Following the decentralized finance (DeFi) boom mid-2020, now commonly referred to as DeFi summer, people had high hopes for DeFi going into 2021. In many respects, they were not disappointed.
The number of protocols also increased rapidly, with new innovations in staking, money markets, liquidity providing and other financial services appearing on what felt like a weekly basis. Much of this growth coincided with Bitcoin’s rally to over $69,000 post-May market correction, from July to November. However, comparing the price appreciation of popular DeFi heavyweights to the rest of the market shows that the sector was lagging behind.
That’s not to say that there were no opportunities for outlandish yield. So-called DeFi 2.0 protocols like OlympusDAO, which offered over 8,000% APY, stole the show in the latter half of 2021. From July to November, the protocol’s TVL skyrocketed 9,500% with a corresponding 2,000% increase in the market cap of its token, OHM. However, as the crypto market corrected into 2022, OlympusDAO’s rise was followed by a rather spectacular demise, seeing OHM drop by over 98% from its highs in November.
DeFi has been somewhat dormant in 2022. Although growing with Bitcoin’s push to over $47,000 at the end of March, the TVL in DeFi protocols is still down compared to where it was at the beginning of the year.
Those individuals that find themselves on the hunt for yield might end up further afield and stumble upon what could be described as DeFi with a twist, dressed up with a different UI and UX, and incorporating elements which may appeal to a wider audience: play-to-earn (P2E) idle gaming.
This article will provide a brief overview of what idle gaming is and why a marriage between idle gaming and DeFi has the potential to be a rather happy one. It will look to do this by analyzing two exciting upcoming idle games, Crabada and Bridgeworld, touching on what makes the games and the sector more widely particularly interesting.
Idle gaming is a gaming genre which minimizes a player’s interaction with the game. Idle games are designed to be able to be left running for extended periods of time, indefinitely even, without interference by the individual.
Gameplay in idle games often focuses around revenue generation. Take the popular game, AdVenture Capitalist, which has had over 20 million downloads, as an example. In AdVenture Capitalist you are an enterprising entrepreneur seeking to expand your wealth and empire. Players start with a lemonade stand, and grow their enterprise to making pizzas, managing sports teams, making movies and even running banks. Every business purchase increases your profits, allowing you to continue to expand. The game is idle as players continue to generate profits even when they are not playing. Players can opt to log on and spend their profits, but this is not a necessity.
To some, a game in which you must wait for extended periods until you can afford to make your next move might sound boring. However, they’d be mistaken. Idle gaming cleverly takes advantage of human psychology to create a highly addictive gaming experience.
Everyone wins. It might be that player A visits the game more frequently than player B, they make adjustments to maximize their yield generation strategy, and are rewarded for doing so. But player B, who goes a longer period of time before returning to the game, returns to a hoard of cash and also gets the same sense of satisfaction.
An experience whereby gamers are consistently rewarded for their behavior operates to build long term retention through the process of operant conditioning. Each time they return to the game, players get a small dopamine hit which creates a powerful feedback loop making them want to come back for more.
It’s for this reason that idle gaming has the highest retention among players compared to other gaming categories as well as some of the highest daily active users.
On the most basic level, you could say that we enjoy idle games because we are simple beings. We like watching numbers go up. But what if the number represents something with actual financial value? Enter GameFi.
GameFi combines gaming mechanics, blockchain, NFTs, and cryptocurrencies to create a gaming experience where players can earn money through their gameplay. This is known as P2E.
P2E and idle gaming is the perfect marriage. If any gaming genre relies on economy design and balancing to create a good player experience, it’s probably idle. Hence, combining gaming and token economist expertise to create a financialized idle game is an exciting prospect.
Let’s look at a couple of examples.
Crabada is an idle game built on the Avalanche blockchain. In Crabada, players can mine, loot, rent, breed, and battle with their Crabada NFTs. In the world of Crabada, your Crabada can build up a combination of stats according to their classes and body parts.
The purpose of the game is to level up your Crabada and find the best strategy to maximize yield, which comes in the form of rewarding gamers with in-game tokens, $TUS and $CRA.
The gameplay styles in Crabada range from fully idle to fully active. Renting is Crabada’s fully idle gameplay option. Mining and looting require more active management. And battling, which will come out in May, requires active gameplay.
In Crabada, mining missions last four hours. Players involved in looting and mining take turns adding or renting Crabada as reinforcements until mining ends. The aim of the game for looters is to steal the miners’ rewards. If they hire more reinforcements with better stats, they will do so successfully. These players acquire their reinforcements from the Tavern in exchange for $TUS. This $TUS goes to Idle players who provide the Tavern with their Crabada which are used by miners and looters.
Renting out Crabada to the Tavern only requires a couple of clicks. Players can then leave the game and each time they come back, they will have more $TUS. This $TUS can be accumulated, used to level up, and eventually used to purchase more Crabada NFTs and generate more yield from renting, or participate in the more active gameplay functions.
The differentiating factor between Crabada and web2 idle games is that Crabada players can sell their $TUS for other cryptocurrencies or cashout for fiat and spend their money on goods and services.
But how lucrative is it? Well, based on current prices, renters can earn between $11-$16 a day. With floor Crabada priced at around $900, this represents a 350% annual ROI. For doing nothing.
Of course, it is not as simple as creating a P2E game with a reward token and high emissions schedule and you’re off to the races. You cannot skip the most important part: creating an addictive game with sound economics. You also want to be weary of relying too heavily on user growth and falling into the trap of ponzinomics. Sustainability is king.
