The return of web3 games: How can I build tokenomics? Modeling considerations for developers (Part III)
In Part I, we discussed who plays web3 games; in Part II, we then explored what attracts players to games and what web3 adds to gameplay as it spices things up. In this continuation of the series, I dive into how non-crypto-native game developers can build a tokenomics model from the ground up to create sustainable incentives for players participating in the game.
While there are many variants and purposes of tokenomics modeling, one key question web3 games often provoke is: “How will token price vary over time?” A nuanced understanding of token price movements will help teams better assess in-game economy health, and guide game development. This is necessary because an additional dimension of complexity emerges with web3 games, which previously did not exist within closed environments that web2 games built. In non-crypto games, developers enjoy plenty of latitude — often, there is no limit to the supply of tokens, token emissions can be rolled out at short notice (e.g. for a festive season or campaign), and outcomes are somewhat controllable (issued too many tokens? Simply raise the prices for in-game items).
The open-ended nature of web3 games has set a new precedent for game developers — tokenomics can no longer be an afterthought, and adjusting tokenomics “mid-flight”, after being launched, is frowned upon. Setting a limited supply of tokens and publicly communicating token emission schedules are now table stakes for any web3 game.
As such, I will lay out a framework on how game developers can build a tokenomics model from the ground up, outlining considerations that lead to clarity on token prices. As with all models, projections and forecasts, reality will almost always differ from the spreadsheet numbers. But this is no excuse to avoid planning. A well thought model can pre-empt and circumvent many issues that have plagued “Gen 1” web3 games (e.g. is our staking APY too high / low? Are there sufficient ‘token sinks’ to regulate consumption with emission?). With a well-planned tokenomics model, game developers can look forward to better engaging and rewarding their player communities over the long-run.