Towards a Robust Economic Model in Gods Unchained | July 2024

One of the particularities of web3 video games is that, as systems in which players own their assets, they require a Careful design of its economic model . Why? Because this dimension is called to play a key role in guaranteeing its viability.

I am JFA, promoter of GU Masters, and I am convinced that If Gods Unchained interests you, this article will also interest you . Join me in this exercise of analysis.

The economy of Gods Unchained: current situation

As you well know, The development of a video game requires resources and paying for them has an economic cost . This means that, unless the development of the video game enjoys some form of patronage, it needs to generate income to cover its operating costs. Otherwise, and I think we will agree on this, it will not be viable in the long term.

In the case of Gods Unchained, it is necessary to consider that this video game it is just one of the products in the portfolio of the company that develops it , the Australian "unicorn" Immutable. As such, Gods Unchained is integrated into the corresponding business unit: the Immutable video game development studio.

I think it is worth starting by analysing the Current Revenue Streams de Gods Unchained:

• Sales of Card Envelopes (Today this is the main source of income for gambling).
• Tickets for Premium Game Modes .
• Fees for transactions in the market secondary (buying and selling cards in the ImmutableX ecosystem).
• Commissions for Forging and crafting of cards.

In addition to the above, and although I doubt that it can be classified as a source of income in the strict sense, there is also the Gradual unlocking , according to the schedule provided for in the white paper of $GODS, the game's token, of the different $GODS pools planned . Although their use is not entirely discretionary, as they are subject to specific purposes, these exchanges provide resources to the game for certain purposes (such as financing the Play and Earn, promotional campaigns, events, etc.).

Once you've defined your current revenue streams, it makes sense to ask yourself what has been its evolution over time .

Gods Unchained Revenue Trends

Section by section.

Card Envelope Sales

Even without concrete data, it is relatively simple, using the sales progression of each expansion as a reference, to conclude that it is decreasing (we will analyze the reasons later).

Premium Game Mode Tickets

The "Sealed" game mode has been one of the most recent successes, but only a small fraction of the total number of players use it on a regular basis (The stalwarts are between 3 and 4% of the total players). There are a number of "faithful" who play Sealed on a regular basis and other players who do it sporadically, depending on the conditions in force at any given time (cost and rewards).

Secondary Market Transaction Fees

Taking as a starting point that in a game of this type there are peaks of activity that tend to coincide with the release of new expansions, that the number of players remains stagnant and also the current system of incentives for players, the average volume of transactions tends to remain flat. However, there is a clearly deflationary trend in card prices, which means that transaction fees have to be, logically, Decreasing . Let's remember that the commission that Gods Unchained takes is 2% of the transaction (except in the case of Diamond quality cards, which is lower) and that, as with any source of income from Gods Unchained, a percentage goes to the staking bag (20% to be exact).

Fees for forging and crafting cards

On the one hand, and to date, the activity of crafting has been directly linked to the release of new expansions. On the other hand, card forging is a clearly underutilized functionality due to the absence of strong incentives to encourage its use. This means that the income generated by the Forge and the crafting are much smaller than they could be .

Clarification on the income generated in $GODS

It's important to note that the revenue generated in $GODS ultimately does nothing more than "recirculate" those tokens. In what sense? The Gods Unchained team has been looking for ways to avoid having to sell those $GODS (for tax and accounting reasons), although the reality is that most of the team's revenue is made in the form of ETH and USDC. So much so, that for the past few months the Gods Unchained team has resorted to buying $GODS on the market to pay for the rewards generated by the strike for the players.

Short and medium-term challenges

In light of the above data, it is obvious that the revenue generated by Gods Unchained, considered in a comparative context that contemplates its behavior since its launch and the progressive introduction of new sources (premium game modes, crafting , etc.), are not growing. Two key questions to be formulated are:

1. What volume of revenue does Gods Unchained need to reach its break-even point (neither win nor lose money)?
2. What measures could be taken to increase your revenue ?

For the first question I have no answer, since I do not know the operating expenses involved in the development of Gods Unchained. However, I can point out Some ideas as an answer to the second question .

Breaking down the business model of Gods Unchained

As you know There are different business models to achieve the viability of a video game . It is possible to offer a free product, which is financed by advertising or by the sale of user data. It is possible to opt for a paid access model, either one-off or subscription. There are also hybrid models, in which it is possible to play for free but with the possibility of paying to access certain functionalities, advantages or aesthetic distinctions (such as the typical system freemium with micropayments so common in the mobile games).

