A Data-Driven and Principled Approach to Designing the Tokenomics of a New Blockchain-Based Game

--- tags: 0. Public View --- # A Data-Driven and Principled Approach to Designing the Tokenomics of a New Blockchain-Based Game Alexis Direr, René Doursat, Benoît Laurent & Dan Biton *Starchain Gazer, Paris, France* **version 0.8** ## Abstract With the advent of Bitcoin and the spectacular rise of crypto-assets, blockchain technology is now rapidly expanding to the video gaming industry. This evolution is the result of two converging trends, the "gamification of DeFi" (started by PancakeSwap) and the "financialization of games" (dating back to Monopoly). A new generation of blockchain-based games feature colorful characters and worlds that make both financial transactions more fun and the gameplay more stimulating. Active in-game trading of items and assets, an activity once reserved to expert players, is now commonplace in the open Web3 universe among casual or "midcore" types. On the other hand, compared to DeFi protocols, which focus on a handful of financial services, modelling the whole economy of a Web3 game is a daunting task. In particular, its token economics or "tokenomics" involves all the on-chain mechanisms of the circulation of game tokens, starting with their distribution among stakeholders (team, investors, and users) inscribed in smart contracts. To best prepare for this challenge, we conducted an extended analysis of established DeFi protocols (Part 1), and current or announced blockchain games (Part 2). This paper reports on our findings and how they guide the economic design of our own project, "Time Breachers" (Part 3). This new game consists of exploring, fighting, and managing resources in a complex “uchronic” multiverse composed of multiple versions of planet Earth. Given the richness of details offered by the game environment, one key decision was to rely on a *single-token economy*, where the protocol's "share token" also plays the role of "in-game currency". In part motivated by a survey that we conducted among dozens of "scholars" (full-time gamers), who strongly came out against juggling with two tokens, we also concluded that a unique token was a better choice to ensure an enjoyable, financially viable experience for the users, and a profitable venture for the token holders. --- ## Table of Contents - **1.Tokenomics of DeFi Protocols** https://hackmd.io/@starchain-tokenomics/starchain_p1 - **2.Tokenomics of Games** https://hackmd.io/@starchain-tokenomics/starchain_p2 - **3.Tokenomics of Starchain Gazer** https://hackmd.io/@starchain-tokenomics/starchain_p3 - **Appendix A: Modelling a Single- or Dual-Token Game Economy** https://hackmd.io/@starchain-tokenomics/starchain_a1 - **Appendix B: Tokenomics Compared** https://hackmd.io/@starchain-tokenomics/starchain_a2 - **Appendix D: DeFi Protocols** -- Appendix DS: SushiSwap https://hackmd.io/@starchain-tokenomics/starchain_a3  - **Appendix G: Web3 Games** -- Appendix GI: Illuvium https://hackmd.io/@starchain-tokenomics/starchain_a7 -- Appendix GS: Star Atlas https://hackmd.io/@starchain-tokenomics/chain_a8 -- Appendix GX: Axie https://hackmd.io/@starchain-tokenomics/starchain_a9  --- ## Bibliography Anatha (2021). Understanding Token Economics (Tokenomics 101), https://anatha.io/blog/understanding-token-economics-tokenomics-101 Asher, M. & Smith, L. (2021). CREAM (Cream Finance), CEL (Celsius), COMP (Compound), and AAVE (Aave), https://consensys.net/blog/cryptoeconomic-research/tokenomics-research-october-2021 Baeriswyl, J. (2021). Understanding P2E 2.0: Axie Infinity Deep Dive, https://outlierventures.io/research/understanding-p2e-2-0-axie-infinity-deep-dive Bright Black (2019). How to Measure F2P Game Retention, http://brightblack.co/blog/f2p-game-retention Chung, T. (2022). Sinks & Faucets: Lessons on Designing Effective Virtual Game Economies, https://medium.com/1kxnetwork/sinks-faucets-lessons-on-designing-effective-virtual-game-economies-c8daf6b88d05 deltaDNA (2015) Retention, https://docs.deltadna.com/reference/measure/retention-2/ Eliason, N. (2021). Tokenomics 101: The Basics of Evaluating Cryptocurrencies, https://every.to/almanack/tokenomics-101 Emiri (2022). GameFi Player Retention, https://defining.substack.com/p/gamefi-player-retention Frenchman, M. (2021). A Guide to LTV – Part 1: Why It’s Important and How to Model It, https://departmentofplay.net/a-guide-to-ltv-part-1-why-its-important-and-how-to-model-it John, J. (2021). The Economics Behind Axie Infinity: Breaking down Axie's internal token economy, https://www.decentralised.co/p/the-economics-behind-axie-infinity Kroeger, A. (2021). Liquidity miners: hands of 💎 or 🧻?, https://alexkroeger.mirror.xyz/HoTLzeiTUBn7c-uZoVcZ6PO9AlGrVQI_4WYDSeJFTiA Kydo & Aiko (2022). BLOG: Financial Infrastructures for Crypto Games, https://kydo.substack.com/p/blog-financial-infrastructures-for Liu et al. (2020). Micro-and macro-level churn analysis of large-scale mobile games, https://arxiv.org/pdf/1901.06247 Luton W. (2018). The Principles of Building A Game Economy, https://departmentofplay.net/the-principles-of-building-a-game-economy ‘pet3rpan’, P. (2021). Play to earn economies as base layer protocols for games, https://medium.com/1kxnetwork/play-to-earn-economies-as-base-layer-protocols-for-games-87085997b6fd The Block Research (2021). Blockchain-Based Gaming: A Primer — Brought to you by Forte, https://www.theblockcrypto.com/post/120409/blockchain-based-gaming-a-primer-brought-to-you-by-forte Walkush, D. (2022). Recent Trends in Token Distribution, https://variant.fund/writing/recent-trends-in-token-distribution