EPNs — Part 5: EPNs as Game Networks

In Part 1 of this series, we introduced the concept of the Economic Protocol Network (EPN), networks that are built on blockchain technology. In Part 2, we looked at how EPNs encourage participation by distributing network value. In Part 3, we explored an example of how EPNs operate in the wild. In Part 4, we shared a framework that can help developers design EPNs effectively and sustainably. And finally, in this article, we explore how they might be deployed in games.

Games are difficult to launch and harder to sustain, and especially in today’s competitive games industry. Players have hundreds of thousands of game options and more come to market every day; as such, positive network effects are essential for a game’s success.

The challenges faced by games are fairly straightforward:

1. Acquiring a critical mass of users, to ensure that players can readily find people to play with and that a community develops around the game;
2. Keeping individual users engaged over time, which extends the period of time that developers have for monetization and maintains the vibrancy of the game community;
3. Sustaining game momentum by preserving a viable balance of new and veteran players with content and protocols that are appealing to both

Network effects help games to grow rapidly for two primary reasons:

• Non-Zero Sum: As the number of network participants grows, the value to each participant increases, and so does the total value of the network. In games that are well positioned for positive network effects, players generally don’t need to fight over or divide fixed resources; instead, the whole pie grows faster than each participant’s slice shrinks, due in part to the contributions of each participant in the network.
• Diminishing Returns vs. Increasing Returns: Networks with strong connections among participants tend to extend the period of increasing incremental returns — keeping the flywheel spinning longer. Everything eventually reaches a point of diminishing returns, but the strongest networks delay this tremendously.

How are EPNs solutions to the challenges faced by game networks?

Economic Protocol Networks enhance the ability for games to rapidly “grow the pie,” by directly incentivizing players to contribute to the games themselves. When in-game challenges reward players with tokens that have unique asset value, players are more likely to pursue them, boosting activity and engagement among players; even truer if players have the ability to craft unique experiences or create unique tokens themselves, becoming a source of fresh original content for their games.

EPNs also forge stronger connections among players. Trading, buying and selling unique tokens turns games into full-fledged economies, tying players together by bonds of commerce and collaboration as well as simply shared entertainment. Ultimately, the ability to earn income from games can turn play into a profession — pushing the cliff of diminishing returns out indefinitely for players who are making a living from their game activity.

But EPNs also directly address the three challenges games face. By providing incentives to players out of the gate, EPNs can draw early adopters in rapidly, overcoming the “cold start problem.” By giving players a direct stake in their game, EPNs significantly boost their loyalty and align the interests of players and developers. And by giving veteran players a reason to stay involved in games that they’ve mastered, by granting them enhanced ability to direct the game’s direction and development, and by giving them economic incentives to keep playing.

EPNs in Gaming

Let’s take a look at how EPNs might operate in a game environment — using the hypothetical example we raised of an intrepid new startup, Fauxblox. Fauxblox is a sandbox game, in which players can make interactive objects in a three-dimensional virtual world, and charge other players to purchase or use them. The currency of Fauxblox is an ERC-20 token called $FAUX, which can be purchased using fiat money and converted back into fiat as well. It costs $FAUX to make objects, and players can charge other players $FAUX to purchase or use the objects they make. But $FAUX also operates as a governance token — holders of $FAUX help determine the development direction of the game, by voting with their tokens.

Let’s consider the network effects of the game — first order and second order, “same side” and “cross side” — and then look at how the $FAUX token operates to amplify positive network effects.

The consequence of adding economic incentive to the Fauxblox system via $FAUX is to generally encourage more activity, because that activity has real-world benefits. As activity grows, so does the community economy itself, with other kinds of commerce, like secondary-market trading of objects, or performing services in exchange for $FAUX (for example, veteran Makers teaching new ones the tools of the trade), emerging as a result. Ultimately, $FAUX turns object-making in Fauxblox into a potential career — or a potential business.

But wait! $FAUX is also a governance token, carrying with it not just economic value but voice in the system and how it is developed and managed. Let’s see how these fit the principles we outlined above:

EPNs blur the line between game life and real life, turning the time, effort and money that players put into games from a cost into an investment and converting game users into economic communities. One collateral consequence of EPNs is that for the first time in history, we have the opportunity to model and experiment with economies in a controlled setting, giving us a unique way to see what combinations of incentives, regulation, skills and resources are optimal for economic growth and sustainability. It’s not hyperbole to say that the lessons obtained from game economies — and the very protocols and platforms used in game EPNs — could be scaled for and implemented in real-world economies. Which means that EPNs won’t just enable “play to earn”; they may also enable play to learn.

That’s it for this series. If you’d like to explore our first series, on Networks and Network Effects, click here to visit the first article, on the history of networks. Keep an eye out for our next set of articles, on Assets Ownership in Games.

Interested in contributing to our Community Economics series? We’d love to hear from you. Comment below or email us here at cec@forte.io.

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