The model he has opted for Gods Unchained to date is based on Game modes that are accessed completely free of charge combined with premium game modes (which require a payment). However, in the web3 context we need to dig a little deeper. The reason is that in Gods Unchained, players not only own the game assets that are in NFT format (there are also assets that do not), but "Play and Earn" functionalities are made available to players. And here we need to take into account two types of NFT assets: those used for gaming (cards, cosmetics, etc.) and the ERC-20 token $GODS.

The fact that players get $GODS makes it possible for them to Progress in the game in different ways:

• Expanding your card collection by buying packs, secondary market acquisitions, or crafting.
• Improving the quality of their cards through the Forge.
• Improve your expertise by participating in premium game modes.
• Etc.

In addition to the above, players can convert the $GODS generated by playing games into other cryptocurrencies or sell them to convert them into fiat currency. I mean a game like Gods Unchained allows you to win "real" money and that makes it very attractive to malicious actors (interested in exploiting any flaw in the system's design) and to those who may consider Gods Unchained as a source of relevant revenue. It should not be forgotten that more than 1.3 billion live on less than 2.15 USD a day, so what for some is "small change" for others is a significant amount of money.

As far as the token is concerned, it is pertinent to note that the success of this type of model tends to depend to a large extent on the existing dynamics achieving Minimize value extraction from the ecosystem , so that a good part of the tokens that players receive are recirculated again (either by forging cards, participating in premium game modes, buying packs, etc.).

Does the current model have dysfunctions?

Gods Unchained began its journey within the framework of the First "wave" of Web3 gaming thus being a pioneer. The initial approach was to emphasize the "Play to Earn" facet, to pivot towards a less emphasis on the idea of making a profit (from "Play to Earn" to "Play and Earn") to focus on asset ownership as a distinct advantage ("The trading card game where every card and victory is truly yours").

Let the Gods Unchained team decide to explore alternative revenue generation pathways spending by players, such as advertising or selling personal data, is highly unlikely . There are several reasons, but one patent is that the small size of the number of players makes monetization through these systems not very viable. If we discard this, it is evident that there is Two "levers" to consider:

1. Assuming the same level of expenditure, Growth in the number of players .
2. Increase in the "average ticket" of existing players.

Or, of course, a combination of the previous two . Be that as it may, the first condition that Gods Unchained must meet is to be a high-quality game and the truth is that, to date, it still has many pending issues. I am not going to dwell too much on this point because it is beyond the scope of this article.

The first thing to keep in mind when analyzing the business model of Gods Unchained is that Gods Unchained is nothing more than a product. This means that it must be designed to Respond to the needs and expectations of an ideal customer (or even several). To date, different customer profiles have coexisted, from those who play sporadically to those who do so with a competitive desire or those who enjoy collecting cards, which is very normal. For each ideal customer profile ( buyer persona ) the Gods Unchained team needs to be very clear about what it offers (how this game can meet their needs better than any other) and what to expect (average customer duration, time spent on the game, expected lifetime spend as a customer, etc.). In other words, and to make this less abstract... the Gods Unchained team needs to be very clear about what the annual budget that each of these customer profiles is going to allocate to Gods Unchained should be, since that would have to serve as a reference to determine the cost of acquiring each new expansion, the cost of premium game modes and any other issues related to the game.

In a game freemium , as is the case with Gods Unchained since it is possible to start playing without spending a penny and access new features and improvements through payments, It is essential that a percentage of users who try the game become customers who spend money on it on a recurring basis over time . The higher that percentage, the better.

In line with the above, the time has come to address an important question: Gods Unchained needs to give its players reasons to be interested in acquiring and maintaining game assets. In other words: if the Gods Unchained team wants to sell assets like cards, players must have reasons to want them and consequently get their hands on them . The most obvious reason would be their use, but we are in a web3 model and that means that players do not need to own these assets to be able to use them. Let's delve into this idea, since it has enormous significance.

The most important asset, because it is essential to be able to play, are cards. And, as I said, Users do not need to own the cards to use them , it is enough for them to be possessors of them. That is, they can borrow them. And this "borrowing", which can occur in two contexts, has many more implications than it might seem at first glance, since it can be:

• Free , within the framework of personal relationships. For example, a friend may lend cards to another to play in a tournament.
• Paid , either deferred (a card assignment is made and payment is received afterwards, something common in "scholarship" systems) or in advance (through card rental platforms).

