Unavoidable cursed design problems in web3 economies: challenges and mitigations
Introduction
By definition, adding blockchain to a game means introducing tradable assets.
This represents a major shift to how the game works. Instead of having a closed ecosystem where players only buy from the developer, blockchain implies that players can now create assets & buy from each other.
Why is this so different? Because games today are designed intentionally to not have trading. Adding blockchain (aka trading) changes player behaviour and therefore requires rethinking the design.
The consequences of this are continually evolving, and may never be “solved” but continually refined and improved.
The focus of this article is on something I refer to as “cursed design problems” and the objective is to present some hot takes on four unavoidable challenges in web3 games and some potential mitigations.
Defining Cursed Problems
A cursed problem is one which has an inherent contradiction in goals
I first came across them in this GDC presentation by Alex Jaffe. They are subject to opinion and likely contentious!
However, understanding what these might be for web3 games, and potential mitigants is extremely useful, as they may often become sticking points of discussion and debate for balancing game design decisions.
In the following sections I will go through my experiences on the following cursed problems:
Economic progression vs sustainability
Content reward (i.e. loot drops) vs trading
Primary revenue vs secondary trading monetisation
Economic sustainability vs free player experience
Economic Progression vs Sustainability
The player goal of economic progression is at odds with the developer goal of economic sustainability.
This problem applies for games with progression, in particular RPGs.
To elaborate, if player progression allows them to either make NFTs faster, or make better NFTs, then there will be inflation over time. To illustrate, imagine players all start at level 1 making copper daggers. As they get stronger, they will spend the same amount of time (and potentially money) to make iron, gold swords etc.
No amount of economy sinks help with this, because players just get stronger over time. For example, if a player originally took 5 days to make a gold sword. Eventually that will take them 2 days, 1 day, etc.
It is not possible to allow players to have continual economic progression while making the economy sustainable.
However, there are some potential solutions to mitigate this challenge, by “bending” the conflicting goals:
Seasonal resets: Making it so that economy progression resets and starts again, which creates sustainability at the expense of progression. This could be a partial reset, a full reset, or even a conversion where players retain power but in a game mode that isn’t the ‘main’ one (Diablo model).
Slow inflation: Accepting the fact that the economy is not sustainable, and instead slowing inflation so that the game economy still lasts for years. Often requires liveops content creation and power inflation over time. Ideas such as impernanence, NFT sinks, and degradation fall under here as well - as they slow down the problem without fully solving it.
Split player progression from economic progression: For example, making it so that regardless of how much players gets “stronger”, their economic output is the same. For example, giving players a certain amount of “crafting energy” which stays constant and limits the NFT quality and quantity they can produce.
Blending on-chain and off-chain economies: Games can make it so that some forms of progression don't impact other players by making some assets not be an NFT.
Reward for Content vs Trading Progress
The player goal of experiencing rare loot drops is at odds with the player goal of tradability.
This problem applies for games where grinding for a reward is a core part of the player experience, for example RPGs.
For example, imagine that a player could come in on day 1 and buy a powerful and rare raid drop. They would breeze through the game which would be too easy (boring), and don’t experience the magic moment of defeating the final raid boss to get the reward. Without realising it, players have ruined their own experience of the game by paying to skip content.
This issue existed in Diablo 3 and was one of the core reasons their auction house struggled.
Some potential mitigations:
(Partially) remove tradability: One possible solution is to have part of the asset’s utility not be tradable. For example, letting players trade equipment but resetting the level of the equipment when it gets traded.
Scale utility: Another solution is to allow players to trade but scale the utility of assets to match the player. For example, high tier heroes might require players be a certain account level to be able to use, which allows them to trade but still requires they play through game content. Or for example an item is tradable which has its own power scale based on the character using it.
Primary Revenue vs Secondary Trading Monetisation
The developer goal of selling content to players is at odds with the player goal of trading content with each other.
