Louis, the founder of Octopus Network, shared his thoughts on the chain game economic system:

Key 1:The game economic paradigm of chain games has changed, from a closed monopoly economy to a truly open market.

Key 2:The tokenization of chain game assets brings about changes in asset ownership, which can achieve a "hot start" through financial effects.

Key 3:There are 3 principles and 6 bases for the economic design of blockchain game tokens.

Key 4:The best technology stack for blockchain games is an EVM-compatible application chain.

Key 5:Blockchain games require good infrastructure and good ecological support.

Good afternoon everyone, I'm Louis, the co-founder of Octopus Network,I am very grateful to Lian Tea House for giving us the opportunity to discuss chain games with friends in the game circle and chain circle.

The topic I shared is "When Games Meet Blockchain": Simply put,I think the encounter between games and blockchain is a great opportunity for both parties, and they can achieve mutual successsecondary title

We believe

We believeChain games are a paradigm shift in the game economy, from a closed monopoly economy to a truly open market. Prior to this, games were a service provided by game developers to players, that is, game experience.The game experience may be enhanced by the participation of other players, which is a service-consumption model. Interaction between players is part of the game experience, butTrading between gamers is generally not supported as it is considered a drain on monopoly benefits.

There is an important change in chain games in the Web3.0 era:That is, the original in-game asset issuance policy that is part of the game's numerical system will be stripped out and placed on the public blockchain.

After the game asset distribution agreement is placed on the public blockchain, developers cannot easily change the agreement. Whether these in-game assets are interchangeable assets such as gold coins or non-interchangeable assets such as props and land, they will all become standard format certificates on the chain. Then the assets are issued on the chain, and any protocol on the chain can be used for transactions.In other words, all game assets become part of an open, huge, and unified encrypted asset market.

The game does not necessarily need to provide a transaction agreement by itself.Generally speaking, in a game-created asset trading market, the liquidity cannot be compared with the big market. As a game, the main business is to create a game experience. At the same time, the game experience depends on the identity and assets on the chain. For players, on the one hand, interact with the game to consume the game experience, and on the other hand, obtain assets by playing the game. The player's private key directly controls the game assets on the blockchain.

Therefore, chain games have the two most important conditions for an open market economy:

The first is the property rights system.It is very clear who the assets belong to. Players can dispose of assets in any way he thinks is beneficial to him at any time. For example, transfer, sale, etc., others have no right and cannot interfere.

The second one consists of various independent game economies, which have been opened up by the blockchain and connected in series into a huge, global unified market with very low transaction friction.secondary title

Tokenization of Chain Game Assets: Financial Utility & Application Utility

We say that the notable feature of blockchain games is the tokenization of assets. Turning game assets into tokens has two main meanings:

The long-term implications are changes in ownership.Generally speaking, there will be an asset in blockchain games called governance token or ownership token, which represents the ownership of the game economy.The incentive system of blockchain games should be designed around how to distribute ownership.

The short-term meaning of tokenization is what we call token magic.Not only for blockchain games, token magic is effective for all web 3.0 economies, and can help platform-based economies complete the cold start process. Whether it is online games, chain games or other platform economies, the core feature is the network effect. The network effect means that the more users there are on the platform, the more valuable the platform service will be to each user. The network effect is a very magical thing. The innovations in the IT field and the emergence of Internet giants in the past few decades are all based on the network effect. But the network effect is more difficult to start, because the number of users is small at the beginning, and the application value of the platform to users is very low. As the number of users grows, the value of the application grows slowly, and then grows rapidly after breaking through the critical scale.

The platform economies of Web2.0 are also facing the problem of cold start, or the problem of laying eggs and laying eggs. Then the solution is to raise funds through venture capital, and then spend money on the market, subsidizing users to activate the utility of the network. In the era of Web 3.0, there is a new method and new tool, which is token.You can see that the most important content of the white paper of the Web3.0 project is actually three points:

• What kind of decentralized platform economy should we build?

• How to launch the platform by distributing tokens

• How Tokens Capture Platform Economic Value

If these three points are convincing, investors will recognize that the token will be valuable in the future. In the financial market, assets that are valuable in the future are valuable now, which can be converted through risk-return rates. So investors will go to get tokens. Investors in a broad sense do not necessarily spend money to buy, but can also invest time and energy in exchange for tokens.

So the token has a financial effect from the very beginning. Although the application utility of the platform is relatively low, platform participants can earn tokens by using them. With more and more users, the application effect of the platform will increase. If the application utility does not increase, only the financial utility, it is a Ponzi scheme.

