The recent crypto bear market has cast a shadow over Web3 games. Whilst Axie Infinity brought Web3 gaming to mainstream consciousness, and it is now frowned upon by builders and investors alike.

Just as excitement over the “play-to-earn” phenomenon emerged suddenly and rapidly in 2021, the scepticism over the very same phenomenon has accumulated similarly, with more than a handful “writing off” Web3 games as a fad.

Yet I believe we are at the cusp of an evolution, where we can look to the next generation of web3 games emerging as higher quality, more sustainable and most importantly, more enjoyable.

As Stanford Graduate School of Business students wrote, “Gen one Web3 games were built by crypto natives, game enthusiasts and traditional finance professionals”. This led to the fallacy, “We enjoy playing games, so we know how to build games.” The equivalent of this would be, “I enjoy eating delicious food, so I know how to be a Michelin-star chef,” a misguided belief that can unravel quickly.

The next phase of Web3 games will be built by strong game developers who already have experience building fun and engaging games without the shackles of rushed token launches or Ponzi-like game economies and are now looking to elevate the game with Web3 tools.

These builders understand that a Web3 game is first and foremost, while tokens are accompaniments that deepen engagement and engineer incentives but cannot replace intense gameplay.

These Web3 games will be more than games; they will be economies, driven by supply and demand, possibly underwritten by tokens and access gated by NFTs.

This multi-part series explores building health economies, discusses mental models for supply and demand, and highlights best practices around Web3 game tokenomics.

Also Read: All hands on deck: How Iron Sail strengthens blockchain gaming ecosystem through collaboration

We have started this conversation with the ‘demand-side’ of the equation before discussing the ‘supply-side’ of tokenomics because tokenomics are not sustainable without a product (in this case, a game) that is in demand. A game with no demand is effectively dead.

Patrons, players and farmers of Web3 games

Demand for Web3 games comes from three persona groups: patrons, players and farmers.

• Patrons are die-hard believers who often have an ironclad belief in and support of the game. Patrons are often the early adopters in the community, the investor who writes a cheque before a line of code is written, or the individual who joins a new Discord server and starts conversation religiously. Patrons often feel emotionally connected to the game or the team behind the game: a passionate but small group.
• Players are true gamers who participate in the gameplay for various non-financial reasons. The player is someone who invests a non-trivial amount of time in engaging in the game and, at best, considers the financial reward as a fringe benefit.
• Farmers focus almost exclusively on the financial upside of the gameplay. The primary objective of investing time in the game is to earn a financial return exceeding the initial participation cost in the shortest possible time period.
• Examples include the popular Axie Infinity scholarship model, where farmers would invest in in-game character NFTs and rent the characters out to players on a revenue-sharing model instead of playing.

Persona	Mindset	Play the game?	Leave when earning stops?
Patrons	I am here to support	N	N
Players	I am here to have fun	Y	N
Farmers	I am here to make money	Y	Y

These three personas are not mutually exclusive, even within the same game. An individual who begins as a Patron (before the game is launched) can transition to a Player (when the game launches), then onto a Farmer, due to a change in family circumstances.

Also Read: Exploring the creator economy in gaming

All three personas are usually present to some extent, yet one will be the dominant persona at a time.

The challenge for game developers is to keep a close pulse on the demographics of their population and how they shift over time. All three personas are necessary to build a healthy web3 game ecosystem.

The Patron is needed to seed initial confidence, attracting Players and Farmers; the Player is needed to engage with the game and consume/utilise game assets produced by Farmers; the Farmer is needed to produce game assets for the Player, especially those who are time poor.

The impact of an imbalanced population is evident among “Gen 1” Web3 games like Axie Infinity, especially between Players and Farmers. When the population’s majority are Farmers, excessive value is extracted from the game, while there are insufficient Players to consume the economy.

This leads to “Ponzi-nomics”, where new entrants largely support the value of game assets until the supply of players and the token price craters.

Patrons will always remain a small but important proportion of participants and have a less material impact. So, what then is the Goldilocks ratio between Players and Farmers? 

A quick online literature review does not reveal much insight, but having informally surveyed several game studios with a track record of building games with decent traction among non-Web3 audiences, the consensus is 7:3, out of every 10 participants in a fun, seven or more have to be Players who consume game assets. At the same time, three or fewer should create assets as Farmers.

This ratio is anecdotal: if you have evidence to prove or disprove this, please reach out at qinen@saisoncapital.com; we would love to engage.

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One of the major enablers of new digital products and business models for the current and future transformation of enterprises is agility.

Enterprises need the flexibility to redesign the connectivity for each location and operations in line with their ongoing transformation process. Connectivity used to be an enabler, but as new products are developed and portfolios evolve in modern digital business, it is becoming an intrinsic part of the product itself; take the connected car as an example.

Therefore, enterprises will need even greater flexibility in all aspects of their connectivity to make it fit for the future, including the capability to adjust bandwidths, optimise latency and security, and reinforce the resilience of their connectivity in line with the business demands and application requirements.

