[Insight] Road to P2O: Tokenomics Fundamentals — 2. DRAS

Selecting the right users for rewards and focusing on the right customers to serve enhances the gaming experience and effectively manages the game economy. In the first article of the series, “Road to P2O: Tokenomics Fundamentals — 1.GGR”, we focused on selecting players for key rewards distribution.

The next consideration once the right users for reward distribution have been identified is determining ‘how much’ to reward. Offering rewards that are too low can disinterest gamers, while rewards that are too high could be unsustainable. The ideal method, formula, or rationale to establish a suitable reward amount can vary based on the game quality, player count, game mechanism etc. However, we have identified a universal rule that can guide game economy designers in establishing a baseline, which is the focus of this article.

This is the second article in a three-part series, where we detail the three fundamental rules for a sustainable token economy in Web3 gaming:

1. Identify authentic gamers among extractors, reward them upon contribution: Gameplay-Gated-Rewards (GGR)
2. Adjust the quantity of rewards distributed as the game scales: Dynamic-Reward-Allocation-System (DRAS)
3. Align the value of in-game items to be converted from tokens as the token price fluctuates: Dynamic-Token-Conversion-System (DTCS)

Maintaining a Healthy Reward Mechanism

Web3 games often encounter a “cold-start” problem, necessitating substantial pre-launch or launch rewards to draw in players quickly. Many Web3 games do this by offering pre-NFT sales, whitelists, or airdrops to reward early participants. While it may gather initial new players, sustaining player interest can be challenging if the initial rewards are set huge and the reward levels aren’t maintained. Many games experience a significant drop in users or new user engagement when the marketed ‘earning’ component diminishes.

While it may be tempting to heavily reward initial users as thanks for their early support, a balanced and sustainable reward distribution system should be established from the start of the game’s launch. Although initial marketing efforts often mirror traditional Web2 game promotions, marketing budgets cannot indefinitely fund rewards. Ideally, the total reward distribution should have a cap and a replenishing formula. Distributing rewards based on the time and effort gamers invest into the game encourages and highlights healthy gameplay aspects.

The Dynamic Reward Allocation System (DRAS) promotes sustainable reward practices by closely controlling and monitoring two aspects: 1. The distribution of rewards, and 2. The total size of the reward pool. By establishing fair and logical distribution rules for rewards, the game rewards users based on their contribution, thereby adding an extra layer of enjoyment to the game. By managing the total volume of rewards at a sustainable level, the game becomes self-sufficient, eliminating the need for substantial marketing volume that directly airdrops to users without any contribution.

Dynamic-Reward-Allocation-System in practice

Examples of applying DRAS rule into the reward distribution can vary based on the type of the game or the mechanism of the game. Start by rewarding participation in beneficial in-game activities, game revenue generated, and game performance. Encourage longer playtimes and more frequent logins by offering rewards for collecting randomly dropped goods or completing daily quests. High performance can be rewarded through victory in battles or high rankings on leaderboards. Once a few simple formulas are settled, the designers can employ more detailed conditions to correctly allocate the rewards.

Under DRAS, the reward pool shall be dynamically adjusted as the player base expands and the game further develops. As more users join and gameplay time extends, the reward pool grows. The DRAS-based distribution system encourages users to engage more in core gameplay. By motivating players to improve the gameplay, or generate more revenue for the game designers, the retention and longevity of the game could also be improved.

Dynamic-Reward-Allocation-System on XPLA GAMES

Below are some examples of how DRAS is implemented in the games of the XPLA ecosystem.

DRAS in Mini Game Party

• Mini Game Party is a hyper-casual game with straightforward gameplay. Users primarily acquire Gold Medals through Medal Battles. The higher a player’s rank, the more medals they earn. Because this system is rank-based, players are encouraged to play more rounds to achieve higher scores, thereby promoting extended playtime. This increased playtime naturally leads to more ad viewing, the revenue from which contributes to the reward pool. Consequently, the reward pool is always replenished, and players who rank highly due to extensive playtime are eligible for the most significant rewards.

DRAS in Ace: Fishing Crew

• Ace: Fishing Crew is a role-playing fishing game that allows you to discover various fishing spots and upgrade your gear. The progression of in-game items leading to $XPLA is as follows: Shards, Pamos Points, Sea Medals, Coral Points, $CTXT (a bridge token), then to $XPLA. The total amount of Shards available for distribution is recalculated periodically, based on the size of the reward pool, which is tied to the game’s revenue. The finite supply of Shards means that if one player acquires Shards, it decreases the chance for others to do the same.
• Sea Medals can be earned through the Special Fishery in Expedition mode or by ranking in the top 10 in Competition mode. The Expedition mode is a real-time competition where players compete over a 5-day and then a 2-day period based on their fishing scores. Sea Medals are distributed when the 7-day competition rankings are determined. Another way to earn Sea Medals is through the Competition mode, a one-on-one match against other users in the fishing tournament. The combination of limited total rewards and different competition modes makes the rewards more competitive, incentivizing players to work harder while maintaining a balanced distribution of rewards.

Not too much, not too little

A game economy designed for 10,000 players may collapse if the player base increases tenfold overnight. Given the constant nature of digital content and its swift growth, it’s crucial to establish preventive measures in advance and monitor them carefully. Numerous games initially attracted significant attention but couldn’t maintain their services due to rapid or unexpected scaling. Thus, it is important to design a game economy prepared for scale, even if it doesn’t seem necessary at launch.

DRAS is our solution to the question, “how much should the game reward?”. It maintains the enticing ‘Play-to-earn’ concept while guiding players towards actions that game designers want them to perform. The three rules of tokenomics aim to create a beneficial cycle for both players and game designers without damaging the game. We hope this article provides insights for your game design journey, and we encourage you to share your experiences to foster learning and market development.

About XPLA

XPLA is a Tendermint-based Layer 1 blockchain that serves as a hub for digital media content. Based on the idea of ‘Explore and Play’, XPLA encompasses a wide range of digital content with a leading blockchain gaming infrastructure empowered by a sustainable ecosystem. As a universal content powerhouse, XPLA provides a sublime creative experience for all with its significant size game infrastructure.

With ‘Play to Own’ values at its core, XPLA fosters an environment where gamers’ ownership and efforts are respected for a sustainable blockchain gaming ecosystem. Having recently onboarded top-notch IPs such as The Walking Dead: All-Stars, Summoners War: Chronicles, MiniGame Party, and Ace Fishing: Crew, including the first cross-chain game, Idle Ninja Online, XPLA is not merely progressing, but propelling ahead as a pivotal, content-driven blockchain, exhibiting an impressive spectrum of services.

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