Framework of Token Design
We initially created the cornerstone of our tokenomics, which consists of OIK, CHR, and NFTs. This framework works as follows:
- OIK, serves as an ecosystem token that represents all the utilities in the Space Nation game series, incentivizing participants to take part in activities such as Space Nation Online IP subsidiary games, community, governance, and more through its various use cases.
- CHR serves as the in-game currency in Space Nation Online and facilitates measure of value, medium of exchange, and purchasing power storage within the game.
- NFTs function as a means of value storage and come in various creative forms.
The roles of these three assets are distinct, non-intersecting, and serve as the unified cornerstone of our tokenomics, upon which we are building our tokenomics. This framework is designed for the purpose of solving multiple issues and enhancing the potential of Web3 games by means of our observation, investigation, and research.
1. FUN is the cornerstone that supersedes every facet of tokenomics
Many GameFi projects have been criticized or misunderstood as Ponzi schemes, rendering them unsustainable for any foreseeable future.
This predicament results from participants exclusively pursuing monetary returns without any other considerations. Each individual strives for a positive return on investment, where the monetary value gained exceeds the monetary value invested. This, however, is impossible according to the equation. Losses lead to losers exiting the game, and fewer new entrants join due to a lack of profit. The game enters a death spiral and ultimately becomes unsustainable.
Monetary value inflow = Dev cost and profit + Non-monetary value outflow + Monetary value outflow
To prolong the game's lifespan, it is crucial to differentiate players' goals from monetary value pursuit. There may be several paths to achieving this, but as experienced game developers, we have chosen to return to the essence of gaming: FUN. This is the foundation of contemporary digital games where players invest time and money to seek pleasure and create non-monetary value outflow. By differentiating certain individuals' pursuits from monetary gain and differentiating groups that exclusively pursue FUN, the game has the potential for long-term sustainability. The issue of how to differentiate FUN is a viable topic within the realm of game design, and we believe we can achieve it through an immersive, operatic, and epic game: Space Nation Online and its subsidiary games. However, we will not delve into the details here as we need to focus the discussion on tokenomics.
You may be wondering what tokenomics has to do with all this. Tokenomics fundamentally involves designing the monetary value circulation rules in the game’s ecology. Why is FUN essential? Because without this non-monetary value outflow, the equation will inevitably lead to unsustainability. Thus, FUN is the cornerstone that supersedes every facet of tokenomics.
2. A dual-token system with distinct and non-intersecting roles for each token
Many GameFi projects have designed multiple types of fungible tokens, each with its own use cases for different game systems and ecosystems. These systems are designed to be interrelated, allowing for tokens to be computable and convertible between them. This enriches the use cases of tokens and can increase demand. We have observed that during periods of economic prosperity, various tokens thrive together, whereas in periods of economic downturn, demand for tokens decreases. In order to avoid losing everything, the main token (commonly determined to be the governance token in many projects) is often prioritized over other types of tokens, causing players who hold the latter to suffer significant losses. While this may partially mitigate the current dilemma, abandoning other tokens to protect the main token can lead to project unsustainability in the long run.
To address this, we have designed a dual-token system with distinct and non-intersecting roles for each token, perfectly suited for a fun-first Web3 game. CHR serves as the in-game currency in Space Nation Online and facilitates measure of value, medium of exchange, and purchasing power storage within the game. It has no inherent value outside of the game and only functions within the game's economic activities. OIK is an ecosystem token that represents all the utilities in the Space Nation game series, excluding any participation in Space Nation Online. It incentivizes participants to take part in activities such as Space Nation Online IP subsidiary games, community, governance, and more through its various use cases, but does not affect any of the games' economic activities. This non-intersecting token system minimizes the mutual influence between CHR and OIK, helping the game form a stable in-game economy. Additionally, the distinctions make it clearer to define each token's usage and form a consensus on their use cases and values. These two elements lay the foundation for setting CHR and OIK policies.
3. 90% of Revenue from monetization to support ecosystem growth, expand the quality and quantity of OIK-related utilities
As a game project series, our goal is to establish and enhance the value of the entire ecosystem. OIK is a token designed for the ecosystem, and we hope to improve the quality and quantity of utilities through ecosystem growth. The growth of OIK will benefit the ecosystem by attracting more people to utilize it.
