Game critical tokenomics upgrades

Community Brainstorming
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Description
I run a company (CoinBusters LLC) and a website, Coinbusters.io. We publish educational content of sorts for a variety of audiences on the site. Most of our company work is done through consulting to financial advisors and high networth investors through economic analyses, tokenomics modeling, and similar.

This is done to assess current ecocystem performance and identify weaknesses in market changes (etc.). I have consulted for several cryptocurrency projects in ecosystem and tokenomics changes that have been successful. My work publicly available work, written with technical data consumable by non-expert financial professionals and investors is featured on etfTrends and VettaFi regularly. I am not able to directly share work from consulting projects due to agreements with those, although I can describe some of the solutions developed. I have been an invited speaker on numerous cryptocurrency panels and events.

My work involves a form of ecosystem analyses known as decision tree models. These analyses look at the structure of token emissions and how the different breeds of users within the game use economics to dictate buying, selling and other price-influencing behaviors. By altering incentives, distribution of emissions and utility options it becomes possible for DFK to stabilize token prices and thrive during market recoveries without large relief sells by LP and token holders.

At the moment, JEWEL is in a supply inflation in-spiral. There is decreasing demand and increased selling because of the significant price changes in recent months due to macro headwinds and some well-documented internal challenges within DFK. As such, there is now a shifting division between value of time spent playing the game and possible earnings, all while passive income investors continue to sell higher percentages of their tokens. If left unchecked n its current state the value of JEWEL will continue to decrease unless a significant and rapid market recovery occurs, and even this will be tempered by the current game architecture.

This grant proposes to do a full decision tree model of the DFK ecosystem and recommend, using quantitative data, game critical changes to token emission and internal game use. These changes require close collaboration with members of the development team to ensure that recommendations (there are often multiple ways to implement things) are most palatable for the team. This grant should be in the $25-$50k range for this work, although I am open to other creative avenues. I want DFK to succeed.

These ideas are high level because they require data unavailable at the time of this grant proposal. However, they illustrate some of the ecosystem decomposition work.

JEWEL income is currently skewed heavily towards LP emissions versus gameplay earnings. Larger networth investors are less likely to play DFK rather than provide liquidity than smaller investors. While macro-scale (market-level) dynamics are at play and have contributed to some of the value decrease across the DFK world, most of it is due to the lack of JEWEL utility within the game compared to incentives to sell. Changes to the ecosystem that incentivize reinvestment or use, rather than selling are imperative. Some of the recommendations below may be nullified by data provided through this work (data requests are included at the bottom).

All JEWEL within the game, save for selling heroes, is emitted by DFK. Emissions are skewed heavily to LP rewards but are divided between gameplay rewards and those LPs. Most users of the gardens within the game are not reinvesting those JEWEL into the game. This creates a one-sided buy/sell silo. Users can either recompound or cash out rewards. A subset of users may choose to stake JEWEL although that is not advantageous pricewise in this market.

There are limited internal use cases for JEWEL within the game. Given that DFK, at its core (right now) is a p2E model - the earned JEWEL will either be staked in the jeweler, placed into LPs, or sold. Some subset of users may reinvest the JEWEL through hero purchases. With the market (BTC, mainly as a driving factor) hanging relatively flat, JEWEL continues to see fairly significant price drops weekly. This paints a clear picture that the weight of reinvestment and staking versus selling is off, by a lot.

For situations like this it becomes important to identify the emission inflection point versus demand. To do so, emissions need to be curbed, quickly within the LPs. They are too high even with the recent halving. Within the Harmony ecosystem there are few other locations for on-chain tokens covered by the DFK LP options to be placed.

However, we cannot incentivize the development of new locations to hold tokens, making the LP reduction percentage strategic. We also know that users of the game are psychologically more likely to re-invest in-game acquired tokens than LP farmers who use this platform. There is an intersection of players and LP providers that strategic reductions would move over to playing, and there is likely to (in the current design) be a loss of TVL without additional changes from further emission reductions.

As a result, the analysis here shows that we are increasing supply into the LPs and ecosystem faster than the game can consume it (inflation), and users are not holding on to acquired JEWEL in a healthy manner. A game like DFK can survive with one of these, not both. Without changes, particularly with the unlock schedule, DFK stands to become unviable as a P2E option and may not be recoverable if left unattended into this bear market after that.

