In-depth analysis of the merits and demerits of chain game development: Play to Earn or Play to Ponzi?
Original author:0x76
Original author:
Editor’s note: “As the bull market that lasted for two years ended in an extremely tragic way recently, many concepts and projects that were created and popular in this cycle have also begun to cool down. So, these once star products really Are they useless? Their success or failure experience, and what valuable experience will they leave for this industry?
In the near future, I plan to use 3 to 4 articles to review and reflect on several key tracks or business models in this cycle. "
Since the birth of Axie Infinity's Play to earn and its derived X to earn model, its ideal of benefiting the public and the outside world's doubts about its Ponzi scheme have gone hand in hand. In the past round of bull market, we have also witnessed the rapid explosion and demise of chain game projects adopting the X to earn mode.
In this article, we hope to examine in detail the merits and demerits of the development of blockchain games from a lower-level logic.
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How to easily distinguish Ponzi projects?
Before we start to formally discuss the Play to earn model, it is actually necessary to review the basic definition of Ponzi again.
According to the broadest consensus in the industry at present, the key to distinguishing whether a project is Ponzi is to judge whether it has created new value for the external society, that is, whether it has produced "positive externalities". If a system does not create positive externalities, then all value is actually a zero-sum game and redistribution within the system, and it will inevitably collapse after a period of time.
So, is there an easier way for ordinary users to quickly identify Ponzi projects?
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1. Observe whether the system has external income
Because in a normal economic system, most economic organizations that can generate positive externalities will not provide free products and services to the society. Just like you must get paid for working for the company, and merchants must earn income from selling goods to you, a sound market can always reasonably price these positive externalities and facilitate transactions.
so,so,
Identifying whether it has external income becomes the simplest way to identify whether an economy has positive externalities.
So for a chain game, to judge whether it is a Ponzi game, it does not actually require us to study the complex game mechanism inside the chain game. Instead, you only need to regard the chain game as a whole and observe whether it can obtain income from the outside.
However, what needs to be emphasized here is that if what we want to answer is whether a chain game has externalities, then the object of observation must only be the chain game as a whole, not a certain part of the chain game system. internal components.
We can see that the so-called "income" obtained by many chain games currently comes from the fee income of the NFT trading market inside the chain game. However, since this type of internal market serves only gamers, which is a typical internal income, it does not generate external value for the entire blockchain game.
Of course, we can also see that some chain game teams such as StepN have actually recognized this problem very early, and even set up the position of "Chief Revenue Officer", hoping to obtain real external income through brand co-branding, advertising, etc. These are obviously attempts in the right direction, and behaviors worth encouraging.
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2. Judging the attributes of participants' spending funds: investment or consumption
In addition to observing whether the system as a whole has external income, chain game participants can also judge the Ponzi degree of a system by judging the attributes of their own capital expenditures.
If most of the participants in a chain game invest funds into the system with a consumption mentality, then these expenditures constitute the main income of the chain game system. This also proves from the side that chain games provide some kind of externality (fun) to encourage people to consume and pay for this externality.
However, if most of the participants in a chain game participate in the game with a speculative mentality, and the main goal is to make profits rather than entertainment, and attach great importance to indicators such as the payback period, then the system will be closer to a huge 's scam.
After all, the ultimate goal of investment-type funds is to leave the market with a profit. Therefore, when the system does not have enough real income to fill their income gap, the system will inevitably move towards the Ponzi model of borrowing new ones to repay old ones.
So how can we better attract more consumer users into the system?
Just like Bitcoin never presupposes the goodness of human nature, but protects the system from malicious participants by designing a reasonable game mechanism. If the economic system of a chain game is too speculative and the consumer demand is too low, then the first thing to reflect on is the design of the game itself, rather than directly shifting the responsibility to the user, which is completely an act of inversion of cause and effect.
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Is Ponzi's theory tenable?
Ponzi economies themselves cannot generate value for society, so Ponzi has often been equated with scams in the past. However, the birth of Bitcoin and its skyrocketing price broke the inherent cognition of many people to some extent. What followed was the popularity of Ponzi's theory and web3 Ponzi's special case theory in the industry.
