Crypto gaming and the monkey run: How we should build the future of GameFi


You’ve seen it before. An amazingly talented gaming founder joins a top-tier studio that promises to create an amazing gaming experience built on the industry’s most powerful engines. But then, it happens: It’s paired with a suspicious shitcoin that launches well before a morsel of game content has fallen.

In the not-too-distant past, the mainstream media may have referred to a hyped-up crypto bull market – but, with bumpy app floor prices still cloudy, we’ll respectfully call it: the monkey race. Market volatility aside, Metaverse evangelists still claim that Web3 Finance will revolutionize the way games are monetized. I’ll call BS.


Right now the focus is not on the new monetization model. The only thing these tokens raise is challenging is the idea of ​​capital formation – not monetization. Although tempting, Monkey Run has quickly led some of our most talented founders to believe that they should be raising vast amounts of capital from tokens printed out of thin air as a flawed alternative to a real monetization strategy.

We are ready to change the mindset. The important question is this: How can we make the hyper-capitalized, hyper-hyped Web3 Metaverse project work – for gamers, for founders, and for investors?

related: Blockchain games go mainstream

Path #1: Schilling is Thrilling

Economically speaking, everyone does well in the monkey race. From leading smart contract platforms to the experimental DeFi protocol to the next Axi Infinity copycat, Monkey Markets beautifully proofs the notion that there really is no shitcoin – just rubbish prices.

For a clearer picture, take a trip with me through the deal pipeline to the heart of crypto venture capital, where shiny new metaverses and gaming projects constantly flood inboxes. Links to cinematic trailers, Unreal Engine mockups, and complex “token economics diagrams” abound, their token launch(s) and their initial decentralized exchange offering raising millions on simple agreements to adequately prepare their token launch(s) for the future. Parrot the demands.

The game’s launch date, you ask? Maybe it’s a planned “mini-game” for Q3, or a massive triple-A launch in mid-2023. What about the token’s utilities on day one? Well, you can stake them for more tokens, and they might even give you access to the game’s first NFT sale. Sometimes they even advertise a non-government utility token and a governance-less governance token – justifying their existence as the big daddy exchanges agreed to list them within a few months.

This may read like an exaggeration, and I wish it were. However, these are the most troubling realities facing the current scenario of token launches in the midst of a bull run – sorry, a monkey market. They capture short-term enthusiasm without a permanent plan for building the future. These pitches capture a moment – but not the right perspective and business model needed for the future of gaming.

related: Metaverse-as-a-Service Will Be the Basis of the Next Internet Age of Web3

Path #2: Build to the Last

The GameFi token landscape is incredibly fragmented. While the initial liquidity is attractive, premature coin launches carry serious risks. The balancing act of creating sticky tokens and successful game design actually provides a narrow focus for Project Token: user engagement and retention, not pure monetization.

Final optimization problem? Maximize additional user retention and engagement for tokens emitted per project, subject to certain levels of existing Web3 revenue and user community.

You don’t need your own project token immediately to monetize your application. Tokens are simply forms of exchange for the assets that your virtual world generates and sells. If your Web3 game can’t operate on an already liquid, volatile token or worse, a well-established stablecoin, your game is in trouble. Try again!

Instead, raise enough private capital to comfortably get through a beta launch. In beta, work with the smart contract platform of your choice to integrate your native token and stablecoin of your choice into your game. Begin to observe your main game loop and major revenue streams.

Think of yourself as a data scientist! Is there any user behavior that you know is defensively funny but still performs poorly? Is this such a valuable loophole that maybe subsidies could start things up? Is currency fluctuation something your users avoid? Where are your most engaged users coming from? How many low-paid workers are there in developing countries? How many prosecutors are looking for the next hip social hangout? How many whales are driving the auction through the roof?

Ultimately, you should design your token to incentivize users to remain in your world. For example, like foreign currencies, you can offer a consumption discount if you pay in your own Project Tokens – but you keep the price of your digital goods in USD. You can also use the layered-risk Treasury strategy, whereby you accept USD (and equivalent), the L1 or L2 of your choice, and your project token. This ensures that you have a large, existing audience that is immediately equipped to connect with your world. It also helps keep you safe during crypto and macro recessions, and the addition can be used to reward investors and users without the pressure to sell on your tokens – among other big benefits.

related: How blockchain games build entire economies on top of their gameplay: report

The most important thing you can do as a gaming founder at Web3 is to focus on improving your game. Tokens can’t make your game – but they can break it.

The Right Priorities for a Sustainable GameFi Future

The unique value of gaming and metaverse applications is not the tokens they transmit. Project value is created by revenue, which in the long run is generated from unique, in-game digital assets. When these NFT-based assets are owned, experienced and understood by a community, it builds and creates value – otherwise said, the community’s reluctance to sell increases.

I’m excited for the day this model becomes the status quo – because it means we’ll be closer to the best Web 3 game we’ve ever seen. Instead of rewarding short-term bag grabs in the market, we will see improved gameplay and tokenomics wrapped up in a gaming ecosystem built for the long term.

Engagement, retention, then monetization. Optimize for those things in that order. Choose the right path

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.

The views, opinions and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

alex ye Leads Republic Crypto’s early-stage research, investment and token economics strategy – helping to secure and advance cutting-edge projects for Republic Crypto’s advisory portfolio. Prior to Republic Crypto, Alex ran fintech and blockchain investments at ZZ Capital, crypto fund research at Top Tier Capital Partners, a $7 billion venture fund, and an endowment of the University of Chicago, his alma mater.