Thread by @WuCarra

Intro to Virtual Economies in P2E Game Design

This is the 2nd thread in a series on play-to-earn (P2E) games, which will run every other day until my brain is empty. H/t @eddylazzarin @gabusch @tocelot @thejiho for contributing to my thinking here 🦾

If you are a Certified Economics Nut & former game dev like me, this is possibly the best time to be alive in history. P2E mechanics are where DeFi mechanics were in 2018 /19, which is to say that right now we have the opportunity to construct the macroeconomies of the future.

As a starting point, I’ve spent some time scoping out the design space for sustainable P2E games. In this thread, I'm going to cover how behavioral economics affects game design broadly, and in the next two, I'll cover real money reward functions & token design, respectively.

Crypto gaming is hard and different from DeFi because games are expected to be fun. If they’re not fun, you’re better off going to some DeFi protocol, which will probably net you the same profit in less time, because these protocols are designed to be maximally efficient.

You can probably indirectly measure how fun a given P2E game is to you by finding how much more time it takes you to earn some profit p in P2E vs DeFi given the same starting capital and then multiplying that delta by your hourly wage in the more efficient labor market (DeFi).

*Note that the framing above isn’t generalizable or closed form bc profit and fun are not independent variables. For dicussion purposes only!!

Crypto gaming is hard and different from TradGaming because it involves real money. The good news is that fun and money CAN be mixed. Closed economy games (and neuroeconomic researchers) have proven that you can exchange intrinsic rewards like fun for money.

The caveat is that fun is not as simple as winning. You can pay to win, but that's not the same as paying to have fun.

Players measure fun / reward on a scale of achievement & self-regard, and because incentives are deployed in social environments, paying to win doesn't constitute an achievement or elevate self-regard.

So what does contribute to self-regard / achievement?

Behavioral economists theorize that there are 4 drivers that form the underlying architecture of human motivation: The drive to acquire ($, NFTs), bond (DAOs, friends, guilds), invent (minigames, metagames), and defend (ideology, battles, territory).

Building many ways to win along this 4 dimensional achievement space is not just good for gameplay, but also existential to the macroeconomy. Players who value the drive to bond, invent, or defend most highly supply liquidity and subsidize players who value the drive to acquire.

Bc the utility maximizing split along these 4 dimensions is diff. for everyone, the game economist's job is to match all these heterogeneous preferences with diff. roles in a virtual economy. A balanced ecosystem is one that has the right # of roles for every kind of player.

My partner @tocelot wrote an excellent thread on how p2e games can build many ways to win to avoid p2w. You can read it here:

https://twitter.com/Tocelot/status/1439632031726456832

On Friday, I'll write about real money reward functions in games (aka P2E), which service the drive to acquire. But the beauty of web3 is that permissionless composability offers an answer to the other drivers of human motivation too.
Bonding & Defending->DAOs
Inventing->NFTs

Developers' ability to build on top of web3 games results in new sims & meta-sims that can help balance out the distribution of roles in the underlying macroeconomy. The prolific @Tocelot also wrote a great thread on this in the context of @AxieInfinity

https://twitter.com/Tocelot/status/1445767686982537226

If you're looking for a 0 to 1 primer on P2E games, check out the previous thread in this series here:

https://twitter.com/WuCarra/status/1445095025428385801

Oh lol I meant to tag @Jihoz_Axie