Low sentiment = opportunity | Skill Tree #18
Low sentiment = opportunity | Skill Tree #18
Tokens in web3 games, community building pre-launch, learning from Cult of the Lamb's social media success
Sentiment is low at the moment. Expect more fights on Twitter. VCs will blame builders for not building successful apps, other VCs will say progress in UX/infrastructure has been too little. Builders will blame VCs for funding dumb shit, and the community for their desire to speculate. There’s some kind of truth to all of them but we would be better off as an industry if people were to look at their own actions first before pointing fingers at others.
Block out the noise, it’s the perfect time to learn. People are questioning the viability of investing in web3 gaming. If it were easy, there wouldn’t be an opportunity. Primary market valuations have started to contract, which is a good first sign.
Tokens in web3 games
Vader published a piece on why web3 games don’t need tokens. The thread garnered a lot of attention and strong reactions.
Vader
Value capture in tokens is difficult due to regulatory and UX risks. Plus, while tokens may act as quasi shares, they don’t come with minority rights
Utility tokens have shown strong inflationary pressure. Propping up the utilility token to prevent it from crashing to zero dilutes value of the main token, NFTs, or equity
Payment currencies require deep liquidity and low volatility. Stablecoins or native tokens like ETH already have that, so why invent a new currency
Monetary control might be a reason to have your own token, but game studios can control the whole economy - every item that gets produced. That’s different from real-world economies where the liquidity of money is used to influence the economy
Highlighting opposing views
Derek: Some of the issues brought up by Vader can be addressed. For example, Not having passive returns on tokens can help on the reg side (not legal advice), UX can be abstracted away for the user. The main advantage of tokens are that they are more liquid and can be used as fractional rewards for players.
Nick: The key benefit of tokens is capital efficiency which can make the implementation of them worthwhile. The problem isn’t tokens but how they’re currently designed
Obviously obvious: Tokens can be designed in a way to address these issues and it’s too early to come to an ultimate conclusion about tokens in games. Also, staking is a working mechanism even with missing regulatory clarity.
My thoughts: I welcome all experimentation in web3 gaming, whether it's with a token or without. That's how we figure out web3 game economies together.
Building from first principles means determining the overarching economic design - player personas, their motivations, value flows etc - then seeing how NFTs & tokens fit into the system. This allows us to create a token that adds value to the economy, instead of building an economy around a token.
There are of course other factors outside of economic design that make a token desirable, for example fundraising.
While different economic designs, some with tokens, others without, are viable for different games, imo it's important what the default starting point is from where we design the economy. Because of path dependency, we will end up at different (local) optima. I would argue that [no token] should be the default position to motivate thinking from first principles
Why innovation is needed in web3 gaming
Copying web2 and adding ownership is not worth the risk rewards
Costs: Higher development costs (e.g. smart contract devs, blockchain infrastructure, non-game developments e.g. staking feature, lawyer fees, …)
Unclear revenue potential: adding tradable assets with 5% royalties means there need to be 20 transactions to be equivalent to directly selling the item
(note: assuming the asset value is the same)
Games need to innovate to ensure viability of the business model.
Ideas
Trading, specialisation, creation & loss as core to the gameloops
Use (free) NFTs for cheaper UA distribution
Deploy tokens to bootstrap growth
Interoperability of NFTs across games
Use ownership incentives to grow creator quality & quantity (UGC + other)
Using composability - community can directly impact game mechanics, events, or build on top
Embrace financialisation (PVP, risk, loss, poker style games)
DAOs to drive growth
My thoughts: Personally, I’m currently biased towards innovations that directly add to the the game loop, meta progression, or the metagame - from derek’s examples that would be trading as a core mechanic driven by player specialization, UGC (broad definition, for example including streamers, sponsors etc.), and embracing financialisation (PVP focus allows to build recurring sinks). Tokens and NFTs for UA may act as a debt to the economic system and therefore require deep integration into the game imo.
That of course has its limitations to certain types of games, so I’m interested in what innovations other types of games can bring.
Community Building Pre-Launch in Web3
4 key insights
Authenticity is king. Engaged community = loyal community
Experiment and iterate. Benchmark against the industry; web3 makes the data available
Community =/= Audience. Community is loyal. Building loyalty takes time & effort
Next unlock: community-based games - LiveOps done by the community
Social Media Marketing insights from Cult of the Lamb
Link (GDC presentation)
use all marketing channels to get to the number of required touchpoints (~7)
presentations, ads, influencers, press, social media, distributionm platforms, …
key 1: grab attention
simple core message that build the player fantasy: 4-word pitch e.g. build your own cult
unique
appealing
easy-to-explain
then build more around that main pitch and expand on it
eye-catching visuals
should relate to the player fantasy
key 2: convert attention into interest
support the player fantasy - relate it back to something outstanding in your game/product
key 3: reward attention with an emotional response
use surprise - build an expectation, then come with something unexpected e.g. cult ↔ cute animals
provide context for people. otherwise they can’t evaluate it
concepts e.g. concept of a cult (compare to scientology)
trends. can prepare for trends e.g. conferences, announcements, presentations, new releases
personal stories
An overview of Dojo - a game engine for Starknet
Dojo uses Cairo which bring several benefits
Scalability of onchain computation (can be verified in O(log^2 n))
Constant proof size (proofs can be recursed)
Partial proofs allow for more efficiency
Smaller DA requirements & costs (Cairo uses state diffs, meaning only the output of an execution needs to be published)
Example: Two players play a game of chess which lasts 50 moves. Cairo only needs to attest the final state, not all intermediary steps
Can initialize game state with assets on another chain
Lessons for game studios
