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By Project Lambo
Can you spot the difference between tokenomics and in-game economies when it comes to blockchain gaming? Most of us can't. People often mix up tokenomics (dealing with tokens in a decentralized system) and in-game economies (how the game rewards and values things) in play-to-earn gaming.
Play to Earn games are booming and are set to become a $8.85 billion market by 2028. Hence, it is imperative for players, investors, and builders to clearly distinguish between tokenomics and in-game economies.
By tokenomics we mean managing the supply and demand of tokens in a decentralized system. In-game economies are what get a player hooked to the game. It involves player experience, rewards and in-game values. Each blockchain or traditional game has its own economy. It could be as basic as buying items from the game's marketplace. These in-game items could be weapons, masks or other accessories. The price is determined by their rarity, usefulness and how unique they are. The rarer an item is, the more valuable it will be. This is a fine balance of supply and demand.
However, tokenomics is how tokens are distributed. These tokens are the same, and each has the same value. The in-game economy is what keeps a player motivated to progress through the game, interact with other players and earn rewards.
Typically, game developers control this economy. They set prices and manage supply. But in blockchain gaming, players have more control. They can own, trade, and even create in-game assets. Hence, they make the economy dynamic and decentralized.
In Web3, the design of this economy is crucial. It should be engaging and balanced to keep players interested. A well-designed economy can make players happy, keep them playing, and even encourage in-game purchases. As gaming evolves, understanding this system becomes even more important.
What is Tokenomics?
Tokenomics is a portmanteau for 'token' and 'economics. It is a study of the supply, demand, valuation and distribution of cryptocurrencies. Tokenomics includes how tokens are created and burned, their utility and more.
The tokenomics of a decentralized project is about building a lasting token system. It's not just about making a new crypto token; it's about crafting a full financial plan. Owners must choose how tokens are launched, disseminated, used, or burnt.
Key to tokeÂnomics is grasping supply and demand. Projects must decide the total number of tokens involved, whether the total supply is fixed, and how the new tokens are minted. These factors affect token demand.
Also, tokenomics explains all the practical uses of the token or the token utility. Whether it is a medium of exchange or whether it will be used to pay a gas fee. Sometimes, tokens also represent ownership and privileges within the ecosystem, especially a DAO. For example, in DAOs, tokens are used for participating in community voting.
Furthermore, tokenomics considers broader market dynamics manipulations. Investors should be aware of any major moves by influential players, often known as whales. They should place safeguards in the tokenomics to prevent users from engaging in such activities. Therefore, tokenomics is a complex play of understanding of economics, blockchain technology and market dynamics to create a thriving token ecosystem.
So, the next time you're thinking about getting into a new coin, especially you meme coin enthusiasts, take a good look at its tokenomics. As the crypto world grows, robust tokenomics is increasingly crucial for success, whether in gaming or DeFi projects.
What is an in-game economy?
Similar to reality, games also use an internal mechanism to distribute resources during gameplay. This system is called the in- game economy.
The in-game economy is what keeps players hooked through a reward motivation. The design may vary, but at its heart, the focus is to encourage players to keep engaged in the game by earning more resources. They also lose resources along the way. Hence, they want to earn more and play more. This creates a loop of gameplay.
Take for example Project Lambo, a unique Play-to-Earn game. Here, players earn rewards by immersing themselves in the world of Sheertopia. They can use these rewards to upgrade their NFT characters. Games offer unique in-game economies to provide the best experiences to players. Project Lambo offers mini-game wagering in its gameplay to make its NFTs more valuable. With the advent of personalization, games like Project Lambo use AI to offer unique gaming experiences to their players which keeps them coming back to the game.
Tokenomics Vs. in-game economies
Both tokenomics and in-game economies ultimately create and share value with their users. However, they have different focuses. In-game economies are all about offering a superior and engaging gaming experience to their users. They are more oriented towards reward-earning mechanisms and the value of in-game assets. In-game economies create a fine balance between the effort players put in and the rewards they earn. And this is what keeps the players engaged in the game.
However, tokenomics of crypto projects looks at a broader picture. How tokens are minted, released and used within a decentralized ecosystem. They also consider macros and crypto market movements.
A significant difference between in-game economies and tokenomics is who is calling the shots. In traditional gaming economies, game developers are mostly in control of the in-game economics and gameplay. They can change prices, add or remove features, or tweak the gameplay. On the other hand, tokenomics works in a decentralized system. The control lies in the hands of token holders after a token has been launched. If it is a governance token, token holders get a say in the votes. If it is a utility token, token holders may wish to hodl or sell the token depending on the market and price volatility.
In essence, both are about economies. One is about the game world, and the other is about real-world elements.
Final words
Having highlighted the differences, it must be noted that both of them seek to form a sustainable ecosystem. Be it gaming or decentralized projects. Both are hinged on supply-demand principles to create value for users. These systems are designed to significantly boost user engagement and satisfaction.
As blockchain gaming booms, it provides a delicate mix of virtual and real economies. In the future, we'll likely see more and more of an overlap of tokenomics in in-game economies.
The boundaries are fading, and the future promises a smooth integration of these two economic pillars.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.