To control the supply, DFK must allocate (via reduction) LP emissions to recursive gameplay transactions (unless it has protocol owned liquidity already). The order in which these are implemented is important related to the onset of an LP reduction. This requires the following:

  1. A way for users to spend JEWEL in game without selling it to increase their capacity to earn at a strategic rate
  2. A way for passive income users to receive worthwhile rewards through participating in the game and investing in JEWEL rather than fully selling rewards at a constant rate through farm emissions. The analysis is clear in that more jewel is being sold than reinvested.
  3. The difference in current emission versus proposed reduction emissions (JEWEL difference) needs to be split into a permanent decrease in supply inflation and the remainder used to incentivize game play much more heavily.

To achieve these, JEWEL must:

  1. Be capable of being spent by gameplay users to provide unique functionality to their heroes, boost future earnings (delay sells) through gameplay
  2. Incentivize idle players/passive income earners to leave LP farms (but not all of the farms) with a way to make a different type of income (discussed below) or accept delayed rewards different than locked JEWEL

*The specifics of the below example of implementation are not complete and are one part of the focus of this grant.

To accomplish this:

  1. Create unique traits, performance bonuses, receivable by spending JEWEL on questing (incentivizes game players to spend v save) - portions of the (JEWEL difference, from above) would be applied here
  2. Create a unique quest capability that leverages rented heroes. This requires the creation of a user/market controlled rental marketplace/tavern. Unique options available to players that use rented heroes. Portions of the (JEWEL difference, from above) would be applied here.
  3. Passive income players would now be required to purchase heroes to make high APRs and rent them. This will attract some LP users away but it cannot be so high as to remove a detrimental amount of LP.

The above case serves many purposes. If the emission reduction discussed above were 25%, for example - 12.5% of the emission reduction is removed entirely (not emitted). The remaining 12.5% Is used to incentivize team (rented) questing and “boosted” questing from invested JEWEL.

Passive income users would make viable income without requiring additional emissions through the team quest gameplay users having to “rent” the heroes (through payment via the market place to the owners of the rented heroes). DFK would charge a tariff on this for fee income for other uses. This creates a JEWEL sink within the game - we have a net reduction in total emissions, an influx of JEWEL into the ecosystem through hero purchases to rent, and more JEWEL spending in two different avenues.

This is not meant to be exhaustive, rather, just an example of the types of analyses I perform. There are many more steps to the above implementations that I would work through and analyze for the team, particularly in consideration of framework limitations and others. The funds here would be used as compensation for all of the analyses, data consumption and ongoing participation for 6 months with additional advising after completion/submittal. These types of things require back and forth with the team and are not a “do it once and be done” type thing, either. I am a significant investor (for me, anyways) in DFK.

Payments can be split into 4 installments, with the first being after the deliverable of the high level ecosystem decomposition. I will need game data related to emissions, gameplay specifics, fee usage within the DFK game, and regular interaction with the developers to create optimal conditions.

A complete analysis takes about 2 months of total man-hour effort. The first order analysis (pain point identification and ecosystem decomposition) takes approximately 2-2.5 weeks. There is typically discussion and refinement before solution proposals begin, and that process is a collaborative arrangement between myself and the DFK team. Once the team has agreed that the changes identified through the solution proposals (full task order described below) I will remain available for advising at no additional cost to DFK (in a limited capacity - not a full time employee!). I would ask that DFK publicly acknowledge working with me and my company at some point during the project in return, likely after seeing the outputs. There is likely to be development time (etc.) for some features which is fine.

The task list and deliverables are:

  1. Ecosystem economic decision tree development
    2, Game usage data analyses
  2. Pain point identification
  3. Collaborative solution proposal (conceptual)
  4. 1st order quantitative solution values and analysis leading to testing/concept evaluation by developers (how it is implemented in game)
  5. Solution refinement and implementation observation/review
  6. Future advising and ecosystem monitoring for tweaks and updates.

I have shared thoughts and participated in the Discord community. My team, for this effort, includes myself and our other senior researcher/analyst.