And creating secure and customisable connections to new business partners as and when needed. Not to mention time-independent booking and adjustment of services and intelligent automation.

Comparing the new demands with legacy enterprise connectivity is a bit like comparing an elite athlete with a couch potato. The couch is comfortable, but modern digital business requires strength, resilience, and flexibility to win the game.

Understanding the connectivity landscape of the modern enterprise

So how is the enterprise connectivity landscape transforming?

A digitally transformed factory, for example, has more data requiring storage and processing than a legacy factory. This data will most likely be stored and processed in the cloud to enable access from geographically dispersed company locations to monitor KPIs and QA in a centralised way and to provide management with aggregated data for making decisions.

As a result, modern enterprises have an increased demand for aggregating and transporting data. But beyond this, a factory is no longer the preserve of the manufacturing company alone. With concepts like robotics as a service, a factory provides a home for intelligent machines owned and operated by external partners.

Consequently, it is necessary to optimise the connectivity to headquarters, branches, production plants and specific external parties. Intelligent production processes, be that the use of robots, smart quality assurance, or additive manufacturing (3D printing techniques), place much greater demands on the resilience of the connectivity. This requires guarantees in the form of high-level service level agreements (SLAs), dedicated bandwidth, and flexibility.

Also Read: Amidst uncertainty, digitalisation requires reliable connectivity

Added to this, companies also want to consume more services from centralised clouds from multiple cloud providers simultaneously as part of their multi-cloud strategy. In this case, end-to-end flexibility is required to guarantee the bandwidth needed for the given service.

Companies today no longer consider the historical A-to-B locational conception of connectivity. Instead, they require more fine-grained connectivity between applications, workloads, devices, and users.

The conception of connectivity is no longer about connecting sites in, for example, two particular cities; rather, the focus is on goals like setting up connectivity between the company’s AI cluster in a centralised hyper-scale and the locally hosted on-prem SQL database.

The importance of resilient, fast, high-bandwidth, and flexible connectivity from the enterprise network to the cloud and to other digital infrastructure service providers, as well as to any service providers involved in the company’s digital value chains, cannot be underestimated. The evolution of modern interconnection services must follow and reflect the needs of modern business.

Designing these modern interconnection services, therefore, needs to be approached in two ways: firstly, by creating a robust, secure, resilient, and high-performance physical infrastructure, and then by adding flexibility and simplicity through virtualisation and automation, thus enabling a range of customisable services.

Resilience is essential for keeping data traffic safe and flowing

For a digital business, trust in its connectivity infrastructure is essential. Day-to-day operations depend on fail-safe transportation of data, be that customer data, maintenance of systems, analytics, or any other of a myriad of essential data-driven use-cases.

Unfortunately, in the real world, incidents and outages are a part of life, and it is necessary to build connectivity in such a way as to minimise their impact of these. Just as a resilient immune system helps the body avoid infection or bounce back rapidly from health-related setbacks, connectivity requires its own form of resilience.

A company can design its critical digital infrastructure to be more immune to real-world events by building multiple layers of redundancy in technology, geography, and business partners.

Also Read: Conservation technology: The role of data and tech in addressing the biodiversity crisis

Sounds great, you say, but how is this even possible?

Redundancy, neutrality, and diversity in digital infrastructure are key to the greatest level of resilience. This must be factored into the design of enterprise connectivity from top to bottom.

Take what we do at DE-CIX as an example: Physical redundancy is an essential hallmark of the design of DE-CIX platforms, necessary to support the SLAs we guarantee our customers. The distributed nature of our platforms, accessible in many geographically dispersed data centres, and redundant deployment of our core and edge infrastructure ensures resilience against localised outages.

Furthermore, we purchase connections as diversely as possible along multiple routes so that connectivity can be maintained between locations, even in the case of localised outages along one pathway.

This means we ensure redundant and non-overlapping cable connections between every data centre where our platform is accessible, creating a highly robust and resilient, failure-safe interconnection environment.

We seek the highest levels of diversity on multiple levels: different operators, different cable stretches, and different upstream products. Interconnecting our platforms globally, the same applies: we share our capacities across different sub-sea cable routes and ensure that these paths do not overlap.

Enterprises should also apply this best practice approach to ensure resilient connectivity for their critical data flows and value chains, the foundation of business continuity in the digital economy.

How enterprises can get what they need when they need it

Bearing in mind the need for resilient connectivity, it is not surprising that enterprises are looking for secure and resilient alternative means to access their chosen cloud services. The demand for private cloud connectivity is constantly growing, and digital businesses meanwhile understand the pitfalls of connecting to clouds via the public Internet.

At the same time, flexibility and simplicity in handling interconnection services are paramount to enterprise agility. An access model (one access, multiple services) for the booking of interconnection services, paired with a self-service portal and API capabilities, ensures easy booking, scaling, and adjusting services. This makes a multi-cloud strategy feasible and manageable and simplifies general interconnection.

