Crypto token design

Your Key Responsibilities: Assist portfolio companies through conceptual phases to break down their product, ecosystem and objectives. Analyze stakeholder maps, economical value flows, potential behaviors, motivations and incentives and turn this into a systems design backed by underlying tokens.

Develop roadmaps, audit, and design economic and governance systems together with in-house specialists. Support the in-house token engineers run simulations and case studies. Conduct market research and analyze battle tested as well as new token mechanics of established ecosystems and apply these to the assisted portfolio companies.

Must have personally been actively using dApps and DeFi protocols and experienced with token minting, burning, yielding, farming, staking and locking. Good understanding of the NFT world, various gamification mechanisms and financial principles. Be able to comfortably handle fast paced, multi-stakeholder projects, keeping founders and their partners to schedule and hands-on support in executing with diligence and pragmatism.

Nice to have: Has been working on economical research, design and modeling of web3 projects Has experience simulating complex systems Has experience analyzing data sets and working with python, R or other similar languages on statistical modeling. In addition, some tokenomic mechanics enable motivations to be met in entirely new ways. Ultimately we are attempting to align participant motivations through the mechanics and balance of tokens.

So, our first question should be who are these participants and what do they want? Developers Developers are motivated by building, appending or improving the current experience of the game. This might be from developing new features, fixing bugs or improving quality of life.

But also expands to the creation of tools, such as asset tracking websites or market makers. There are two types of developers: Internal: Those who are directly involved in the development of the game day to day, either via employment of a development company or a DAO.

They likely expect a form of performance compensation, based on the success of the product, too. External: Those who are not officially involved day to day but build central or ancillary features on an ad-hoc basis. These developers have a mixture of motivation from straight profit to recognition of the community. External developers have the most complex motivations in this group and how close their relationship is to the game is dependent on how decentralised and open development is.

Some external developers may build external tools that help players purely out of passion and community recognition, meanwhile others do so for financial gain. That financial gain may come directly from making requests to the DAO for some new feature or improvement, or it may be from some service they provide. In the former, developers can submit development proposals which are voted upon and funded by the treasury upon completion.

In the latter the developers may see some opportunity to develop a tool or service entirely separate from the game, such as a token swap or a trading platform. In some cases these external developers are other businesses or DAOs with their own salaried employees, as is the case with tokens on commercial exchanges, such as Binance. But with the advent of graphical MMORPGs with open economies in the late s, a new class of working player emerged.

Crypto gaming unlocks both of these player types, which we identify as: P4F Play-for-Fun : These are the traditional players, motivated by leisure. They are often financially net negative, meaning they have spent some money in the game. Others are playing without payment, as commonly found in F2P games.

P2E Play-to-Earn : These are players who are seeking to earn a full or partial living from playing the game. Most traditional games have spent millions of dollars attempting to keep P2E players out of their games, so why then do crypto products embrace them? Well, P2E has emerged as a reality of decentralised and truly owned assets: Once these items are on chain the developer ostensibly loses control over them and they gain real world value. But these P2E players often act as great virality tools: Their income is linked to future success of the product.

P2E players can only exist if P4F players do also, so their motivation is aligned with all other participants, so they become a mobilised and motivated fanbase. They can also attract investors who profit share with them by means of item loaning. However, within P2E there are currently two types: Commodity Grind: These players are much like gold farmers of yesterday, they grind the game in order to create commodities in the most optimal manner.

Their job is effectively cranking a handle and may possibly be interchangeable with bots AI , depending on the game. Content Generation aka C2E Create-to-Earn : These players generate new content in the game, such as levels, skins, music and narrative. Alternatively they generate content external to the game via streaming including eSports , podcasts or video creation.

This generation is inherently creative and so for the most part uniquely human, meaning less likely to be bottable. A third type may emerge in the future: Actors. These players will behave in ways which are human, perhaps in crafting responsive stories like a dungeon master, playing an in-game character or running guided tours.