9 Likes
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Thank you @Master_of_Coin_CB for your very thoughtful writeup.

Very well elaborated, documented and justified.

We are all here for the long term, our horizon exceeds that of 2 years, but on the short to medium term I too don’t see anything that would help Jewel gain value.

We are at a critical crossroad. Now is the time to test and assess our original assumptions, plans and vision. The ones the team had back in the Summer of 2021.

Where are we compared to that vision?

How is the environment around us?

What do we expect to land in the near, medium and long term?

Assess all that and with the help of experts like CB and others, compensate, adjust, adapt.

Adapt.

3 Likes
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Just moved this post over to the Brainstorming category for further discussion. Send us a note if you’d like to schedule a consult sometime build@kingdomstudios.io

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In the short and also long term the DFK Platform only needs resource adjustments, community insight and gameplay to achieve success with the power tokens. This is only beta, Bullish.

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I don’t agree with the above. The price of JEWEL given its current utility and tokenomics has some significant shortcomings, as per the myriad reasons described in my above post.

One of the major happenings in the crypto market right now is we are seeing a hard separation of token values from project utility/use/viability. DFK as a platform is incredible and you should be bullish it on. As an investment, right now, it has some challenges.

I emailed per the recommendation above. Looking forward to helping, hopefully.

3 Likes
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All early investments have challenges, patience is one of those, building the game platform is the other which takes not only patience from the community but also the team. This is skilled labor; coding html, solidity, making tilesets for map renders, converting art into files that run on top of the game to sync properly. It takes time to build and listen and communicate with audience at the same time. At one point iron and brass didnt have much value until it had a utility.

The utility is a work in progress.

As the platform progresses so will the value of the platform not just the jewel token.

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I guess I am unsure as to the point of your responses.

Is your statement that the team need not do anything?

My point is that you cannot separate economics and gameplay or game functions if the expectation of success for the platform includes user investments. Without a balance of production and consumption within the ecosystem, specifically with JEWEL tokens, the price will never reflect the Beauty of the game and it will only ever reach a fraction of its potential.

I believe strongly that I can help the team adjust the current and future strategy with an emphasis on ensuring the gameplay and game features synergize with the way people actually buy, sell, reinvest and what drives them to make these decisions.

1 Like
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This is a really good analysis and I hope this proposal gets followed up by the DFK team. I think it touches on some core balancing issues that are really hurting the people who are still playing the game. Thanks for taking the time to write it up.

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Fantasic writeup. Feels like an analysis like this needs to happen, or at least to be decided upon by a vote by the community. The cost seems reasonable given the potential value-add to the project and if nothing else, the recommendations provided could give the team more food for thought (even though they have a current plan and vision).

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DFK has a Tokenomics Team in place already.

I just don’t believe hiring additional personal to help them with “Tokenomic issues” is high on the priority list.

You are correct the “economy in the game” needs to expand.

That is what developers with knowledge of software engineering and artistry will produce in time.

If anything Kingdom Studios will expand their productivity and revenue by implementing new content and gameplay and allow Jewel Tokenomics to grow organically.

With new in-game resource implementations and added utility to the existing NFTs.

-The overall market correction, the Liquidity Pool Pump/Dump and FUD placed jewel where it is right now. “macro head winds and inflation in spiral”

-Side Note: Educational content of sorts on these various topics are free for review on public platforms.

I agree with you though on the point of LP emissions vs gameplay earnings.

Focus needs to be turned towards the NFTs Utility and create actual gameplay in a wise manner.

This is noticed by not only the team but the community.

V/R

Bless

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Tokenomics must always be high on the list with anything. Great ideas that do not work are not great ideas. The DFK team makes incredible content and the game is intricate. There may be a Tokenomics team in place but they do not do what I do, and the difficulty in making changes in a deliberate and strategic matter without guesswork is what I bring to the table.

I have a graduate degree in engineering and have worked in software most of my life. I understand the mechanics of what changes entail and how they work.

JEWEL continues to fall despite flat BTC days. This is a first order representation of a supply overhang. If you have a supply overhang, which means that the ecosystem is not consuming or reusing emissions at an effective rate (what that rate is for DFK requires work) no amount of utility will offset the AMM price reductions.