A successful idle P2E game needs the same key ingredients as other successful crypto projects. The team must be solid, able to ship, and have the necessary range of experience to create enough demand for their project to outweigh their chosen supply schedule. The tokenomics must be sustainable and well thought-out with sensible token allocations and vesting schedules, accruing value to the community and capturing protocol growth. There needs to be a high quality community who hold a long-term belief in the project. And, the chosen technology stack must be appropriate in order to meet the project’s throughput, cost, and network demands. Arguably, these ingredients are even more important to idle game projects due to the complexity of the virtual economies they create.
Crabada ticks all of these boxes.
The team has a good balance of crypto, gaming, creative and marketing experience. The dual-token system is well designed with inflationary and burn mechanisms to manage the supply of $TUS and more demand scheduled for $CRA, the governance token. The launches of Crabada’s own Avalanche subnet, the new battle game, and the scholarship programme, are scheduled for May 2022. This should scale the game, leading to more demand for Crabada, $CRA and $TUS, mitigating the impact of upcoming token unlocks. Crabada’s community has grown to an impressive size in the absence of marketing. Organic growth, excitement about the project, and good community management have inspired community-built tooling such as Crabada Tracker, Crabada Lovers, Crab Radio and CradaDAO.
In terms of technology, Crabada processed three million transactions last week. The game is the biggest gas guzzler in the Avalanche ecosystem. This is an issue as it makes gameplay expensive. However, when Crabada moves to its subnet, the Swimmer Network, in May, gas fees are projected to drop by 85%. This could facilitate the next wave of adoption for Crabada. Exciting stuff.
Bridgeworld is a game of strategic commerce, trade and domination which sits at the center of the Treasure metaverse, a gaming ecosystem on Arbitrum with the goal of becoming the decentralized Nintendo.
Ecosystem gaming projects are linked economically and narratively through $MAGIC, which acts as the reserve currency for the entire web of Treasure metaverses. $MAGIC is extracted from the Atlas mine in Bridgeworld. Players start out in Bridgeworld by purchasing character NFTs called Legions and purchasing and staking $MAGIC in the Atlas Mine. The goal of the game is to maximize $MAGIC extraction from the Mine.
Players in Bridgeworld can opt to participate in questing, summoning and crafting in order to find Treasures, summon Legions, or create Consumables. These NFTs can be consumed or staked in the Atlas mine to boost $MAGIC extraction. Alternatively, once a player has staked some $MAGIC and other NFTs in the Mine, they can do nothing. They will generate yield for as long as their tokens are locked in the Mine’s staking pool.
Calculating the yield opportunities in Bridgeworld is more complicated than doing so for Crabada. There are over 50 different types of Legion and Treasure NFTs which can be staked in the Atlas Mine, each providing different yield boosts. Additionally, players can opt to time-lock their $MAGIC for up to 12 months to enhance yield generation.
As a rough guide, the lower end of staking APY’s in Bridgeworld nets players around 4.5% APY, and the higher end nets players around 30% APY. Higher yields are possible but are very costly.
As with Crabada, Treasure also has the right ingredients for success.
Unlike Crabada, which is yet to decentralize governance, Treasure has been community-led by TreasureDAO from the start. That said, there is a core council who have done an unusually good job at coordinating the ecosystem’s development when compared to the efforts of other projects with decentralized decision-making. Allowing the Treasure community to input into decision-making from the get-go has meant that the project has established a high-quality, loyal following.
$MAGIC’s tokenomics are also strong. The token allocations are logical, the vesting schedule was designed for long-term growth, and the demand characteristics for $MAGIC are great.
Treasure has a highly ambitious and exciting roadmap: they want to be the decentralized Nintendo. There are already over 50 projects launching or planning to launch within the ecosystem, and Bridgeworld and $MAGIC are the glue that binds everything together.
In terms of the technology, Treasure is currently on Arbitrum, but in the interest of scalability, is moving the gaming ecosystem to its own app-specific Treasure Chain, built on Cosmos. Gaming on Cosmos is somewhat uncharted territory, but the scalability promises of Cosmos app-chains create the groundworks for a promising future.
By appealing to gamers, creating a fun idle game which incorporates DeFi mechanics affords an opportunity to onboard more people to de facto DeFi and crypto more widely. If done correctly, one can create a more exciting DeFi experience without determining profitability.
Like Crabada, Bridgeworld has a fully idle gameplay option which is akin to DeFi staking in disguise, with different UI and UX. But also, and importantly, both games have complex economies which require and are receiving constant nurturing. Creating a sustainable economy is absolutely essential and incredibly difficult. Many have tried and failed.
To create a successful idle game, there must be, amongst other things: a way to spend the currency in the game; an easy way to start out; and an upgrade system and complexity or else the game will be too linear and not have enough depth. When you have these ingredients you go beyond DeFi and create a more exciting offering, an addictive yet profitable game. Both games mentioned in this article possess these important features.
This is important when considering a topic I touched on earlier: idle gamings’ remarkable capacity for retention. Retention in gaming is everything. It’s also one of DeFi’s big issues. Whether people come for the game or for the yield, if you create a captivating and addictive game, in times of economic turmoil, players might stay for the game. In this way, idle gamings’ stickiness could offer a partial solution to DeFi’s issues regarding mercenary capital and the ongoing battle to retain liquidity. It’s this battle which is responsible for DeFi 2.0 innovations like protocol owned liquidity and other liquidity as a service protocols. Perhaps these projects have missed a trick and gamifying liquidity will see GameFi defy the current discourse regarding unsustainability and outlive their DeFi counterparts.
Only time will tell.
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