👨🏫Tokenomics
“ Gold and silver are running out; but virtue, constancy, strength and poverty are never exhausted.” -Charles de Montesquieu
Considerations on the causes of the greatness of the Romans and their decline (1734)
“ In five years, you will actually value your time properly. And instead of being harvested for advertisements, or being fleeced for dollars to buy stupid hammers you don't actually own, you will be playing some on-chain equivalent game that will be just as fun, but you'll actually earn value and you will be the harvester. That isn't a fringe viewpoint that P2E will be the dominant form of gaming in a few short years"
Alex Ohanian, Reddit's co-founder
Economics (or political economy, economic science) is a discipline that studies the economy as a human activity, which consists of the production, distribution, exchange and consumption of goods and services. The name economy comes from the ancient Greek οἰκονομία / oikonomía which means "administration of a household".
Lionel Robbins, former head of the economics department at the London School of Economics, defined economics as follows: “ Economics is the science which studies human behavior as the relationship between ends and scarce means which have alternative uses. Scarcity is a central concept in economics. It means that something exists in less quantity than it would take to satisfy any desire. Not everyone can have it all; people have to make choices.
Whether it is the legend of Sissa ibn Dahir, inventor of the ancestor of chess, chaturanga, games, often of chance, archeology would indicate that the first games date back nearly 5000 years in ancient Babylon and the first countries to have practiced them would be Ancient China, Rome, Egypt and India.
5000 years ago, the senet, the first board game in Egypt and 2000 years ago see at the same time, the invention of the lottery by the Romans, money and games have always been partners never far away one of the other. Since then, and especially recently with technologies, from the microprocessor in 1971, until today, the phenomenon of the couple (game - money) weighed a little less than ten billion dollars in expenditure for the years 2010. graph opposite shows that with the approach of new disruptive technologies (Blockchain, AR, etc.), spending continues to grow at a rate of several billion dollars more each year to be around 75 billion in near future.
From Emotion to NFT
The game is an infinite source of the extension of the imagination. In this sense, it develops aptitudes (cognitive, psychomotor, etc.), does not develop violence [2], and allows one to live (in the emotional sense) adventures, situations that are normally impossible: piloting a rocket, having the gift of ubiquity, lifting a car, killing people, ... even getting killed. Invade a country, lead thousands of people, be the richest in the world. (Hello Elon).
Online games have brought a great wealth of community development: with available servers, it becomes possible, in private or in public, to join a scene and participate in it. From Ultima Online to World of Warcraft via Roblox, Fortnite, and other Clash of Clans, each game has its community today.
While the notion of victory, of value and therefore of money was more or less present, the notion of Token and NFT bring an additional dimension that even becomes foundational in the context of certain games.
Indeed, the notion of token makes it possible to make property historically and factually inalienable and the notion of non-fungibility therefore makes it possible, through a single standard, via a wallet, to use exchange in a simplified way and track _ its valuation, while also reducing all forms of intermediation to a minimum.
The notion of added value intervenes in a framework of exchange: wanting, doing or having this and initiating an exchange is enough to value an entity where logically the two partners of the exchange are winners: the one who sells prefers to obtain the counterpart of his sale rather than holding the entity itself (dollars against an NFT for example) and similarly, the other party prefers to part with its currency to obtain ownership of what was for sale rather than keeping its currency.
By adding a more formal framework (a game, rules, transformation abilities etc) and rarity, and the intelligent organization of it, it becomes possible to play while producing value. This is what we exploit, even if the theory here is oversimplified.
Having a good game means that you have to manage the stocks, the flows, and the balances that depend on them all at the same time. Too much of anything will kill the set. We have therefore set up a large number of monitoring KPIs and a set of equations to balance with variables that will need to be controlled.
Thus, participating in the game will allow each player to create a certain added value, where each ability, skill, character can be bigger, stronger, more beautiful, faster, more powerful, more rare etc. and will also be able to carry out missions and other quests with greater productivity.