To answer this question, we first need to re-analyze several commonly used arguments of Ponzi combination theory.
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Why are pensions not Ponzi?
Pensions are an essential part of almost every modern society and have obvious social value. However, due to the obvious external characteristics of borrowing the new to repay the old at the same time, many people identify it as a Ponzi structure and repeatedly quote it to demonstrate the rationality of the Ponzi structure in some cases.
So, is it really a Ponzi scheme to repay old pensions by borrowing new ones?
of course not. Because the greatest significance of the existence of pensions is not to increase investment value, but to stabilize the financial risks brought about by individual life cycles at the social level. Therefore, the essential attribute of pension is insurance, and all insurance products are consumer financial products intentionally designed to improve future certainty.
Just as we do not buy aviation accident insurance to return capital and increase value, the main purpose of pension insurance participants is not to invest and make profits, but to ensure normal retirement living expenses without children to support them.
We cannot say that the pension is a Ponzi scheme in which the old people who came first came out of danger, while the young people who did not get out of danger happen to be young people who joined later. Pensions and Ponzi are only similar in form, but the underlying logic they follow is completely different.
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How to Understand Bitcoin’s Externalities
The entire cryptocurrency market originated from Bitcoin, and the success of Bitcoin itself has subverted the inherent cognition of most people. Indeed, the first impression of Bitcoin to many people is that it is a pure Ponzi scheme. Even if judged according to the simple method of judging Ponzi just listed, Bitcoin seems to be difficult to meet any of the above definitions.
Therefore, Bitcoin has become the best argument for Ponzi theory. Many people believe that since Bitcoin can exist for a long time, it means that the Ponzi scheme may become a bubble that will never burst under certain conditions or a certain "narrative", so that everyone can benefit from it.
If one wants to refute such arguments, one must answer: what are the externalities of Bitcoin?
The externality of Bitcoin cannot simply be understood as external income, but more reflected in people's undisputed ownership of property and absolute trust in consensus within the system in an absolutely free and open environment. It's just that these values have always been extremely missing in Eastern culture.
This may also be one of the reasons why Chinese public chain projects often fail to succeed. Because if a public chain project lacks freedom, openness, and trustless things that can generate externalities, then the rest is indeed not too different from the capital market.
As we saw after the BCH fork, the BCH team's first thought was not how to improve transparency and openness to promote ecological development, but to find ways to attack Bitcoin. The underlying logic is still that there is me without you, and you without me, "it is better to pursue the poor with the remaining courage, not to be famous and learn to be the overlord". Although this underlying logic is indeed in line with China's historical experience, in the blockchain world, this kind of thinking makes the only externality of a public chain disappear, and eventually it is getting closer and closer to a pure Ponzi scheme.
However, is there another possibility that a project will increase the number of users through the Ponzi model in the early stage, and rely on the number of users to realize cash when the number of users reaches a certain scale, and then become a normal economy that relies on income to maintain operations?
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Is it possible for chain games in Play to earn mode to transform?
But we can also see that some projects with a certain long-term vision such as Axie and StepN were born in this cycle. So, is it possible for these teams that relied on Ponzi growth to develop users in the early stage to complete the transformation in the future?
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The essence of Ponzi income is debt
Therefore, when such a system begins to transform, if the early users are not to be lost, then these marketing expenses become transformation liabilities that the system needs to make up for through subsequent revenue. The higher the income of early users, the heavier the debt burden during the transition period.
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Exponential Growth and Healthcare Runs
We know that the main advantage of Ponzi's growth is that it can make the number of users grow exponentially within a certain period of time. But the exponential growth of liabilities is obviously not a good thing for the transformation.
We have all experienced the power of exponential growth during the epidemic. If you want to control the outbreak of the epidemic in a city, the time window to solve the problem may only be the first two weeks. Once you miss it, you will have to pay a huge price to recover it. Many chain games have actually encountered the same problem, that is, when their systems have experienced a "medical run" due to exponential growth, and their public relations and user service capabilities are on the verge of collapse, they have actually missed the time window for transformation.
