Thread by @mikojava

1 Play-to-Earn economy design, a primer

2 Lots of people ask me about economy design for their P2E games. I have seen hundreds of designs

3 One very very common mistake--they outsource the economy design to a fancy consultant.

4 in many cases the consultant wants to show how fancy they are. I see lots of slides that show such work and it looks like they got their money's worth

5 because the consultant made something that looks very complex. What a wonderful design, they must be very smart. NOT.

6 Obviously real world economies are exceedingly complex. And they become robust due to the complexity and "biodiversity" and opportunities for Keynesian acceleration

7 But let's not kid ourselves. Game economies are not "real" in the traditional sense. And economies are almost all nonlinear systems in practice.

8 What matters most in initial design are two principles, one of which is to understand inflationary and deflationary mechanisms.

9 For example, things like weapons and armor damage is deflationary. It's where money "goes to die" in your system.

10 Power inflation is inflation. Remember in World of Warcraft when your Orange Legendary drop from the endgame boss suddenly became weaker than the starter zone green drop in the new expansion?

11 Also, KISS. Keep it simple, stupid. Economists who are paid to make designs tend to overdo complexity because they want to show how smart they are.

12 Start with the economic loop. Don't add too much complexity.

13 One thing that few understand is that you can and should add complexity later. Adding new mechanisms is actually mechanism discovery and it leads to more engagement.

14 another key lesson is monitor everything. @Jihoz_Axie was explaining that the @AxieInfinity community themselves provide a flow of new KPIs to measure on an ongoing basis.

15 So start simple and monitor everything. Also, listen to your community. Learn about externalities. Patch new mechanisms in gradually and understand that your patch can be destabilizing. Be prepared to roll back.

16 VCs like myself are NOT impressed by your complex economy slide. It means you haven't ever actually built a in-game economy before.

17 full economies don't spring forth fully armed and armored like Athena from the forehead of Zeus.

18 If you have crafting, yes by all means add crafting. But do it as an update.

19 if you have item damage, by all means. But again, add it in and be prepared to roll back.

20 A living breathing economy is like a living organism. Gradualism will help you, your player base will thank you.

21 And remember--you are f---king with people's money. So don't go off half cocked. Be sure you are fully cocked.

22 if you want a review of your game economy v1 please reach out to me, DMs are open.

23 We might not get a second chance to launch our games. Do it properly and iteratively and follow the absolutely essential design principles outlined in this tweetstorm.

24 Externalities are everything, by the way. Also, some people are scared of adding a second or third token. Don't be.

25 One thing that is really strong about an "after the fact governance token" is that you can always airdrop your community after the fact.

26 after the fact airdrops are beautiful because they contribute to "hopium" and they rightly reward the earliest participants if designed properly

27 Also, adding second and third tokens creates a separation of concerns and actually decreases system complexity (admittedly at the expense of user complexity)

28 But user complexity isn't always bad. It can make the entire ecosystem more engaging and more wealthy. in Axie you have AXS, RON and SLP. Community is handling it just fine.

29 the complexity that economists often fail to consider are the second and third order effects of players and traders all seeking new alpha. One person's gain can be another person's loss. Pay to win can be accidentally introduced.

30 getting a lot of requests for study materials. One truly amazing source of knowledge is to talk to axie managers about patch updates. You will learn a lot.

31 Thank you for attending my TED (Token Economy Design) Talk!

32 By the way, when I say simple, there's only one thing that differentiates a good economy from a bad one. A bad economy has lost its peg. Ask Argentina, Venezuela and Turkey if you don't believe me.