[Insight] Road to P2O: Tokenomics Fundamentals — 3. DTCS

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XPLA Ecosystem

5 min readMar 15, 2024

Designing a Web3 game economy is challenging due to the constant fluctuation of token market values, which can cause the value of in-game items and activities to change, leading to confusion and chaos. Factors such as economic conditions or significant industry movements can influence token prices, making it difficult for gamers to strategize effectively. This complexity is one of the main reasons traditional Web2 gamers are hesitant to embrace Web3 implementation in their favorite games.

In previous articles on tokenomics fundamentals, we discussed mechanisms to safeguard the game economy, how to distinguish between authentic gamers and extractors, and how to properly reward players. In this final article, we’ll outline the final piece in establishing and nurturing sustainable tokenomics that foster a virtuous cycle.

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

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

Maintaining the value when prices sway

Cryptocurrency operates 24/7 with real-time pricing on various trading and exchange platforms. The instantly calculable value fluctuations directly affect the game economy, as tokens can be exchanged for in-game items. The combination of value fluctuations and liquidity means that arbitrage opportunities are identified instantly, making the project potentially vulnerable.

The Dynamic Token Conversion System (DTCS) was created to prevent extreme arbitrage attempts and protect the game economy from the constant influx of tokens tied to game assets. It achieves this by dynamically adjusting the conversion rate when there’s an inflow of tokens into the game. When the token price increases or decreases, the cost for players to buy tokens for exchanging into game items increases or decreases. In such cases, DTCS modifies the token-to-game item conversion ratio to ensure fair treatment for both Web3 and non-Web3 users.

DTCS is crucial in encouraging more users to use the Web3 route for generating game assets and retaining ownership. Token inflow implies that core supporters are purchasing tokens for use in the game, enhancing their gaming experience through buying game items. By adjusting the token-to-game item conversion ratio alongside token price fluctuations, we can deter arbitrageurs when the game economy adjusts with the fluctuating token price. This way, core players who wish to further invest in games through tokens won’t experience any disadvantages.

When using DTCS, it’s notable that adjusting the game item-to-token ratio in response to token price fluctuations isn’t necessary. This is because it’s related more to the financial gain that players can achieve when cashing out, rather than the gameplay itself. There’s no fixed formula for assets and values exiting the game. It’s up to the game designers to decide what is best for the long-term sustainability for the game economy.

Dynamic-Token-Conversion-System on XPLA GAMES

Here are some examples of how DTCS is implemented in games within the XPLA ecosystem.

DTCS in Summoners’ War: Chronicles

In Summoners’ War: Chronicles, Mileage is a crucial currency used to purchase premium items in the Mileage Shop. Players can convert their purchased $XPLA into Xlium, and then into Mileage in the P2O Forum. During this process, the conversion rate from $XPLA to Xlium changes dynamically with the $XPLA token price. However, the conversion ratio from Xlium to $XPLA remains fixed, regardless of the token price.

DCTS in Mini Game Party

In Mini Game Party, the Gold Medal is an essential currency for buying rare items in the Medal Shop. Players can exchange their purchased $XPLA for Sun Chip in the XPLA GAMES Wallet, and then convert Sun Chip into Gold Medal in the game. The conversion rate from $XPLA to Sun Chip also adjusts dynamically with the $XPLA token price. Similar to Summoners’ War: Chronicles, the conversion ratio from Sun Chip to $XPLA in Mini Game Party is constant, regardless of the token price.

Creating a Win-win product

In the emerging field of Web3 gaming, we’re dedicated to developing a system that serves all builders in our ecosystem. The XPLA team maintains regular communication with these builders for refinement. Our goal is to provide comprehensive support in designing, developing, executing, marketing, monitoring, and improving projects within our ecosystem. We accomplish this through experimentation, celebrating small wins, and continuously learning from both our successes and failures.

Our ambition goes beyond a common vision — we aim for precise execution alignment with our builders. We’re committed to strategizing innovative ways to design Web3 games that amplify the gaming experience for both players and builders.

We imagine a world where traditional Web2 gamers, who primarily engage with non-Web3 games, start appreciating the unique features Web3 games offer. In this envisioned world, gamers actively exchange digital assets acquired across various platforms, and builders are motivated to further develop and nurture their games. As a result, Web3 games will thrive and become mainstream. Until then, we’re dedicated to fostering this industry alongside the builders to discover the ideal formula.

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.