What is CHR
CHR serves as the in-game currency for Space Nation Online, acting as the medium of exchange between players, and between players and the game environment. As the Space Nation Online game continues to grow, the supply and demand for CHR fluctuates. In order to maintain price stability, it is not possible to use a fixed issuance plan or a fixed number of tokens. Instead, the total and circulating amount of CHR is dynamically adjusted based on scientific measurements and management techniques, using multiple mechanisms that address both the supply and demand sides of the market.
CHR will be designed to follow on-chain logic but will remain off-chain for the first several months after the launch of Space Nation Online. Once the in-game ecosystem has matured and become stable, we will decide whether it is feasible to bring CHR on-chain.
Tool 1 - Time-series Model
Time-series analysis can be used to model the behavior of game players, including activity, retention, game duration, and participation patterns. By examining the relationship between behavior and the production, circulation, and consumption of CHR, a CHR supply-demand model can be established. This model serves as a benchmark for identifying trends in supply and demand, and production, consumption, and circulation can be adjusted accordingly.
However, this method has limitations. The model is influenced by variables such as players, games, and external environments, and studying and making assumptions about these variables requires time and manpower. Additionally, adjusting production, consumption, and circulation is not a frequent operation. Therefore, this tool is best suited for identifying long-term trends in supply and demand. How to identify short-term economic fluctuations remains an open question.
Tool 2 – The Fisher Equation
The Fisher equation is also known as the trading equation. Irving Fisher, for whom the equation was named and a professor of economics at Yale University, in the book The Purchasing Power of Money in 1911, formulated and posed the first systematic exposition of the relationship between the price level and the amount of money.
This equation is an identifier, in which the value of P depends on the interaction of M, V and T. M is the average amount of currency in circulation in a given period of time; V is the velocity of money circulation; P is the price level or weighted average of various commodity prices; T is the transactional volume of various commodities. When we discuss this equation on the premise of monetary equilibrium, we can view it as the demand for money, similarly, the supply of money.
The real-world financial system has become very complicated due to the participation of banks and governments. Although Fisher’s identifier is concise and powerful (it ideally describes the identity relationship between money circulation and commodity circulation), its applicability is not strong because it makes strict assumptions and ignores other decisive factors of participants. Fortunately, the virtual world Space Nation Online is a microcosm of the abstract real world. There are no banks, no currency multipliers, no complicated relations between the resident departments, the enterprise departments, and the government departments, and so on. Thus, the Fisher equation can be skillfully applied in Space Nation Online to guide CHR supply.
As mentioned above, the objective of maintaining a reasonable CHR supply is to ensure that the flow of money can meet the needs of commodity trading and value storage, so as to maintain a stable price. Stable prices are both the ultimate goal and the premise for players to have consistent expectations in terms of currency value. With the Fisher equation, namely:
V in the game can be represented by the total trading volume of the trading market divided by the average trading price, that is, the trading volume. T can be represented by the total amount of commodities that can be traded. Finally, M represents the money supply. In this way, we can calculate the amount of money needed in each period. Space Nation Online takes biweekly statistical data as a cycle, formulates a reasonable money supply, and then produces guidance for short-term supply targets.
The previous section discussed various approaches to adjusting the output, consumption, and trading friction of CHR. These adjustments are aimed at the supply side, and their impact is extensive and profound, so they need to be used carefully.
On the demand side, operational activities are a highly flexible means of adjustment. They come in many forms and are highly compatible with game mechanics. Examples include limited-time dungeons, black markets, and world-class resource collection.