This is otherwise called cannibalisation. Developers who monetise via primary sales (sale of NFTs) are competing with players who also sell on an open market. Over time as more assets get purchased, the “competition” from players trying to resell will also increase. Today this is not an issue for games, but for web3 games cannibalisation is a real threat to the revenue model.
Some potential mitigations:
Trading as focus: Games can focus on monetising via trading revenue rather than primary sales. Let players create assets, and create gameplay reasons for them to trade. Potentially build embedded marketplaces or in-app trading as part of the product strategy.
Web2 revenue: Sell game assets or boosts that aren’t tradable, which avoids the issue of cannibalisation.
Asset segregation: Split up the asset base so that some types of NFTs are only available for purchase from the developer, while others are never sold and can only be made by players. For example, in the latest Guild of Guardians design, heroes which were sold won’t be available for summoning, while equipment is an asset class that will never be sold.
Focus on high value, scarce items: Sell expensive, tradable game assets that are provably scarce (1 of 1) or very high in prestige so that they trade for high amounts. This limits cannibalisation while generating higher fees for the developer.
Economic Sustainability vs Player Experience
The developer goal of preserving economic sustainability is at odds with the developer goal of creating a positive player experience.
To illustrate, in a normal free-to-play game (in particular mobile), players are often restricted on content and therefore encouraged to purchase to accelerate their progression. This is typically a partial and gradual restriction - for example players get a tonne of free resources at the beginning to get them hooked, and only later experience constraints.
However, once these ‘resources’ become NFTs a problem arises. Which is that it becomes possible to exploit and farm. Players can’t be given a lot of free NFTs to start, because this would make the NFTs worthless. In fact, a relatively safe assumption is that any NFT which players can get for free which is of value, will likely be botted, assuming that the time/investment it takes to run the bot is less than the upside of selling the NFT. In this example, the “solution’ to preserving economic sustainability might be to charge a cost for minting the NFT, or making it really hard to get. This is a design decision which helps with sustainability but will likely detract from the player experience.
Similar conflicts occur with ideas of item degradation or seasonal resets. These ideas are useful to preserve value in the economy, but players may not like them depending on the genre.
Some potential mitigations:
Deprioritise sustainability: One take could be that the systems don’t matter if players aren’t playing. So instead to prioritise retention & player experience, and accept some level of price deflation.
Make the downside ‘part of the game’: For example, make it so that items degrade only when players die in “high-risk” dungeons, to make it feel like part of the experience.
Deprioritise player experience: Make it harder for players to acquire NFTs in the first place. For example, they cost money to be crafted, or are only available in limited quantities, or both.
So what?
Cursed design problems exist both in web2 and web3 games.
The article above summarises my own experiences with cursed problems specifically when it designing web3 games with tradable in-game assets:
Economic progression vs sustainability: The player goal of economic progression is at odds with the developer goal of economic sustainability.
Content reward (i.e. loot drops) vs trading: The player goal of experiencing rare loot drops is at odds with the player goal of tradability.
Primary revenue vs secondary trading monetisation: The developer goal of selling content to players is at odds with the player goal of trading content with each other.
Economic sustainability vs free player experience: The developer goal of preserving economic sustainability is at odds with the developer goal of creating a positive player experience.
To emphasis - all of the above can be debated for hours with various solutions. Would love to see different opinions in the comments. My point is that solving requires making a compromise to one of the core player or developer goals.
Realising this compromise is required can save countless hours of discussion and inform the direction that teams take when making design decisions.
PS: I will be releasing an “ultimate onboarding guide to web3 games” for developers, marketers, designers and product owners coming into the space. People who have previewed (mostly founders & builders) have told me to sell it but I plan to give it away for free. Subscribe to be the first to get notified.
About me: Lifelong gamer and crypto native degen. Experience in startups, consulting and web3 games. Formerly VP@Immutable where I built out Guild of Guardians from the ground up (squad based mobile RPG with ~1 million players on the waitlist) and advised partner studios on web3 economies. Passionate about pushing the web3 gaming industry forward by sharing strategic yet practical perspectives. Find me on Twitter.