In this sense, these concepts, this power, these capacities, these skills will necessarily have a value that it will be possible to monetize. We organize the Gameplay and all the attributes around it so that this play & earn is a success. We know the theory perfectly, we also have a practice counting in tens of years and thousands of hours. Finally, we have the experience of very large-scale projects, with very substantial budgets as well as fundraising.
Exchange, cash flows and fees
Simplicity and transparency being the best means of readability, certain transactions with added value will generally be taxed at a few percent, and in a reasonable manner. In reality, this rate is not so important in itself: it is not like a VAT which is passed on to the final consumer: it is an element of adjustment of the value of the currency in the financial equation of overall game balance. At any time, for example, we could decide to lower the taxes and reduce the monetary contribution. Everything is a matter of justice and balance so that the game remains above all a game and that it is sustainable over time.
Examples on 3 distinct cases
Let's take 3 distinct examples: the marketplace, arena tournaments of the combat or race type or the Services.
Marketplaces are of two kinds. Internal and external .
The internal marketplaces are those setup or proposed by Metacube.Foundation to allow the purchase and sale of all entities (from a stere of wood to a delegation of power for example). On these transactions, only tax is levied and it exists in the form of burn. This burn ratio _ writes off the burn rate from your currency holding balance. This automatically enters into the equation which aims to stabilize the currency. The creation will then be based on the general equation with a weighted redistribution during quests. Thus, money creation is always in balance, and aims to stabilize the value to fight against inflation or its depreciation.
The external ones are those where creators can offer their creation for sale. On these platforms, where you can find all kinds of objects, the acquisition is made in FIAT currency or in MTCB currency, with regard to the existing parity. Again a fixed tax of 2.5% will be levied.
Arena tournaments, whether 1 vs. 1 or n vs. n combat or in pure race mode (with 1 unique winner or several in a row) are subject to paid registration in MTCB (or via MTCB by the purchase of FIAT). The proceeds of these registrations will be almost entirely donated to the winner(s). Here too, a burn tax exists.
In the services, a burn tax can officiate. For example, in a 1 versus 1 combat context during a chance encounter or during a strategic and duly prepared raid, 2 things can happen. On the one hand, the fight is won and you are damaged. It is possible to use services that will repair you faster. On the other hand, if you do not have enough material to transport the goods acquired as a result of the fight, it is possible to use a service which will take into account the Mass - Energy equivalence: the famous one which will allow you to use a service to upload the content in the form of mass transformed into electromagnetic radiation to the Great Machine and then re-upload the equipment once it arrives at your place again. The power and frequency of the electromagnetic flux are demonstrated in the Appendix (the determination of with respect to the equality .
Elements of value
In any ecosystem, the key transfer asset is value. Value can be captured in the forms of:
Produce like commodities: wood, iron and stones for swords,
Services (Accelerated Repairs, ...)
Common currency to be used at later dates (i.e. sovereign currency to be used to pay taxes) or
In internal tokens, in currencies (i.e. in-game currency for in-game activities) and
NFT (i.e. the representation of digital assets)
Global model
Without going too far in the technique, we balance at each moment the well-known equation M . V=P. T
The Quantity Theory of Money (QTM) states that aggregate prices (P) and total money supply (M) are related according to the equation P = VM/Y, where Y is an aggregate form of GDP and V is velocity money. With lowercase letters indicating percentage changes (growth rate), the quantity theory of money can be expressed as p = v + m – y, with p as inflation rate and y, v and m as growth rate output, velocity and money supply, respectively.
A central implication of the QTM is that a change in the rate of money growth induces an equal change in the rate of inflation, prompting Milton Friedman to assert that " Inflation is always and everywhere a monetary phenomenon. "[3]
Instead of assuming the velocity of money or its rate of growth as a constant, we can use the equation, v = p + y - m, to allow changes in velocity to be dictated directly by three sources: inflation, output growth and monetary growth. The dynamic interactions between these three variables can be captured by econometric analysis [4].
