About the Author: Derek Lau is the game director for Guild of Guardians, a mobile RPG where players turn their gaming passion into NFTs. The game is published by Immutable and developed by Stepico Games. He has a unique blend of experience in gaming, product, and startups, with long and sustained exposure to NFTs since 2017.
Play-to-earn gaming has emerged as one of the biggest trends in mobile gaming. While traditional games are no stranger to microtransactions, this new breed of titles implements blockchain technology and Non-Fungible Tokens (NFTs) with the intention of rewarding players for their time spent on the platform.
This is exciting and may even be revolutionary, but it isn’t quite so simple. If the gameplay, rewards, and overall economy aren’t finely balanced, many of these titles run the risk of simply being unsustainable long-term. Instead, careful checks need to be put in place to ensure that the ecosystem maintains a rich gamer experience while still providing tangible value.
The solutions aren’t all obvious, but they are essential if these types of titles are to become more desirable to a larger audience.
The value of NFTs
Video games have found ways to support in-game economies for years, all without the use of NFTs or a blockchain. Digital items are nothing new, and even the ability to trade these assets has been well established over the years. While this is true, current digital ecosystems still tend to serve the developers first, with the users essentially paying into closed systems.
NFTs stand to change this. Blockchain technology brings the possibility of tangible digital ownership over in-game items that users can leverage in a meaningful financial system. The trustless immutability of these digital assets means that gamers can not only transfer their earned or purchased items onto other platforms but also sell them on secondary markets. This completely levels the playing field — now, putting money into a game world isn’t just throwing money into a black hole.
All items in a blockchain-based system have explicit, verifiable scarcity. Each one is unique from every other one, and the underlying cryptographic signatures make it impossible to steal, forge, or otherwise game the system. This has never been possible for digital assets before, and it stands to completely transform how online gaming works.
NFTs should enhance gameplay, not detract from it
Providing users with verifiable digital ownership in return for their hard-earned cash seems like a no-brainer, but it’s only part of the equation. Simply adding money to a virtual world doesn’t automatically make for a great experience. The fact is, the game itself needs to come first. Users should be attracted by the core gameplay, only to then realize that owning their in-game assets makes the whole experience more rewarding.
There are already plenty of blockchain-based games available, and some show real promise. However, far too often, blockchain mechanics are simply grafted into a generic game formula, creating a product more enticing to profiteers than actual gamers. This is fundamentally unsustainable long-term. Fortunately, it doesn’t have to play out this way. There are ways for digital assets to be integrated into virtual worlds that enhance the overall experience rather than overpower it.
Balancing An In-Game Economy
One aspect that needs to be immediately considered for a digital economy to truly work is the initial distribution of tokens or assets. Developers need to be careful not to give early adopters a significant advantage over those who come later or risk alienating new users who feel they can never catch up.
Furthermore, it incentivizes first-moving profiteers to simply gobble up and hoard game assets in an effort to maximize returns without necessarily ever interacting with the game itself. This clearly also erodes the benefits to real users and creates an unbalanced economy.
Developers need to strike an equilibrium between securing their fundraising goals and ensuring that assets are distributed sustainably. One way this could be achieved is by limiting how powerful or valuable these items can become. Other limitations could be put in place, such as requiring rare and powerful items to be wielded by characters who have reached a sufficiently high level or resetting player progression at regular intervals.
Of course, it’s still important to incentivize early adopters with such assets. But Ideally, the vast majority of in-game items should be earned or crafted through the gameplay itself.
These are just a couple of ideas that could be utilized, but the take-home message is that there needs to be an organic balance that discourages users who would try to “mine” the game for money, and rewards those who engage with the core gameplay.
Preventing Early Sell-Offs
Tying in fairly neatly with the need to balance token distribution is the need to ensure against early and undue sell-offs. In other words, it’s essential not to let individual users hoard large amounts of assets only to subsequently dump them onto the market, leading to a crash in value.
To combat this, developers may consider building-in vesting periods that specify when — and sometimes how much — a holder can sell their assets after an initial token sale. The point is to ensure that the basic buying power and value locked into the digital economy cannot swing too wildly, potentially harming the experience for players with lesser means.
Of course, like everything else in these game worlds, the exact parameters would need to be fine-tuned. Put too many restrictions on the market, and you’ll simply push away potential investors, but too few, and you risk the “wild west” volatility we’re trying to avoid. This needs to be carefully dialed in through testing and adjusting; there is no simple, one-size-fits-all solution.
Utility Tokens Are Key
To keep the majority of speculators away, the bulk of digital items should stay truly practical in nature. Every asset should have practical useability, whether that be in the form of a special item, a governance vote, limited access to a specific area, or some other relevant value outside of simply trading.
For example, perhaps a certain token is needed for players to create in-game assets. Whenever the currency is spent in this fashion, it gets sent to a collective pool. This pool is then used to reward others who have staked their assets to support the ecosystem’s liquidity. This creates a value-driven feedback loop that benefits everyone involved, is sustainable, and incentivizes actual gameplay.
Globally, the video games industry is expected to reach a whopping $250 billion valuation by 2025. With the blockchain industry’s continued push into gaming, It’s only a matter of time before NFTs become a cornerstone of mainstream titles. But implementing the tech correctly isn’t going to be a simple task. Nevertheless, developers that strive to balance sustainability with engaging gameplay can cultivate a dedicated and passionate fanbase built on more than just the promise of turning a quick profit. And these are games that are most likely to stand the test of time.
We’d like to say a big thanks to Derek for sharing his experience and insights into play-to-earn games. Play-to-earn games are going to be huge and it’s great to see a clear and informative approach from play-to-earn pioneers like Derek.
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