As the economy grows larger, new users become less risky and have a diminishing marginal contribution to network utility projects. So the financial benefits of new users should be getting lower and lower, but they get better and better application utility. In this way, the Web 3.0 economy can be leveraged more quickly.Axie Infinitysecondary title

Token Economic Design for Chain Games: 3 Principles and 6 Basis

Regarding the token economy design of chain games, there are three basic assumptions, which are the basis for subsequent discussions:

1. Chain game is a virtual economy with network effect player to player.

2. Chain game assets must pass the standard certificate issued on the chain.

3. The chain game economy is part of the open encrypted asset market.

So, how to design a chain game economy? Here are 3 design principles and 6 incentives for your reference.

The core of the chain game economy is the governance certificate or the ownership certificate.It represents the ownership of the chain game economy. Means both interests and rights. The interest is to transform the scale growth of the economy into the growth of the intrinsic value of the token through mechanism design, also known as value capture. There are multiple approaches to value capture that cannot be detailed here.

Ownership tokens are distributed to various participants that contribute to the growth of the economy’s network effects,Including developers, investors and players, etc.In addition, ownership certificates should have governance rights and be able to participate in determining the future direction of the blockchain game protocol.It is mainly a game asset distribution agreement.Protocols can be refined and evolved through on-chain governance.

In most game economies,Game developers will still be at the core.In a complex game economy that needs to continue to evolve, the developer's share cannot be too low. Don't give 100% of the pass to the community in comparison with Fair Launch, that is very irresponsible. If it is just forking the existing protocol, then all the contributions actually come from the community. In this case, it is fair and reasonable to give 100% of the coins to the community.

Mechanism design is good or bad without moral considerations.The less the developer gets, the more fair it is? not like this. The goal of mechanism design is Incentive Compatible for long-term incentives. Let everyone have the motivation to do things that are beneficial to the development of the economy in the long run. In addition, no matter whether the investor buys in the primary market or the secondary market, he should get a pass if he provides funds.

The key is how to reward players. The core contribution of players to the chain game economy is to improve the game experience of other players.If someone buys an item NFT and then sells it, he is an investor and not a player. Players have to participate in the game to improve the game experience of other players, and he has made the player's due contribution.This kind of contribution needs to be verified and quantified by the protocol on the chain, and then the corresponding token rewards are given, which is the core of the chain game economic system design.

The incentive basis for rewarding player contributions should consider several factors:

The first is identity and props,Who is he, has attributes, and actually includes all the players' past investments in the economy.

The second is to consider the time invested,All rewards must be time-related, otherwise the game will fast-forward.

The third is random,Randomness itself is part of the fun of the game.

The fourth is strategy, or skill,Because there are very few real-time chain games now, it is right to call skills a strategy. Strategy is the method used to participate in the game. Strategies can be individual or collective. Collective strategies require cooperation. Rewarding various kinds of cooperation creates society.Also, there should not be an absolute optimal policy to begin with.The outcome of the strategy should depend on the strategies of other players or other teams during the same time period. Only in this way can complex systems be formed and self-organized and self-evolved. Once there is an absolutely rational optimal strategy, then both the player and the player team will eventually lose their free will and become slaves to the algorithm, and the meaning of the game will disappear.

The last two points are content creation and expanding the game experience.Advanced games need to support player contribution and expand the gaming experience. On the one hand, it needs the support of the game technology platform, and on the other hand, the contribution of content or new game experience is not easy to evaluate. So I put an asterisk, it's advanced stuff.

The last major principle is: it is necessary to reasonably set up the value capture mechanism of token ownership and the additional issuance unlocking mechanism, so that the long-term growth rate of the total value of ownership tokens is slightly higher than the speed of additional issuance of tokens.secondary title

The ceiling of chain game economy: public chain transaction processing capacity

In the second half, we discuss the blockchain game infrastructure.

The above picture is very simple, it is the daily trading volume of BSC in the past year. It can be seen that the average is on the order of several million per day, and it can break through to more than 10 million when it is high. This is probably the number of transactions that the industry-recognized fast public chain can support. The congestion at the end of last year was mainly due to blockchain games. When it reaches more than 10 million transactions per day, the congestion is already serious. The biggest ceiling of the blockchain game economy is probably the capacity of the blockchain.We call it the anti-network effect, that is, the more users there are, the value to a single user decreases because of too much congestion.

How to do it? The only way to run large chain games is the application chain, one chain one game. arriveAxieAt the same level, there can be 1 million active users, and the daily transaction volume is several million or even tens of millions. A game of this magnitude can exhaust the capacity of the entire BSC public chain, and it is unsustainable to run chain games on the public chain.