If obtaining cards in this way proves more profitable than buying them, the number of players interested in owning their cards will be pressured downwards, as will the prices of these assets . Now, is that so? Which strategy is most profitable for Gods Unchained players with the system in place, which we are analyzing? Let's take a look.

The model Play and Earn Gods Unchained makes the following features available to its players.

1. Play and Earn daily : The first 10 matches of each day played in Ranked generate shards based on rank, number of wins (including streak modifier), and quality of deck used. Depending on the number of shards generated, a proportional share of the corresponding reward pool is received.
2. Weekend Ranked: the first 18 games played since the start of this event count towards getting Core and expansion packs for sale at any given time.
3. Premium Game Modes (Sealed): Players can obtain both $GODS and cards from the Core and expansion for sale.
4. Staking : Players with wallet $GODS linked to the game get a proportional share of the available $GODS pool, with weekly accrual and monthly distribution.

Players, as economic actors, will evaluate the different options available to maximize the monetary benefit that they can extract from the game. Unfortunately at the moment it is more profitable :

• Rent cards than buy them .
• Play with a Meteorite Quality Deck than to take the risk of increasing the quality of those cards (knowing that the meta is changing).
• Score a large number of wins with a Diamond-quality deck at rank 5 , although sub-standard compared to the most powerful archetypes at higher ranks, which achieve a win rate of around 60% in Mythic.
• Etc.

Therefore, the answer to the question at the top of this section seems obvious: yes, The current system is completely dysfunctional and, therefore, it is entirely incompatible with a healthy growth of Gods Unchained in the long term. We are seeing the consequences... A card market immersed in a deflationary process, which causes players to prefer to sell any card they are not using on a regular basis before keeping it, since its market value tomorrow will be lower than today. Be careful, that in a trading card game the cards that are outside the meta see their price languishing is within what is expected, but in a web3 context there are systems to guarantee that all cards maintain at least a fraction of their value. This is fundamental, since the value proposition of the game is "own your assets" and of course, the ownership of assets that see their value reduced to zero over time is not very attractive.

So much for the bad news. The good news is that, from my perspective, This situation is still reversible . Here are some ideas to get Gods Unchained back on track.

Towards a sustainable economic model for Gods Unchained

If there is one thing that I hope has been made clear in the previous sections, it is that Gods Unchained's current incentive model only encourages extractive behaviors by its players . There is no guilt on their part, since, as I have pointed out, they are simply acting rationally to maximize the benefit they can obtain from Gods Unchained.

As I always say, "Inadequate incentive systems generate undesired results" . And that's what's happening in Gods Unchained.

I'd like to start with Two notes which I consider essential.

On the one hand, I want to highlight that web3 games are a new paradigm and that is also reflected in their business model. Web3 trading card games are supposed to be the equivalent of printed trading card games, but in digital format. Traditionally, the main source of income from physical card games (if not the only one) has been the sale of envelopes with cards. However a game like Gods Unchained doesn't need to rely on card sales as a primary source of revenue . The existence of alternative sources of income means that card sales may play a secondary role in the future, although we must be aware that this is not going to happen in the short term. It is important to be clear about this because the use of envelopes as a solution for the distribution of letters could have its days numbered for legal reasons (for more details I recommend reading the article "Goodbye to booster packs in Gods Unchained?" ). I list below some alternative sources of income to selling card packs, such as the sale of:

• Season passes.
• In-game assets, such as cosmetics, emotes, cards, etc.
• Tournament Entry Fees.
• Tickets in premium game modes.
• Forging and crafting of cards.
• Etc.

On the other hand, and in continuation of what was stated in the previous paragraph, It is essential that players aspire to own their cards . Not only that, but they should also have a collection of cards that is as wide as possible and, moreover, of the highest possible quality. Why? For a clear reason: the higher the demand for cards, the higher their prices will be. This translates into higher income for the team from the sale of packs, but also from commissions from transactions in the secondary market, for the use of the Forge, etc.

