier competitive / social play orgs. The concept is to extend the funnel of competitive recruiting and pressure top competitive players to stay sharp by creating a more fluid organization where rising stars can be quickly discovered in the organization and trained up to competitive ranks using on-chain identities and real-time gaming data.
• Web2 gaming organizations such as FaZe Clan are already pursuing versions of this, such as through the FaZe1 Recruitment Challenge. We also see examples of this in traditional sports–for example, Lionel Messi was discovered during a training session with the FC Barcelona youth team.

Creative

• These are going to be the great design houses of the future, and the places where the next best digital creators will be found and reside. Like the guilds of the past, they will essentially be academies that train the creators of the future in particular crafts, and may specialize in a specific art (e.g., NFT shoes across games) or a specific game (e.g., cosmetics in a web3 shooter).

Coordinator

• These are a bit of a unique organization, and really a unique offshoot / blend of the low-risk collectors / aggregators, high-tier competitive, and creative orgs. They essentially vertically integrate all types of players to create in games a pipeline of gathering resources, crafting great items, and using them in high-tier play. Another important application of these types of organizations is in resource coordination and empire-building games — think web3 versions of EVE Online, Diplomacy, or even Farmville.

These are definitely early thoughts in progress and I’m sure I’ll start to see my categorizations evolve and change, especially as web3 gaming progresses and new exciting games come out and essential infrastructure is established. But it’s worth thinking about how the roles of organizations in web3 gaming will develop and specialize as the space matures. It’s an exciting time to be in web3 gaming!

For the next part, we’ll hearken back to Part 2 and discuss ways to quantify future guild business models!