W3GS: Choosing the Right Incentives to Build a Robust Game Economy
At W3GS, Lisa JY Tan, Ken Bassig and Augie Ilag explored how collaboration between web3 game developers and players to establish effective incentives can ensure sustainable economic growth for games.
The web3 gaming landscape has evolved considerably since the last market cycle, with developers exploring different models to structure healthy tokenomics for their games. One game that many have been watching closely is the fast-growing community favorite, Pixels. Since launching its token following a spirited play-to-airdrop campaign, the game has been rolling out major updates integrated with token utility, including a new guild system developed with YGG.
It has been interesting to see games like Pixels working closely with their communities to enhance both user experience and players’ motivation to engage meaningfully in the game economy. As we enter a new cycle, how could these emerging models contribute to the long-term success of web3 games? What interesting possibilities do they offer for players and developers alike?
At the YGG Web3 Games Summit (W3GS) in November 2023, Ken Bassig of Magnus Capital, Lisa JY Tan of Economics Design, and Augie Ilag of CMT Digital explored the role of users in positively shaping game economies. The group discussed possibilities for tokenomics now that web3 is seeing a new iteration of game design, emphasizing the importance of measuring game economies and optimizing them for long-term success.
In the following excerpt, Ken acknowledges the rich array of player experiences found across various gaming genres, illustrating how a token would be leveraged differently depending on the type of player or game. Lisa and Augie then talk about boosting economic growth collaboratively and addressing mismanaged incentives rather than assigning blame to specific entities such as developers and users.
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W3GS: Putting a Price on Fun
Ken (10:17): I think there's going to be a new kind of game that will be coming out with how they'll be leveraging a token. It can be tiered systems and such, where casual players are different from competitive.
And even then, you have this whole suite of new kinds of games that will interact differently with tokens. A shooter will be different from an RPG game. A gambling game will be different from trading card games with NFTs. Each tier of these games and the way they interact with players is going to be on a whole new level, set with all kinds of experiences and verticals.
To our last question here on our topic: Who do you guys think is to blame for these games and how the economy has kind of crashed? Is it the users, the players? Is it the game designers themselves? Or is it just the general market, the economy?
Lisa (11:14): If you look at a poor economy, if you look at an economy that's not very stable from a country's perspective, do you blame the government? The economy? Who do you blame? At the end of the day, an economy is made up of many archetypes of people. It's not the government's fault specifically. It's not the users' fault specifically. It's all the mismanagement of incentives.
We talk a lot about pricing. And pricing is a reflection of what the economy is. All these economic policies we put in place are an incentive to get people to do certain things. If you want people to be spending more, then maybe don't increase interest rates, and you have money coming in, you have VCs investing in projects. And it creates a virtuous cycle.
In the same way, how do you scale that down to a game economy in its own right? And how do you create the right incentives to boost economic growth? I think this is a partnership between the game developers, the game creators, the game designers making it fun, as well as the users coming in, all working hand in hand to make a robust economy that creates value in the long run.
Augie (12:15): I agree. “Blame” is a very charged word, obviously. But I find it tough to fault the gamers, just because these players are obviously free-market agents. And I think if there's an opportunity for them to extract value, you can't blame them for doing so, necessarily. I do think it is, as Lisa mentioned, a collaboration effort between the various stakeholders and, frankly, game designers keeping their users in mind and trying to design for some of these anticipated behaviors.
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