Don't just look at the current gas fee.EthereumwhenEthereumWhen hundreds of thousands of transactions are processed every day, the gas fee is not high at all. But when it comes to 700,000 to 800,000 transactions per day,When the capacity is close to saturation, the gas fee has increased not only several times, but dozens of times.secondary title

EVM-compatible application chain: the most suitable technology stack for chain games

We believe that the most suitable technology stack for blockchain games is an EVM-compatible application chain.Why EVM compatibility? Because there are many blockchain development technologies, but EVM is the absolute mainstream. The most direct problem is that the development of blockchain games requires smart contract developers. Most of the people who may be found are Solidity programmers, and very few people understand other technology stacks. Moreover, after seven years of development, all pitfalls have been stepped on, and EVM is the most mature and reliable.

The application chain is one chain and one application. Although it is developed with smart contracts, it can still enjoy the benefits of one chain and one application. The first is to exclusively enjoy the processing power of a chain. Due to the small number of nodes, the performance of the application chain exceeds that of ordinary public chains. It can handle tens of millions of transactions a day, and supports chain games with daily activity of one million.

And you don't have to worry about competing with other apps. If you are on a large public chain, it is possible that you have just done a good marketing activity, and other applications start to do airdrops, and you find that none of the users can join. This kind of thing happens from time to time on both Ethereum and EOS. Compared with DeFi, chain games have higher interaction density and lower unit value of transactions. So once the big public chain is congested, the first to be hurt is the chain game. Because most blockchain game users are price sensitive.

The second advantage is that the application chain is dedicated to serving an application. Can be fully customized to achieve the best user experience. Everyone knows that the outbreak of Axie Infinity was in March and April last year. The most important opportunity is the launch of the dedicated side chain Ronin. After Ronin went online, the transaction cost of Axie was basically reduced to zero, which caused a big explosion. Axie has been working on it since 2018. The whole technology research and development has been very twists and turns. In the end, it can be said that it has to develop Ronin by itself.

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How to start and run an application chain

The success of the application chain requires four pillars. The first is security. Users must be able to safely start and run a chain through PoS, so that users can safely store assets on the chain, or transfer them across chains. The second is cross-chain, which must be interconnected with major public chains and major DeFi protocols. The third is infrastructure. After all, it is to start a complete blockchain, including a complete set of services such as blockchain browsers and RPC clusters. The fourth is a community that recognizes value, so that there will be consensus and governance, so that the project can continue to develop.

The Octopus application chain and NEAR are naturally cross-chain, and cross-chain with Ethereum through the Rainbow Bridge. We develop Substrate IBC, and the Octopus application chain is connected to Cosmos through IBC. The third is infrastructure, a complete set of infrastructure services provided by Octopus Network. The application chain team only needs to do the application and front-end, and other things, including nodes, blockchain browsers, RPC clusters, Indexer, etc., are all provided by Octopus Network for free.

Octopus Network The octopus network belongs to the NEAR ecosystem. It is built on the NEAR public chain. NEAR-led sharding is the most complex blockchain technology with the greatest expansion potential. Octopus Network is an application multi-chain network built around NEAR. Each application chain is an independent blockchain with dozens of nodes. The application chain can have a seamless cross-chain with the NEAR main chain, and can have a two-way asset cross-chain with Ethereum.

Octopus Network provides a one-stop infrastructure service for the application chain: security, Octopus Network provides leased security LPoS, which is on-demand leased security, cost controllable, and the security level increases with the economic scale of the application chain. The second cross-chain, Octopus application chain and NEAR natural cross-chain, cross-chain with Ethereum through the Rainbow Bridge. We develop Substrate IBC, and the Octopus application chain is connected to Cosmos through IBC. The third infrastructure is a complete set of infrastructure services provided by Octopus Network. The application chain team only needs to do the application and front-end, and other things, including nodes, blockchain browsers, RPC clusters, Indexer, etc., are all provided by Octopus The Internet is provided free of charge. The fourth focus - the community, is the decentralized application chain incubation community built by Octopus Network.

Various Web3.0 applications, including chain games, the most important thing is to develop their own communities.Now to do chain game projects, you must choose to join a good ecology,Get the support of the ecology and the attention of the community, otherwise no one will pay attention to what you do. Octopus Network can be regarded as a decentralized incubator. The team has done a good job of development and registered with the Octopus Network. After we do the technical review, there will be an open voting mechanism, which is to strive for support in the Octopus Network community. We will help promote the game in the community. Every once in a while, the most supported application chain will launch the main network.

At present, Octopus Network has launched two application chains, which will be launched at a rate of two to three weeks later. Octopus application chain and NEAR are naturally cross-chain. Native token can be cross-chained to NEAR as ID0. Octopus Network provides 200,000 OCT airdrops for ID0 of each application chain, helping the application chain to increase fundraising by about 1 million US dollars. Then trade on Ref.finance, because it is a standard token, it can be combined with all NEAR's DeFi protocols.

Disclaimer: This article is for informational purposes only and should not be construed as legal, tax, investment, financial or any other advice.