To some extent they already exist in the form of moderators. Investors Investments are one of the most interesting, diverse and overlapping motivations amongst participants. These are, along with P4F players, the participants bringing money to the game.

This money might end up in the hands of the developers or P2E players, but ultimately investors are mostly, but not always, expecting a significant increase in their outlay. We have identified several investor types: Backer: Those who come in early to seed the development because they believe in the project.

They may or may not expect to see a return for their outlay, but they do want to see the project happen and often some recognition for their belief. They have a portfolio across many games and understand the economics at play and may even be from institutions such as venture capital firms or DAOs. Governors: Those who wish to invest capital in order to be a part of the long term stewardship of the game.

This may be the most dedicated of players or other investors who are looking to protect their stake. Speculators: Those who purchase up assets early because of a known scarcity and assumption of future value. Unlike portfolio investors they are often less sophisticated in their investment analysis. Motivation Quotients Participants do not have singular or static motivations. Indeed there are lots of overlapping motivations in a game which also change over time. As such we can think of each participant as having quotients of motivations.

For example, a participant may act as a backing investor, but also be a P4F player, much like traditional crowdfunding players. Meanwhile, a top level player may be earning a living in the game via P2E but wishes to participate in the future of the game via governance votes. As games tokenomics evolve, we will likely see specific motivation quotients defined as niches.

These niches will be made even more specific as integration into the wider world of DeFi DEcentralised FInance occurs. So investors are investing in guilds to invest in assets for players who will earn via play. Our goal then, is to design tokenomics that aligns the various and complex motivations of our participants via the mechanics of tokens and the blockchain. These mechanics working alongside each other are known as systems. Tokenomic Systems While tokenomics is still in its relative infancy, there are already lots of emergent systems which are offering templates for aligning motivations through token mechanics.

Below are a few examples of these. Looking into the distant history of game design can prove highly relevant to understanding the role value exchanges have to play — something highly relevant to NFT monetisation. As such it is easy for games to put some or all of this value on-chain via tokens.

Characters: Playable characters that exist within the game world. Gear: Weapons, armour and the like that can be used to append characters. Consumables: Items that are single use, such as a potion or a booster. Land: Virtual spaces that allow some advantage to the owner, such as ability to build on it or generate some revenue from it.

In-game items are interesting to both players and investors of various types. For P4F players, it is a way in which they will spend to gain a play advantage. Any in-game item will be attractive to players via one or more of the Four Cs of Monetisation: Competitive advantage: Offering an advantage over other players or the game itself.

For example, the purchase of higher level gear. Convenience: Makes something easier or quicker to do. For example a booster item. Cosmetic: Items that change the appearance of something. For example, an avatar skin. Content: Gives more in-game content, such as story. For example, a pass that gives access to more of the game world. P2E players, however, will be looking to gain tokens that have real world value and can, by some mechanism, be exchanged for fiat. This might be a currency or some in-game item NFT.

Meanwhile, investors will want to buy in-game tokens that will either appreciate in value due to their being a limited supply or will allow others, via play, to generate more tokens of value. As such, many games keep lots of in-game items off-chain, allowing for some to be redeemed on chain in bulk at a later date. Governance: Voting and Dividends Web3, which encompasses cryptocurrency and blockchain, is founded on an ideal known as decentralisation: The movement away from single organisations or groups governing and regulating from a central location metaphorical or physical while maintaining power and assets such as data , as seen in the current web and across established financial ecosystems.

Decentralisation instead presents more open and democratic systems where power is not held in one place. In decentralisation a distributed ledger i. These ideals and technologies ostensibly allow games to become managed outside of the original developers. However, in order to achieve this what is known as a governance token is commonly issued. Governance tokens provide two things: Voting: The ability to use tokens to vote on a decision.

Often where one token equals one vote. Benefit: A benefit for token holders that aligns their motivations to vote in the best interest of the product or organisation. As such, governance tokens often take the form close to what we would traditionally consider shares: The ability to vote on issues while providing those holding the tokens with a share of profit. Often profit share is proportional to the amount of tokens held.