Therefore, even if the chain game team successfully creates income and begins to transform, it still needs to slow down the growth of the debt side in order to achieve a balance with the income side.
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Increment reduction and debt restructuring
So is there any other way to deal with the exponentially growing liabilities that have gotten out of control? In theory there are.
On the one hand, it is to reduce the speed of debt increase as much as possible, that is, to reduce the rate of return, but at the same time, it will also cause a reduction in the speed of inflow of new users, further aggravating the transformation crisis.
From this point of view, the transformation logic of Ponzi chain games seems feasible, but it is still more difficult to implement in practice, and may not be a truly feasible commercial route. Of course, we still welcome entrepreneurs to continue exploring in this direction, but don’t use users’ money to try and make mistakes.
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Where is the future development direction of chain games?
So, what should be the focus of improvement in the development of chain games in the future?
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1. The game must be fun first
The primary value of a game is to be fun. Therefore, when the product you develop is not fun, please stop calling yourself a game, and you are not qualified to talk about gamefi.
Pure Play to earn will only lead to Paly to Ponzi. The strategy of relying on Ponzi expansion in the early stage and transforming in the later stage is extremely difficult to implement, so far no project can really run smoothly.
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2. We should encourage innovation, but please stop using users’ money to try and make mistakes
Whether it is exploring a new game mode or trying a new economic model, it is natural to take great risks, and failure is commonplace. An emerging industry requires countless entrepreneurs to bravely try and make mistakes before they can explore a new business model.
Naturally, we should not laugh at those failed explorers, but the cost of failure should be mainly borne by entrepreneurial teams and venture capital institutions. After all, they bear high risks and have the opportunity to obtain high returns.! ! Some chain game teams earn a lot of transaction fees during the Ponzi growth stage, and at the same time, when the Ponzi model is about to collapse, they blame the greed of users for the game crash. This is obviously a very irresponsible attitude.
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3. The core logic of chain games should be on the chain
Some projects that claim to be blockchain games, in addition to issuing game tokens and NFT equipment to the chain, the core logic of the rest of the game still needs to be run by a centralized server. Therefore, we can see that the project party can modify the rules of the game at will, increase or decrease the usage scenarios of certain NFT equipment, and even stop the service and run away directly, but users can do nothing about it.
For this kind of game that cannot put the core logic on the chain, it should not be called a blockchain game at all, but just a traditional Web2 game that uses blockchain technology to issue coins.
Of course, it is really helpless for many blockchain games to use centralized servers to run game logic. After all, the performance and cost of the public chain at this stage cannot meet the needs of the game. Therefore, the further development of chain games still needs to wait for the gradual improvement of the underlying infrastructure.but no matter,If the core logic of the game cannot be guaranteed by the characteristics of the blockchain such as trustlessness and non-tampering, then users cannot truly own their own game assets. The so-called user ownership is actually just empty talk.
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4. Over-financialization destroys user and team feedback models
If you want to develop a good game product, you must iterate quickly and continue to trial and error in the early stage. During this process, the team needs to get clear feedback on the strength of the gameplay from the market.
Therefore, for a team that really wants to develop games, excessive financialization and premature token incentives may instead affect the normal development of the project. Properly postponing the financialization process, and implementing token incentives on the premise that the gameplay has been fully verified by the market, may be a chain game development strategy worth rethinking.
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5. Openness and composability are the core advantages of blockchain games
A really fun blockchain game must not simply copy the successful experience of traditional games, but can use the underlying advantages of blockchain technology to try to surpass the playability of traditional games in some aspects.
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In order to discuss the X2E mode as clearly as possible, the article is indeed written a bit long. But the reason why I have said so much is to hope that our industry can avoid detours, and at the same time, ordinary users will suffer less losses.
Although I do not recognize the pure X2E model, I am still extremely optimistic about the future development potential of blockchain games, and even chain games are one of the tracks I am most concerned about at present. But the development of everything must conform to the most basic logic or common sense, and chain games are no exception.