Improving and activating the ecology and consensus formed by active users is essential. Users will not support or participate in the ecosystem without reason. One important design in tokenomics is the reasonable allocation of reinvestment in the ecosystem. Game development investment will deliver better game content. Community investment will result in better community activity. Governance incentives will give rise to better project development paths. We commit to using 90% of the revenue generated by the Space Nation series of games to support the game ecosystem. This support can take many forms, such as game development, brand building, ecosystem development, stabilization of the game economy, etc. We promise to continue investing in this way indefinitely.
4. Maintaining a stable price level and external exchange rate for CHR is important for the economic growth of Space Nation Online
Space Nation Online is the core of the ecosystem, and its prosperity determines the prosperity of the entire ecosystem. According to the equation in chapter #1, players expect a positive return on investment, where the non-monetary return plus monetary return is greater than the investment. Through our observations, we believe that players expect a stable and predictable positive return.
Looking at GameFi as an example, we observed that many GameFi projects had very high returns in the early stages. With the help of FOMO, the returns became even more exaggerated, but with the beginning of the death spiral, the returns continued to decline until no one paid attention. The fluctuations were huge. Putting aside the issue of the game target setting itself (#1 discussed), such large fluctuations increase the desire to escape, exacerbate panic emotions, and undermine the willingness to play games. Even if the return is positive, violent fluctuations can seriously undermine the player's confidence. Even a very fun game may collapse due to these fluctuations. Imagine buying a set of Thorium Ore (a highly demanded mineral resource in World of Warcraft Classic) for 500 gold coins today and 5000 gold coins tomorrow. Today, 10k gold coins can buy a monthly card, but tomorrow, it will take 100k gold coins. It’s easy to conceive of how disappointed the player would be.
Different types of players provide for their own resources and abilities according to their unique demands and obtain expected returns that can be anticipated. This is precisely the core of MMORPGs. What is an expected non-monetary return? That is the fun of playing games during the gaming process, including game progress, achievements, socializing, etc. Again, these designs will be considered and discussed as part of in-game design. In terms of monetary returns, our understanding of expected returns is stable returns. These are dependent on whether the price level of in-game items is stable and whether the exchange price of CHR with the outside world is stable.
To obtain a stable value transmission chain, it is necessary to provide a CHR supply that matches the productivity of the universe. Precisely how to identify CHR supply targets and how to adjust them will be discussed in the next chapter. This chapter emphasizes the importance of stable and predictable positive returns to Space Nation Online. We will strive to provide a stable price level and a stable exchange rate for CHR to promote the development of the Space Nation Online economy.
5. Setting up monitoring and approaches to stabilize the price of CHR against fiat currency or stablecoins
To avoid "maintaining a stable price for CHR" becoming an empty slogan, we must establish rules and invent tools to make it an achievable goal.
The time-series model for CHR supply will be used to estimate and track the long-term target of CHR supply. This will be established based on multiple player behaviors, including registration, retention, churn, game duration, and participation patterns.
Fisher's equation will be applied as short-term guidance for CHR supply, with inputs for trading volume, average trading price, and total amount of tradable commodities.
The target identification tool can tell us determine where CHR is at any given time, and supply-side and demand-side CHR adjustment mechanisms and tools are means to push CHR supply return to its ideal value. The adjustments to the output, consumption, and trading friction of CHR are aimed at the supply side, and their impact is extensive and profound, so they need to be used carefully. To address this flaw, we designed a reserve pool to store a portion of the tokens systemically retrieved, rather than directly burning them, for dedicated demand-side adjustment tools. 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.
6. Allowing Space Nation Online be a self-circulating universe
Traditional games and some Web3 games invoice in-game items by selling them directly. From a monetization perspective, this is a very efficient approach. However, for an open economy MMORPG, any items directly injected into the game need to be carefully considered. This will affect complex production activities, various resource outputs, and item pricing in the MMOPRG.
At Space Nation Online, we have handed over the power of producing most in-game items to players, making it a self-circulating universe. Players mine resources, collect them, and process them. The produced goods are collected again, processed again, and after multiple item consumption, circulation, and aggregation, they form the final asset. This helps to form Space Nation Online's social relationships, promote transactions, and most importantly, strengthen the CHR token's ability to price goods. We will sell items such as vanity items and crew that are independent of the grand economic cycle or have independent economic designs. This will provide more room for player-customized demands and for the interoperability of Web3 assets.