Game Tokens Part 2: Balancing
This is Part 2 of 3 in a series about Game Tokens. My goal is to define them, describe their utility, discuss how to balance them, and finally discuss what I’m calling the “Value Extraction Dilemma” we have with them.
Most of this comes from a Twitter thread but there’ll be some additional information as always.
“Game tokens are a novel underdeveloped solution in Web3 gaming to balance game economies. P2E ecosystems are not zero sum, but they do have limited value that needs to be managed”
The first step is understanding that we are essentially trying to balance supply and demand. We are going to use Axie Infinity in all the examples since it has the largest P2E economy and on the forefront of this issue with SLP.
The Supply Side
Using SLP as an example, when we look at the supply side we have a simple yet complex problem:
- Axies can generate unlimited SLP over their infinite lifetime
- Once AXS from the treasury flows back into the economy, the theoretical cap on Axies will be infinite
We have two variables that have infinite supply, SLP that Axies can generate over their lifetime and the number of Axies that can exist. If BOTH of these variables aren’t controlled properly, SLP will continue to have high inflation in the long run. Patching/solving only one of these issues does nothing in the long term since the other variable is infinite.
Reducing SLP Emissions and adjusting SLP Breed costs are two levers that have been used in the past, but we need more. In Battles V3, limiting the time an Axie can earn SLP may be needed.
There are many different ways to do this via things like total lifetime energy before needing to be “recharged”, or if v3 is a deck building game, having a Standard vs Expanded gameplay where SLP rewards are granted only for Standard with new cards every season.
Some solutions could also attack both variables at the same time by limiting the SLP an Axie could earn, and the total number of Axies that can earn SLP.
There also needs to be less fear to adjust these variables. Especially during hyper or stagnate growth. Hyper growth is great, but in a P2E economy it needs to be accounted for. Increasing breed costs every week may have helped distribute the growth over a longer timespan till battles v3 in hindsight.
Liner models don’t make sense when you go exponential. Quicker reaction is needed in the Web3 space.
The Demand Side
Moving onto Demand, this is much simpler but something P2E games have less control over. This is where burn mechanics and general demand for Axies come into play.
There’s no shortage of SLP burn suggestions so not going to cover that.
The Demand for Axies is currently mostly tied to the price of SLP and the return a team can get you. The Lunar New Year event will provide the first alternative demand for Axies.
It will be interesting to see how many Axies in Total will be released for the LNY event and what impact it could have on breeding rates. Future release events where items that are purely esthetic are rewarded seems like a nice way to have a steady demand for Axies.
Beyond this, making Axies seasonal, adding more types, limiting gameplay to specific Axie #s, and more are all ways to continually drive continuous demand. Combined with Land gameplay or even other game modes(Axie developer program?) there are lots of options.
The Balancing Act
Lets get a visual to see where we are now and where we need to go.
This may look like a zero-sum game because we’re missing something…
All the other value in the ecosystem from the marketplace, AXS/RON, and more importantly community! The impact of these are huge and can go on the demand side to drive growth
Now that we have established some first principles on what Game Tokens are, their uses, and how to better balance them we have one last issue…
Part 3 will cover the Value Extraction Dilemma, more on this later