And how can the team get players interested in owning their cards? And, I insist, this approach is key, because other approaches are not going to have the same effect. Let's look at some "Myths" Popular:

• "Everything would be solved if the number of players were to increase “. If borrowing cards offers more advantages than owning those cards, the growth in the number of players will not have the desired effect.
• "What the game needs is a Tournament circuit and premium game modes that require the use of expansion cards that are the player's." Tournaments and premium game modes are all well and good, but as long as renting cards is more efficient than owning them, they're not going to do much good... without forgetting that only a percentage of players are so interested in the competitive field.
• "Implement Card Burning Systems it could be enough to reduce supply." Indeed, systems of destroying cards to generate new ones (such as crafting) reduce the supply, but if there is no demand for all the cards, not just those that are part of the meta at a specific time, the impact is limited.

Here I must make an aside, since The adjustment of supply and demand is not enough on its own, but it does have a decisive effect on finding a point of equilibrium in the market . The supply of cards can be reduced once they have been generated, through card "burning" systems (forge, crafting ) or before they are generated. In that sense, Gods Unchained has incurred in an excess of "creation" "printing" of cards, either through free game modes (Weekend Ranked) or paid ( Sealed ). Even so, and although it would be desirable for rewards to be concentrated in the form of $GODS and cosmetic elements, there would not be a problem of "oversupply" if the demand were more intense... so the ultimate challenge is to try to make the cards more attractive, no matter what.

Having clarified the above, What would work to increase the attractiveness of the cards? The key idea is to increase the value provided by the ownership of the cards because, returning to what I explained at the beginning of this section, "inadequate incentives generate undesired results". In other words, Gods Unchained urgently needs an incentive system that makes players yearn to have the largest collection of cards they can reach. And that requires rewarding collecting, as I explained in the article "How to encourage collecting in Gods Unchained? | May 2024" . Specifically, focusing on social aspects and aimed at the feeling of achievement, on the one hand, and economic incentives, on the other. You might be thinking... and wouldn't that put enormous upward pressure on the price of some cards? It would have this effect on cards with smaller "rolls", of course, but it wouldn't have to get out of control since all expansions can be reprinted (except for Genesis, but for that to become a problem the number of players in Gods Unchained would have to grow exponentially).

The ultimate goal would be for players' ability to obtain rewards to be conditioned, proportionally and progressively, by their degree of involvement in the game. With equal rank and performance (number of games and win rate), it makes sense that a player who has "invested" more in the game would benefit from a greater potential to earn rewards. As I noted in the aforementioned article:

"Ideally, in my opinion, the different incentive systems were interlinked to reward the most involved players . Gods Unchained is a game with several dimensions and that means that it seems desirable that the players who interact the most with all of them are the ones who are most rewarded. For example, collecting cards is good for the game, but if you reward this without adding any additional demands, you run the risk of attracting speculators, rather than players. This is solved by establishing conditions in line with those foreseen for Offering of the $GODS and which require, in short, a minimum activity. In other words, it should not be enough to buy a complete expansion and leave it "parked" there, but ideally it would be necessary to require the player to be active (a minimum number of wins in a given period of time, a minimum number of purchases of packs or on the secondary market, a minimum of forged cards, etc.). In short, the first thing is always to reward interaction with the game as such and that the rest of the "layers" of the game come to reinforce this (collecting, staking of $GODS, etc.)".

Before sharing some final conclusions, I make one last clarification. The management of the $GODS token also plays a crucial role in the game economy. I am not going to go into this topic because this article is already long enough, but you will find some reflections on it in this article: "$GODS Staking Dashboard: Launch and Expectations" . I do want to point out that, although the game is "bleeding" at the moment in terms of the distribution of $GODS ( Play and Earn journal, Content Creators Program, etc.), is not serious because Gods Unchained has enough reserves to have a wide margin of maneuver in this area. Thus, distributing 14,000 $GODS every day as Play and Earn , the $GODS exchange available for this purpose would last for about 34 years (170 million tokens).

Conclusions

I imagine that at this point I don't have to point out that the design of the economy of a web3 game like Gods Unchained is not simple at all . As in any complex economic system, everything is interrelated and the effects of some decisions do not manifest themselves in the short term.

As long as the Gods Unchained team has the technical and human means to implement the changes that the game's economic model needs, including a new progression system and the introduction of incentives for collecting cards, I am sure that the current situation is reversible with the adoption of the right measures. In that sense, I want to end with a hint of optimism. The challenge is formidable, but in no case impossible .

¿ What would you add to this analysis? What other options do you think would be worth considering? Do you have any suggestions? Feel free to share it with me, I'll be happy to hear it.

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