Blockchain Gaming Tokenomics: Designing Sustainable Game Economies

Blockchain gaming has been on the rise ever since its inception in 2017; this is when we saw the first-ever widely popular and accepted blockchain game, Cryptokitties. It has been on an upward rise ever since then, with many games following in its footsteps after that.

The essence of blockchain games is in their offering of allowing players to earn revenue just by playing games, and tokenomics is the blueprint that allows the creation, distribution, and trading of assets against which the ecosystem of the game exists. 

In this blog, we are going to understand what tokenomics is, its role in blockchain games, key components, and the economic model behind blockchain games. Without wasting time, let’s witness the next gen of blockchain games:

What is Tokenomics

The word “tokenomics” is derived from the combination of two words, namely, “token” and “economics,” which means the study and design of economic systems within some blockchain network. 

Considering the blockchain domain, tokenomics touches the essence of the formation, distribution, and management of tokens that are used in games as assets, currencies, and other essential elements in the building of a game’s ecosystem.

The Function of Tokens in Blockchain Gaming

Tokens in blockchain gaming serve various purposes. Some important ones are: 

In-Game Currency

Tokens act as the sole currency for carrying out transactions within a game, using which gamers can buy character skins, power-ups, unlock levels, or get access to premium content.

Ownership of Assets

Blockchain technology in gaming ensures that each token represents the actual ownership of a particular unique asset, which can be traded, sold, or swapped among different players.

Governance

There are a few games that give away governance tokens to players for participating in game build decisions through voting, fostering a more decentralized and player-driven approach in game building.

Rewards and Incentives

Tokens are given to players to keep them engaged by rewarding them after they level up, complete some missions, participate in some sponsored gaming events, or contribute to the gaming community.

Key Components of Tokenomics

Now, let’s have a closer look at the key components of tokenomics:

The Supply of Token

Token supply defines the absolute number of tokens that can ever be generated within a game. This supply is usually fixed to create a scarcity and potentially increase the value of tokens. The other approach is to use an adjustable supply to control inflation within a game’s economy.

Distributed Model

The distributed model in blockchain-based gaming refers to how in-game currency is distributed among players, programmers, stakeholders, and investors. Maintaining a fair and smart distribution among them is essential for striking a balance in a thriving economy.

Utility

Utility represents the functionality and use cases within a game’s ecosystem. The more places you can use the token, the higher its demand will be.

Liquidity

Liquidity is the ease with which gamers can buy, sell, or trade their tokens. Ensuring high liquidity is essential for building a healthy economy that lets gamers convert their tokens into a variety of assets or cryptocurrencies with ease.

Burn Mechanism

It is the permanent removal of tokens from the circulation by sending them to some inaccessible burn address or a dead wallet. Some games implement it to reduce the supply of crypto, creating scarcity and increasing the value of tokens that are then left in circulation.

Economic Models in Blockchain Gaming

Now, let us examine different models that game makers can choose when developing a blockchain game’s economy:

Freemium

Freemium is the most popular monetization model when building games. Here, players are allowed to download and play games for free, and then they are lured to pay for various in-game items that can help them complete game levels.

Play-to-Earn (P2E)

In the play-to-earn gaming model, players are given tokens through gameplay whenever they get some achievement or unlock a level.  Axie Infinity is the prime example of this type of model. In this game, players can earn tokens by breeding, battling, or trading their in-game currency, called Axies.

Pay-to-Play (P2P)

In this model, players need to buy tokens in order to get access to the game or some specific content within the game. This approach guarantees that game makers are able to generate pockets of revenue. The tokens that are distributed can then be used inside the game.

Decentralized Autonomous Organizations (DAOs)

A few game builders incorporate DAOs in which players who hold in-game tokens are given voting rights and an influence on the change of the game’s storyline. This model not only allows players to give their contribution and form a deeper connection with the game but also contributes to the game’s success.

How To Develop An Economy For Your Blockchain Game

When creating a blockchain game from scratch, you must answer a number of questions in order to build your game’s economy. This procedure is divided into several stages, which are:

Determine Your Target Audience.

You need to think about all the people and parties that you are planning to involve in your ecosystem. Are you planning to involve external developers? What type of investors do you want to contribute to your game? You need to answer all these questions.

Define The Motives That Attract Players

Secondly, you have to figure out the potential audience that will participate in your game. You need to define their motivation, the expectations that they have with the game, and how you plan to keep them invested in the gaming process after its release.

Define The Core Mechanics Of Your Game

Next, you need to plan out game mechanics in depth. How will your game stand out in cutthroat competition? How do you plan to make changes in the game if needed? How are you going to grow the community?  What mechanisms do you have to make it popular?

Define The Tokenomics Model

Now you need to choose the tokenomics model and the token that will power your game ecosystem. Are you going to use utility tokens or governance tokens? What will be your total supply of the token? How are you planning to distribute tokens and motivate the community to purchase them to raise capital?

Define Core Token Dynamics

Finally, your only goal that you are left with is to decide how you plan to add tokens into the circulation supply and how to remove them from the market.

You should clearly mention the methods by which the players earn tokens and how they are allowed to spend them. In most cases, when there is a saturation of tokens in the market, they steadily lose their value, and there is no reason left for players to hold or buy them. Opposite to this, if there is a scarcity of tokens in the market where the supply is concentrated in investors’ wallets, you lose the community as a result. 

As you can see, building tokenomics for any blockchain game requires addressing a multitude of questions, after which it will be a much smoother journey ahead of you for building a popular and profitable game.

Conclusion

To wrap up everything, we have seen how tokenomics works and helps build a thriving economy inside blockchain games. They are the force behind building a player-oriented ecosystem and offering new creative methods of creating engagement with the game.

If you have a vision for a game, it could potentially become the next popular blockchain game. But building a game is no simple task, and a blockchain-based game can add even more complications. It is in your best interest to part with a firm that can help turn your game vision into reality.

If you’re dreaming of launching your own blockchain-based game, now is the time to act. Partnering with the right development company can make a big difference. At Technoloader, we specialize in transforming your game idea into a thriving blockchain gaming platform from concept to launch.

Contact us today!