The flow model is therefore this:
Example of a battle or race arena
In general, the issue of money is always done consecutively to the observation of the creation of an asset, and the suppression of money is always done in relation to its value, governed in particular by the Fisher equation.
Main principles of management
Composition bias
A term coined by economist John Maynard Keynes.
This bias can be explained as follows: “ We can think that what is good for the individual is necessarily good, by extrapolation, for the groups formed. ”
But this is false. It is quite easy to demonstrate this in the following way: if a person has personal cash flow problems (for food, for example), they will reduce their spending on what is not necessary. This may seem both logical and intuitive. However, the group does not necessarily have the same parameters or the same objectives. For example, a government, in times of crisis, may not have the opportunity to reduce its expenditure.
Axie infinity had made that mistake. Indeed, to meet the demands of guilds made up of people who managed to make a living from their game, the game's economy found itself in danger.
It is therefore important to pay close attention to monitoring the needs and consequences of acts of economic management in the game, sometimes considering that the different entities have conflicting needs or that the consequences of actions for others can have paradoxical results. Wrong. We must therefore succeed in balancing the individual needs of the players with the monetary consequences at all levels; it is a key to a sustainable P2E.
Understanding the relationship between Mint and Burn
Axie Infinity had made the mistake of completely declopling them_ to satisfy a goal without considering counter-intuitive and potentially catastrophic consequences.
In a situation where tokens can be taken out of the economy and exchanged for other assets such as a P2E, this becomes critical. Notably, the behavior of some users leading to deflationary environments (exchanges, hoarding, staking, ...) has only just been discovered, and developers must be reactive to handle these situations.
Manage net capital outflows
Appreciation and appreciation of tokens may seem like a good result on paper, but it can have harmful long-term effects. Just as can be seen in a real economy, the appreciation of the local currency (token) leads to an increase in the purchasing power of external goods (other tokens, NFTs outside the ecosystem, etc.) compared to in-game goods (e.g. in-game assets) which in turn increases net capital outflows. This takes the engagement away from the game.
It is then very important that the system can react by acting like a central bank in order to manage the supply of tokens.
Centralization-decentralization
Finally, we believe that the theory tells us that at least initially, for P2E models, they must find themselves in a paradoxical situation of centralized decentralization. Indeed, the characteristic of having a central view of all flows is necessary for management. If not, then a lot of assumptions have to be made and this will often turn out to be catastrophic. This would necessarily imply poor economic health, a drop in engagement and less and unsustainable income for everyone: players, but also investors, founders, developers. The risk obviously is death at the end of the road.
Synthesis
Before being a play and Earn, Metacube wants to be a revolution through its game, coupled with an extremely sharp, competent and serious macroeconomic, budgetary, political and fiscal policy. Monitoring and very pro-active activity will be carried out on the currency in order to guarantee it the best value.
It is therefore important for us above all to make a good game (and in this sense, the community of several tens of thousands competent and eager gamers will be the best input : they will be both advisors, payers and experienced: we will be 1000 times stronger at 50,000 than at a few tens!
Distribution
Company / Founders / Shareholders ~25%
Dev/Studio ~70%
Foundations ~5%
At this stage, the distribution, which we want to be the fairest and most balanced, has not yet been definitively decided (When we reviewed a very large number of white papers, we were surprised to see how much the figures could vary or are inconsistent or worse, on the contrary, incredibly precise when there was still so much to do, show, explain and execute).
https://www.statista.com/statistics/558952/in-game-consumer-spending-worldwide/
Because the studies show without ambiguity that the difference between game and reality is perfectly integrated and that these games rather tend to channel aggressiveness (see for example the work of researchers Kutner and Olsen, 2008 )
Friedman, Milton. “The Counter-Revolution in Monetary Theory.” Wincott Memorial Lecture, London, September 16, 1970.
The analysis uses spectral methods; see Sargent, Thomas. Macroeconomic Theory. Academic Press, 1987.
Last updated
