Being a central aspect of crypto gaming which is taking over mobile gaming and the entire gaming industry, tokenomics is a fast emerging field in blockchain-based game design.
Tokenomics is often a complex and oftentimes confusing topic, and this article offers a complete guide to tokenomics and how it works especially for mobile gaming.
What is tokenomics?
Generally, tokenomics was birthed with the blockchain era and it is a combination of two terms: token (specifically a crypto token or coin) and economics which refers to the financial aspect of the interactions within a blockchain ecosystem.
Tokenomics in mobile gaming
With the evolution of blockchain, cryptocurrencies, and non-fungible tokens (NFTs) there is a paradigm shift within the mobile gaming industry towards crypto-based games that heavily rely on micro-economies built around their tokenomics.
A game’s tokenomics align the motivations of various parties including the creation of profit for developers to the creation of partial income for gamers and investors in the now popular play-to-earn (P2E) and MMORPGs games.
A well-designed tokenomics means a fun mobile game, increased value and rewards for all the involved parties.
While the tokenomics aspect is not entirely new since it existed in the gold farming and power levelling of MMORPGs like the famous World of Warcraft, it is the concept of decentralization and autonomy brought by the crypto revolution that has caused stimulation in the gaming industry.
It is the crypto revolution that led to the creation of blockchain-based games and metaverses that build ecosystems around native crypto tokens and non-fungible tokens (NFTs). By using blockchain technology, these games are decentralized and can be accessed both on mobile and computer devices.
Examples of popular blockchain games and metaverses include Axie Infinity built around the AXS token, The Sandbox built around the SAND token, Decentraland built around the MANA token, and the new Dreams Maker built around Dream X Token (DRMX).
The native tokens form the core of the tokenomics of crypto gaming. Most blockchain games have a fixed token supply while for others the token supply is dynamic with participants being given the chance of mining tokens.
The total supply of the native tokens are distributed for various purposes including initial public sale, decentralized autonomous organization (DAO) treasury, rewarding the development team, marketing & PR, day-to-day operations, future game development, and incentives (rewards).
After the development phase, most crypto games including mobile conduct Airdrops or initial public sales via initial coin offerings (ICOs), initial exchange offerings (IEOs), initial DEX offerings (IDOs) or initial NFT offerings (INOs). However, some first conduct private sales to their close partners before opening the sales to the public.
Besides purchasing the native tokens during initial sales, participants can also earn the tokens as rewards and incentives for playing and taking part in the development of the game. Unlike traditional game economies, today’s crypto games offer motivations to developers, players and investors depending on their level of participation.
In addition, the majority of the native tokens of the crypto games are available for trading on popular cryptocurrency exchanges where they can be bought from.
Native tokens in blockchain mobile games
The native tokens of blockchain mobile games have several use cases both within and without the games’ ecosystems. These use cases include:
Trading on secondary markets
Holders of the native tokens from the crypto games can trade the tokens on most crypto exchanges or even convert the token into fiat money using available off-ramp service providers.
This provides an additional source of income to the token holders.
Staking
The token holders may also choose to stake their tokens in various crypto staking pools either in the ecosystem of their respective crypto games or in crypto exchanges and other decentralized finance (DeFi) protocols majority of which are easily accessible through mobile phones.
By staking the tokens, holders earn staking rewards.
Minting, crafting, breeding and trading NFTs
The majority of the crypto games involve NFTs either in form of avatars or in-game assets and these NFTs are bought on the various NFT marketplaces using the native tokens.
Besides the already existing NFTs, participants are also allowed to mint, breed, and craft the NFTs; processes that require users to pay using the native tokens.
Governance
Holders can also use the native tokens for voting through decentralized autonomous organizations (DAOs), often on matters relating to the governance of a game, its treasury, or its community.
Conclusion
Game tokenomics and native crypto tokens form the core of the micro-economies of the various mobile gaming metaverses.
Tokenomics play a crucial role in determining the experience of involved parties and in the development of blockchain-based mobile games and their respective communities mostly through incentives/rewards; something that has resulted in a paradigm shift from the traditional mobile games that were based on the play-to-play model.