What is known as a treasury is often at the heart of such systems: An address holding proceeds as tokens and coins. Often governance votes will allow holders to decide on how the treasury gets spent. In some specific cases this allows external developers to put together a proposal featuring suggestions for improvements as well as a cost. Once the proposal is accepted by a governance vote and the improvements implemented, the developer will be rewarded from the treasury.

Note: We will use ICO as a catch all term for the initial public offering of any type of token. ITO Initial Token Offering is often more technically correct, but today the terms are used somewhat interchangeably. ICOs offer a way of funding future development of a chain or platform, and are increasingly being used by game developers as an alternative to equity fund raising. The offerings typically see a developer or publisher sell a new token at a low or discounted price.

There are typically two types of tokens offered via an ICO: Security or governance tokens: These tokens function much like a share, in that they grant voting rights and often a share of profit; e. However, these can fall under restrictive legal covenants in certain jurisdictions. Utility tokens: Increasingly popular with game development studios, utility tokens offer some kind of in-game utility, such as enabling breeding or offering boosts. Utility tokens usually do not function like shares, conferring no ownership or voting rights, so are subject to much fewer legal restrictions.

It is also possible for tokens to mix elements of security, governance and utility. Presale While an ICO and a presale bear a number of similarities, it is important to understand them as distinct entities. A presale is much more comparable to a crowdfunding effort via the likes of Kickstarter or Indiegogo: It is aimed at a large number of players and speculators rather than a small number of professional investors. Presales do present two significant challenges: As with a crowdfunding campaign, it can be hard to communicate the value of an incomplete product; or even a product only at the planning stage.

While successful presales can attract meaningful attention, a great many can fade away with little to no impact. As such, marketing and community building are essential as a means to support a presale effort. Additionally presales release tokens into the wider market which can result in speculation and rising prices. This is known to produce a buzz around the project and draw increased attention. Again, a comparison with crowdfunding is relevant here, with the likes of a Kickstarter campaign may generate hype and interest as well as funding.

Traditional financial ecosystems are highly centralised, with limited banks, regulator and state agencies holding power, control and governance. And often they gather at global financial hubs such as London, presenting physical geographical centralisation. External: DeFi and Exchanges One property of tokens is that they are not limited to existing solely within your game and the context surrounding it. Put another way, they can exist elsewhere in the broader crypto ecosystem.

If on a side chain, for example, tokens can be bridged to a mainnet such as Ethereum a mainnet is a fully functional, operational blockchain, as opposed to the likes of testnets and regtest networks. Additionally other dapps decentralised applications allow loaning against tokens such as NFTs while others create derivatives to enable more complex speculation on the asset. Portability: Public chains allow for the possibility of items to be used across multiple games, permissionlessly.

Meaning a game can be expanded by open source, fan made or other commercial titles. Opening up your tokens to wider use means relinquishing control over how your tokens can and will be used. It could even be the case that players fall victims to scams that are far beyond your control. Furthermore, mistakes in the likes of minting and smart-contracts are non-reversible, meaning particular caution and a careful process is essential.

Design Process The process and theory of designing a crypto game ultimately shares a number of similarities with the creation of free to play games. Similarly, if you are newer to the space you can read our blogs on building game economies , retention frameworks , game balancing , LTV and monetisation catalysts. Detailing the process of designing an entire tokenomics from beginning to end is unique to your game and funding status, so is beyond the scope of this article.

However, you can begin to shape a game concept to be a successful crypto game by asking yourself or your team a number of questions: Which participants does your game serve? How will you game engage players, investors and others from the crypto and game industry ecosytems?

Which motivations engage participants? Why will you participants engage with the game and continue to engage with the game? Do the motivations for players and investors, for example, complement or serve one another, as part of a balanced and broader game economy?

What are the core game mechanics? How do the game mechanics make the release distinct, fun, marketable, and compatible with a tokenomic system? How can the game be maintained and adapted while maintaining its core appeal and community?

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