Folius Ventures: The "Taxation System" Business Model is More Suitable for Web3 Games
By providing ten suggestions for this brand new business model and designing a virtual Web3 game to demonstrate its feasibility.Original authors: Aiko, Jason (MLC), Folius Ventures
Based on the thoughts and discussions triggered by the previous research report, @MapleLeafCap and I would like to further summarize and share the new insights we have gained over the past year in exploring "Web3 + Games" ------ namely, that a tax extraction system is a more suitable business model for Web3 games. We provide ten suggestions for this brand new business model and have designed a virtual Web3 game to demonstrate its feasibility.
Over the past six months, we have overturned several proposals, repeatedly deliberated on design details, and consulted with seasoned veterans in the gaming industry, all to ultimately deliver a satisfactory answer to like-minded seekers.
At the same time, we have open-sourced the design framework, hoping to take this opportunity to learn and discuss with more excellent developers.
Here, we sincerely present:
We believe that the current intersection of most Web3 and games is still immature, with the only significant breakthrough being that game value carriers can exist and circulate freely overseas, and developers have gained the autonomy to price game value carriers based on global liquidity.
The benefits of games connecting to the year-round global financial market of Web3 are evident ------ once, valuable items in Web2 could only be priced based on their utility within the game, but now they can be priced more fully and traded more frequently.
This also means that the volatility of game value carriers is higher, premiums are greater, and trading is more frequent, making the "tax extraction system" based on economic volume a more suitable business model for Web3 games, while the "in-app purchase" business model becomes a thing of the past.
However, there is a natural conflict between traditional design thinking and the tax extraction system: manufacturers monopolize direct sales, and players lack economic collaboration, marginal cost design, and face rapid redundancy of durable goods, which cannot enhance the vitality of the game economy and overall tax revenue.
As mentioned earlier, while we do not have a perfect solution, we offer ten additional ideas for teams that recognize the tax extraction game framework:
Currently, the vast majority of games face bottlenecks such as strong Matthew effects, high content repetition, insufficient depth, and high learning and participation thresholds. However, the tax extraction business model needs to choose gameplay that can maintain long-term appeal to a broad player base and adhere to long-term operations.
Most game loops currently serve individual game progress, with players being self-sufficient, which can easily lead to the inflation of underlying resources.
We prefer to cut game loops and game progress from the bottom up, creating essential scenarios and economic relationships; and adding meta-processes at the top to accommodate and digest the outputs of individual processes.
Mainstream games typically adopt numerical design, with numerical growth as the core source of fun, but this can easily lead to a unidimensional pricing system and resource redundancy, reducing economic vitality.
We lean towards replacing numerical design with functional design, horizontally expanding functionality, thereby creating low-cost, highly combinable, and vastly different functional components, which enhance playability while increasing economic vitality.
Traditional game charging methods are rough, or they induce players to pay endlessly for numbers and efficiency. However, in Web3 tax extraction games, pricing should be tiered based on players' gaming intensity and production time, ensuring that casual players can enter with a low threshold, heavy players pay for intensity, while production-oriented players face the highest and most complex costs to reduce resource devaluation caused by rent-seeking behavior.
For durable goods in games, we prefer to cleverly transform them into consumables, or differentiate their feel and experience after aging, and maintain broad market demand in the long term through a layered mechanism, allowing the value of durable goods to ultimately settle rather than become redundant.
In the closed economy of traditional games, the secondary market for games is restricted by the official or only has auction houses, with market design being relatively simple and direct.
However, we prefer to gamify the upstream and downstream processes, for example, when assets are traded on the chain market, random mutations may occur, and upon returning to the game, a "cleaning" service fee replaces royalties, allowing players to participate in the provision of related items and services.
Economic regulation should consider maintaining exchange rate stability and free capital flow, abandoning monetary policy independence.
Because games, as entertainment, should have relatively low costs, and loose capital controls and stable exchange rates are more in line with players' interests and preferences.
It should be allowed for state-owned institutions within games to combine with private industry chains, reducing direct sales by game manufacturers and industrial monopolies, gradually relaxing private rights to invigorate the market economy, and incorporating value carriers into games in a gamified manner to form an industry chain with real value for players.
By using a diversified mixed currency system to blur and complicate resource output costs, increasing non-linear and mandatory consumption, we can allow for temporary excess profit margins while continuously adjusting the overall game probabilities, crafting/destruction equations, and balancing to eliminate long-term "global optimal solutions."
To deeply analyze the asset design of tax extraction Web3 games and practice the above theories, we will build a virtual Web3 game framework produced by Folius ------ let’s call it Foliseum! Inspired by excellent roguelike games like Risk of Rain, Dead Cells, and The Binding of Isaac, as well as shooting games like Borderlands.
For more design details, please visit Notion
Of course, we still have many unfinished designs and look forward to in-depth discussions with designers and entrepreneurs. You are welcome to leave reading comments in the open-source document or enrich the design ideas of Foliseum in the questionnaire.
During the writing process, we deeply realized that the details of game design are complex and not easy, and we dedicate this article to the Web3 game creators who are continuously expanding boundaries in the fog.
Finally, thanks to @MapleLeafCap for their patient guidance and support, and to all the veterans in the gaming industry for their valuable suggestions for this article. If you have different opinions or better ideas, or if you want to join the economic design of Web3 games, feel free to contact us at any time!