No matter whether it’s for direct access to hyper-scale and specialised clouds, for sourcing and using specific applications from the cloud (like Microsoft 365), or for securely connecting and exchanging data with business partners in a secure and exclusive environment, enterprises require a dedicated infrastructure to consume the services they are using.

Therefore, even when the underlying infrastructure is necessarily shared (such as the global Internet backbone and interconnection platforms like those operated by DE-CIX), enterprise customers need a virtual point-to-point private line, meaning that the enterprise connectivity is logically separated and has guaranteed reserve bandwidth on the infrastructure.

Also Read: Why Asia Pacific is a hotbed for bold ideas in material technology and sustainability

The further evolution of cloud connectivity will involve greater interoperability and cloud-to-cloud communication.

Technology-neutral integration enables the service edge

Technology-neutral integration allowing the service to the edge is needed to fulfil the interconnection needs of future enterprises. Here again, DE-CIX, the world’s leading operator of neutral interconnection platforms, can stand as a model.

The DE-CIX ecosystems are home to all the digital service providers that the business world needs access to, the data centres, the network operators, the cloud and content providers, the content distribution networks, and many more.

As an innovative interconnection specialist, we are responsible for providing flexible integrated solutions in terms of an on-demand network as a service and customers beyond the scope of traditional interconnection services.

The best way for enterprises to ensure the greatest resilience of their connectivity to locations, partners, and resources in the cloud is to not only build out their redundant connectivity with multiple contractual partners but also to capitalise on the redundancy and diversity built into the distributed and neutral nature of the DE-CIX infrastructure.

As an agile facilitator, an interconnection specialist like DE-CIX can simplify and streamline the process of creating resilient connectivity for the digital transformation challenges of the modern enterprise.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

Join our e27 Telegram group, FB community, or like the e27 Facebook page

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The cryptocurrency regulations need to evolve since the existing laws are based on a centralised system, said Atsushi Taira, Managing Director of startup investor Mistletoe Singapore.

Smaller but advanced countries like Singapore and Estonia can take the lead and introduce innovative regulations.

“Blockchain is part of society. Regulators need to consider the decentralised nature of blockchain [while drafting laws]. Although they cannot control everything, they can at least put a minimum requirement like KYC (know your customer) for crypto transfer between two parties. It is necessary to prevent instances of anti-money laundering,” Taira said in an interview with e27.

There are different kinds of KYC models. For example, blockchain-based distributed KYC or zero-knowledge proof or ZKP (ZKP is a cryptographic method to prove that something is known to a third party without having to reveal the underlying information).

“Regulators need to be savvy enough to understand the technology and then accept new types of KYC,” said Taira, previously Senior VP (Global Business Strategy) at SoftBank Group. “If regulators push the existing KYC system (based on the concept of a centralised banking system), people won’t accept that. So regulators must be more advanced and adapt to the blockchain-based regulation.”

Taira also stressed that if Singapore and Estonia (economies where the financial system is advanced) can change the regulatory framework to accept the new forms of KYC, it can be a good starting point. Changing regulations may not be possible in big countries like Japan and the US because it’s hard to reach a consensus among various stakeholders.

Also Read: The brother of SoftBank founder Masayoshi Son is heading to Singapore, following Eduardo Saverin’s footprints

According to Taira, the ongoing financial crisis is a course correction and is good for the global startup ecosystem. When a recession occurs, all the bad guys and mediocre startups will go, and only strong ones will remain. In addition, the valuation will become reasonable. In that sense, it is an opportunity for the startup ecosystem.

“In 2009, when the economic recession happened, it proved to be a great vintage for VCs because they could find great startups and invest with a reasonable valuation. The return on investment was also good. So a legitimate startup and technology don’t need to worry about the current slowdown. Plus, it is a temporary phenomenon.

In his view, there is a good demand for central bank digital currencies (CBDCs) around the world, especially in the wake of the recent Luna and UST crashes. “We will require stablecoins in the future irrespective of the Luna and UST crashes. This will prompt central governments to introduce digital currency. When a country, for example, China introduces a CBDC, the US may be freaking out: ‘Oh my god, if China’s CBDCs spread worldwide, it will impact USD’. Because of that kind of attention, I think governments will consider introducing digital coins. I don’t know if it is good or bad for blockchain, but they will do it anyway.”

Mistletoe Singapore is a unit of Mistletoe Japan Inc., which was started in 2013 by Taizo Son, the youngest brother of SoftBank Founder Masayoshi Son. It primarily invests in hardware solutions across the globe and has invested in over 60 companies, including Ninjacart, Golden Equator, and Hatcher+.

The firm recently started investing in the Web3 domain. The primary focus is next-generation Web3 companies that are striving to make a social impact. For example, tokenisation of energy/electricity, carbon credit, and solutions targeting the unbanked population (it has already invested in an investment DAO in Vietnam).

“In that sense, we focus on linking with the real world. We hope that Web3 will change society,” Taira concluded.

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