It’s not how it works. DFK is a P2E game. To make the game worthwhile as an earning mechanism with a low value token requires volume that the game does not have right now. Adding features to the game, while making it more valuable or fun to existing players does not, and can not, simultaneously fix economic related price depreciation. It’s just not how the math works.

If you marry efficient tokenomics and a control of supply with the work the DFK team is already doing, it is literally impossible for this game not to succeed. If JEWEL continues to drop, as the main mechanism for rewards in the game (which it will in due time), the activity in the game will decrease. Betting that through content work only the game will overcome the nature of the as-built economy is incredibly risky. Risky enough that if incorrect DFK will have serious future challenges to remain viable.

Let the team continue to produce world class content, and let me help the team handle the modeling and analysis of the minutia involved with percentages, distributions and perceived buy/sell value. It does nothing to slow the development timeline or roll-out of new features. I would argue that sentiment from the community, who is extremely invested in the price of JEWEL (which is a direct reflection of the economics of the game, as is Kingdom Studios’ revenue), would be overwhelmingly positive when seeing that the changes to the flow of JEWEL making the price more stable and appreciating ultimately in value.

Features and tokenomics cannot be separated, nor should they. The tokenomics of the platform need to be a central discussion point on every single feature added to the game. “How does this feature work?” must always be followed by “How does this feature fit into the economy?”

Hopium and math are incompatible. I’ve watched projects (even some I’ve invested in) make critical mistakes delaying that have proven damaging and penal.

JEWEL physically cannot grow organically in its current state. It is of no fault to any one person, but the consumption (sinks) for JEWEL are few, the emissions are high, and a high portion of the community relies on DFK as an investment and income stream.

As written above in my original post, these changes are not sufficient or viable entirely to help correct course. They were merely shown to illustrate the value in what I do and how I go about doing my work. I feel the grant size is fair and am happy to find an arrangement that makes sense for both my time in doing this work and for the team.

I’m hoping to stress that I’m not “going to just fix” the tokenomics as if I have all of the answers right this second. I operate through a process. Through that process, with the team, obvious answers arise. What I do is break down the economy and it’s consumption or redemption swim lanes into a model. That model can be used to assess how changes being implemented will impact things going forward. That model becomes valuable as a parameter tweaking metric to estimate impacts from future use (if more people use this, xxx happens, if less people do this, yyyy happens, etc.). Add a feature? Here’s what happens.

At the end of the day, we (the community) want the game to be a worthwhile investment and use of time and to be really fun to play. We can have both.

4 Likes
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Have you spoken to the existing Tokenomics team?

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imo the best thing to do right now is have a solid proposal laid out and discussed with pianoman/ sunbear. Once that is seen by the community, the merits of what you are suggesting may be more widely understood by the team and the tokenomics committee

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Kingdom Building Program Grant Proposal Template

Description
Provide a clear and detailed description of what you want to create and how it will benefit and relate to the DFK project, the blockchains, and the community. Be specific about your vision and desired outcome and why you believe this project will be feasible and successful.

Grant Rationale
Explain why this grant is needed and how it will be helpful (e.g., increase quality of product, speed up production, hire team support, etc.). List specifically how the funds will be used.

Grant Amount
50K USD (typically granted to proposals that relate to, benefit, or synergize with DFK and the DFK community)
25K USD (typically granted to proposals focused on DFK partnerships or overall innovation of DeFi, P2E, NFTs, etc.)
10K USD (typically granted to proposals more general in focus but still working toward innovation)
Which grant are you hoping to receive? Explain why this grant amount is the best fit for your project. You may customize your amount if you feel it better fits your proposal.

Team Information
List and describe the team you have assembled. Include roles, experience, and expertise related to the project. The more you are willing to share about your team, their abilities, and their past work, the more trust the community will likely have in your project.

Requests from DFK Team
What specific requests from the DFK team do you have that you will need in order to be successful (e.g., API access, consultations with devs, access to game data)? Please be detailed and specific here so we can assess our ability to support you.

Connection to DFK Game and DFK Blockchain
How are you hoping to have your product interact with the DFK game, its NFTs, its tokens, and the blockchain? It is important for us to consider how this possible usage and collaboration will affect the DFK game, the blockchain, and the economy.

