by BSC News
June 20, 2022
Many are comparing Web3 projects with Ponzis without realizing that even some of the most important countries are making the same mistakes.
According to the U.S. Securities and Exchange Commission (SEC), a Ponzi scheme is an investment fraud that pays existing investors with funds from new investors. To avoid being compared to one, blockchain games must start paying close attention to their economic models.
Although this comparison seems fair, poorly designed Play— and MoveToEarn games are more akin to countries with high inflation or hyperinflation. But, of course, many early participants in games like Axie or STEPN have only seen the bright side of an expanding money supply if they sold in time.
As new users enter these economies, the exponential demand for in-game digital assets rises faster than the downward pressure from selling them. This lets early users sell the tokens they earn while prices keep rising. But games (and countries) eventually reach a point where exponential growth fades.
For this reason, balancing token supply and demand is key to creating sustainable game economies. Therefore, every project that plans to survive long-term should now work on tightening excessive token printing, introducing non-stop burning mechanisms, and finding better ways to create organic demand. In addition, projects could look outside their game bubble to find new revenue streams – just like countries export their goods and services.
Many games, like Axie and Stepn, are already working toward implementing more sustainable models. The industry is very young, and there is much room to grow and experiment. It's painful to go through these times, but building a healthy economy is necessary by leaving behind broken models.
Although a bit far-fetched, GameFi developers can draw from real-life examples across history. In many cases, governments highjack their countries' future by trying to patch up deeply rooted problems with temporary solutions. Reckless money printing is not the way to go. Web3 and the world economy are realizing it.
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