GameFi Tokenomics 101: Dual-token blockchain games

In a previous article, we launched three tokenomic fashions for single-token blockchain video games and their respective professionals and cons. 

On this article, we’ll go over dual-token tasks, an innovation that got here after single-token video games, which is the most well-liked mannequin at this time.   

The twin-token mannequin emerged within the first half of 2020 when Axie Infinity launched SLP (Easy Love Potion) to cut back promoting strain on AXS, the unique sport token of Axie Infinity.

Since then, nearly all main titles have had a dual-token financial system. 

To grasp how dual-token video games work and why this mannequin exists, we must always take a look at how Axie rolled out SLP.

Earlier than introducing SLP, Axie was a single-token GameFi, the place gamers enter USD and obtain the sport token, AXS. With super person development and cash from many PE funds supporting the market, Axie efficiently ran on only one token for over a 12 months. 

Nevertheless, it was not tough for Axie to comprehend how vital new customers had been for the tasks. As soon as new cash stopped coming in, a demise spiral would start.

To alleviate promoting strain on AXS, Axie launched SLP in 2020. Whereas AXS was used for governance and staking rewards, gamers would use in-game utility token SLP for breeding new Axies and incomes extra SLP. The event group elevated the ratio of $AXS- $SLP required for breeding and elevated the quantity of $SLP wanted for copy.

At first, the brand new mannequin labored as deliberate. Based on Footprint Analytics, AXS’s price roared proper after SLP was dropped at the sport, whereas SLP’s token worth stood beneath $0.1 for a number of months. SLP had seen an uptrend drawn by newcomers because the GameFi summer time. Nevertheless, this development didn’t final lengthy, and SLP quickly fell right into a demise spiral. The Axie group responded by altering the group governance construction to develop into extra decentralized. Additionally they eliminated SLP as the sport’s PVE (Participant vs. Surroundings) yielded earnings on Feb. 9 to cut back SLPs mint and provide. With these adjustments, SLP’s worth elevated.

The twin-token mannequin has solidified whereby one token is principally used for governance—proudly owning extra of this enables the holder to have extra voting energy in group votes in regards to the undertaking—and one other is used for in-game features, i.e., the utility token. In most video games at this time, gamers earn many of the yield within the often lesser valued utility coin and a bit within the governance coin as a premium, e.g., in the event that they personal useful NFTs. 

In addition to Axie, a number of different fashionable GameFi tasks, corresponding to BinaryX and Starsharks, additionally use the dual-token mannequin. 

Two totally different classes of twin tokens GameFi

A lot of the newly launched dual-token GameFi tasks undertake the mannequin of the “enter sport token and output sport token” mannequin. 

For instance, BinaryX gamers use governance tokens to begin the sport and yield utility tokens as returns, whereas Starsharks gamers begin and yield utility tokens within the sport.

We all know from the earlier article that the associated fee and returns are extremely correlated to this mannequin’s token worth. It’s a lot simpler to regulate the tokenomic fashions with out centralized adjustment with the twin tokens than the USD value-based mannequin. The USD-based mannequin requires an oracle to specify the variety of corresponding tokens, which complicates the dual-token mannequin.

On this article, we offer an analytical strategy to dividing totally different classes of twin tokens GameFi:  After the sale of Genesis NFT, what strategy does the undertaking proprietor use to extend the variety of NFTs out there to satisfy the demand for NFTs from new gamers?

At first, many of the GameFi tasks will promote Genesis NFT on the official platform or accomplice platforms corresponding to  Binance NFT or Opensea to build up preliminary gamers. They then have a number of mechanisms to mint additional NFTs whereas fuelling token consumption. These embody:

Breeding Mannequin: On this mannequin, the second era NFTs and subsequent NFTs come from the breeding of Genesis NFTs, with no extra blind bins offered. This mechanism requires burning/spending tokens to mint the brand new NFTs, which permits the sport to affect the promoting strain on the tokens relying on the worth of minting. 
Blind Field Mannequin: In contrast with the breeding mannequin, the blind field is easy. The group units the variety of NFTs within the sport, and when the market is nice, or consumption goes up, gamers promote extra. This buoys the worth of the tokens as a result of they want them to purchase the NFTs.

Nevertheless, all formidable, long-view tasks will declare that many of the cash from blind field gross sales, whether or not in USDT or utility tokens, goes straight to the group treasury or burnt. Starsharks is so fashionable as a result of it introduced to burn 90% of the utility tokens from blind field gross sales.

Abstract of dual-tokens GameFi tokenomics

Tokenomics are an important a part of a GameFi undertaking, together with metrics just like the variety of new gamers, the variety of lively gamers, and the distinction between output and consumption. 

As GameFi evolves, every cycle sees new financial fashions and improvements, every with its personal professionals and cons. Critical traders can even be taught to identify tendencies inside particular tokenomic fashions to time bottoms, predict FOMO inflation, generate yield throughout backside stabilization, and different methods.

An article initially by Watermelon Recreation Guild, edited by Footprint Analytics group.

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