Deliverables
List and define your deliverables. These are the important steps in the development of your product or project. Please also indicate the current status of each deliverable (e.g., completed, in process, anticipated start and completions dates, etc.).

Payment Schedule
Provide a suggested payment schedule based on the deliverables above. Payments are often provided once a few deliverables are accomplished, usually broken up into three or four disbursements throughout the entire process of completing the product/project.

Timeline with Milestones
Provide an estimated timeline including milestones. Timelines typically span from the beginning of the project to its completion. Milestones should include your deliverables (e.g., backend completed, UI completed, audit performed), in addition to your goals or measures for success (e.g., number of users, revenue created, etc.).

Long Term Plan
Describe your plan for ongoing development and maintenance of the product or project once the grant support is completed. It is important that the community knows how it will be upgraded and maintained as time goes on and who will be responsible for it.

External Links
(Project link, examples, demo, whitepaper, video)

File Uploads
(Art, mockups, charts, etc.)

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Hey @Bless and @C5000, it has become evident that @Master_of_Coin_CB does indeed know what he is talking about and I was able to verify their credential through third-parties.

He has made a best effort with the information he has at hand to illustrate a problem and suggest some possible solutions. There is nothing more he can do at this point without the DFK Team be willing.

What he is suggesting does not conform to a typical Grants Proposal. He is not a third-party wanting to build for the ecosystem. This forum post is not even a proposal, thus why it has been moved to the “Community Brainstorming” category.

He is raising a very alarming issue that we should pay serious attention to. So far your arguments have been those of faith and wishful thinking while MoC is delivering hard-cold facts and math analysis.

Your skepticism is understood and respected. I had the same. I did my own research and came to the above conclusions.

Your concerns have been heard, now it’s time to leave space for more community members to chime in and even more importantly to get the higher-ups of the team to engage.

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Thank you for taking the time to check out his credentials and steer the discussion

That was the only objective of my post. I don’t know much about his credentials or have any doubts or confidence about his ability. If he has something solid that can help the project then let’s go through whatever process is needed for some action to be taken was the intention of my reply.

DFK already has a bunch of problems with communication and I think right now with the angry pitchfork crowd screaming for pvp/ pve , they are attempting to just put their head down and work on that.

I think if there are good solutions being put forward maybe OP can have them laid out with some other scenarios in addition to what he wrote up there that would be easy for the team/ tokenomics committee to digest and get some lightbulb moments if there are to be any.

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I only want what is in the best interest of the community and Kingdom Studios. Sunbear and Pianoman can direct him in the proper direction after gathering more information within an interview. Perhaps Human resources or a new proposal?

Best of Luck,

V/R

Bless

1 Like
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I hear all of this. The entire reason I reached out to try and do this for DFK is that all of the really hard stuff (the game and community building!) is so well done here. I’m here for the long haul too.

Open to any and everything that makes sense here. Appreciate the feedback and discussion!

3 Likes
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Hello everyone,
I just wanted to let you know that I have forwarded this thread to the DFK tokenomics committee to review. Have a great day.
SunBear

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As a player and investor, I have to agree with Master_of_Coin. Just look at the numbers and Jewel value. Tokenomics team should be humble and open to review what they are doing. We cannot continue to justify Jewel price only to market conditions and put all our hope that PvP will turn everything around.

If ‘number of Jewels’ I’m getting from my LPs in DFK is ‘N’ and ‘value of Jewel’ is ‘V’, my total daily income is basically N*V.

DFK tokenomics team can control N. V is not under tokenomics control - it depends on a number of variables. But it can be influenced.

One way to do that is trying to increase Jewel demand. The other is controlling emissions.

Creating more consumption/sinks/demand of Jewel will definitely help but not enough. We need to control emissions too. As a player and investor, I’d rather have less ‘N’ but more ‘V’.

And having a ‘hard numbers/data’ approach to this, based on experience and know how, is fundamental if you want to have a healthy system with longevity.

One last thought: P2E is not sustainable if the overall extraction of value from the game is bigger than the value created. Seems simple logic but sometimes forgotten and/or misunderstood.

1 Like