Thread by @MetaPortal_DAO

1/ Following our research on value accrual in crypto gaming economies, we dug a bit deeper into @AxieInfinity and looked at value accrual to treasury vs. value extraction (or incentives paid) to players in SLP. Read on for some interesting lessons👇

metaportal.substack.com/p/the-purpose-…

2/ s/o to @SkyMavisHQ btw for posting a lot of data publicly and updating it weekly.

We looked at value accrual to the Treasury, net SLP mint rate and DAUs. We calculated value accrued vs extracted in $ terms, as a ratio and also on a per player basis.

3/ This chart assumes that 75% of all net SLP is sold. It shows that every week (barring one), starting from end of Sep 2021 and until today, more value has been taken out of the economy than accrued to the Treasury.

4/ Same chart but with 50% of net SLP sold. More balanced picture, with the situation deteriorating in the middle of December and not late September in the 75% scenario. We think between 50% and 75% of net SLP (post burns) is probably fair given the player base. Could be higher.

5/ If we convert the 50% scenario into a ratio, we get the following. A negative value would indicate a weekly net burn of SLP and anything between 0 and 1 indicates that a weekly net mint of SLP is below the weekly amount in ETH and AXS brought into the Treasury.

6/ This chart looks at value accrual - value extraction on a per player basis. Been negative since late September - early October, showing shift to a more extractive economy.

7/ Some thoughts on the data. We first look at this through the lens of your garden variety DeFi incentive campaign. In DeFi, projects give away governance tokens for liquidity or TVL, both of which tend to be mercenary.

8/ Axie gave away SLP, an inflationary token with no governance rights or a way to cause sell pressure on AXS. In return, they got ETH from marketplace activity, AXS from breeding fees and DAUs (600k even now).

9/ From 31 May 21 to 6 June 22, Axie Treasury accumulated ~$1.36bn. If 75% of all SLP was sold, they gave away $1.64bn in incentives, number is $1.1bn if 50% of net SLP is sold. They also managed to build 600K DAU on V1 and equally as many on Origin.

10/ Lessons 1

Soft currency incentives can be used to bootstrap Treasury. If monetisation = secondary volumes then denominating in a hard currency can used to accumulate assets even when soft currency📉

We should always strive to build a sustainable economy for players though

11/ Lesson 2

Teams should monitor these metrics - value accrual, value extraction, ratio of the two, net balance per player, etc. Should also have measures ready for when things start to deteriorate.

12/ Lesson 3

If soft currency is used as an incentive mechanism, teams shouldn’t allocate 30% (which is common) of the governance token to P2E incentives. Use tokens to reward high value contributors and skilled game play instead!

https://twitter.com/wvaeu/status/1534226871415902209?s=20&t=yAHj0dIJgmYMoS-xLMs2Qg

13/ If you enjoyed this thread please like and RT. If you are a crypto gaming studio and want to chat, shoot us a message. If you want to contribute, join the Discord.

https://twitter.com/MetaPortal_DAO/status/1536739950808408064