A Comprehensive Canvas For Designing Economies and Web3 Tokenomics
In the rapidly evolving digital landscape, the creation of balanced and engaging economic systems within gamified environments and Web3 platforms becomes more essential with every passing month.
As a recognized authority in Gamification Design, I have spent quite a bit of time dabbling in designing virtual economies.
My journey, which includes authoring the book “Actionable Gamification – Beyond Points, Badges, and Leaderboards,” (once stated as one of the top two must-read books in Web 3), has led me to develop the Economy Design Framework, which also heavily utilized in the tokenomics design space.
This framework was born out of a necessity when working with many companies. Many of my clients, despite their enthusiasm and vision, struggled with the fundamental aspect of creating a well-balanced economy. They would randomly decide between 5 points or 500 points for certain actions. But we know, in a real economy, just a 3% change in the interest rate would massively affect the behavior of all the banks, insurance companies, and all the consumers. There is a certain precision we need to care about when designing economies.
I also spent some time as the Contracting Chief Experience Officer of Decentral, working alongside Ethereum Co-founder Anthony Di Iorio, and helping numerous Web3 companies design their tokenomics. This has equipped me with unique insights into both short-term utility and long-term sustainability of digital economies. Further, my creation of Metablox.co, a Web3 blockchain museum, allowed me to explore further how to balance economies that are about timeless memories that would still matter three generations later.
The Economy Design Framework encapsulates these experiences and insights. It is designed to guide organizations through the complexities of designing balanced economies, integrating reward schedules, activity loops, progression curves, and optimizing the probabilities of mystery boxes and easter eggs.
Even though I see the greatest need of my Economy/Tokenomics Design Framework in the booming Web3 world, the framework particularly is valid for any type of ecosystem that involves rewarded behaviors and trading. It even applies to the real-world economy and can be integrated into my NationCraft Framework for governmental policy optimization.
In this Economic Design Framework, I offer a comprehensive guide that amalgamates my years of expertise and observations. It is a blueprint for innovators and creators who aspire to build engaging, sustainable, and balanced digital economies. Whether you are designing a gamified app, a decentralized platform, or a blockchain-based experience, the Economy Design Framework is your essential companion in navigating the intricate world of digital economics.
Components of the Economy/Tokenomics Design Framework
The Economy Design Framework is divided into a few major sections. There are the Sources, where value is created or stored in the economy. There are also the Sinks, where the value is expensed as utility or liquidity to the player, effectively removing the intermediate store of value (currency).
There are internal components, which are value created and dispensed within the economy system, and external components, which usually means other stores of value – cash/fiat or mainstream currency – get injected or withdrawn from the ecosystem.
Below the whole equation is Confidence/Speculation, which represents how much psychological hype is behind the ecosystem, artificially ramping up the perceived value of everything within it.
So let’s start off with examining the Sources, which follow the equation:
Value = Labor In x Skill Leverage x Luck Factor.
The Genesis of Value: Labor In
The fundamental level of where Value is created is how much purposeful Labor people put into a system. This notion of Labor is deeply rooted in the teachings of Adam Smith, the father of economics (I happen to have a degree in Economics from UCLA).
It doesn’t matter what the labor is towards, as long as people consider it productive. If I play a game and spend 1000 hours “laboring” by killing monsters, planting virtual plants, or collecting stones, my reward for doing all of that is worth 1000 hours worth of labor. If you also want the same results or rewards but don’t want to spend 1000 of your hours to obtain it, you give me money or other storages of value, in exchange for my earned rewards.
The Booster of Labor in an Economy: Skill Leverage
The second Source of value creation within an economy, which serves as a modifier to the base Labor In variable, is Skill Leverage. Skill Leverage, or the ability to derive more value from an hour of labor through specialized skills or talents, highlights the varied worth of labor across different sectors.
This disparity is why, in the real world, a doctor’s hour of labor is worth more than a janitor’s. The doctor possesses greater productive Skill that the janitor does not have. However, the Doctor still needs to pour in over a decade of intense labor to acquire his medical Skill Leverage and secure his degree.
Within games or virtual economies, strategic skill or sheer talent can amplify the value generated by a player. Some people have higher skills within a game, and some have certain gear that gives them power-ups that provide more value per hour of labor. Generally, increasing one’s Skill Leverage is the most reliable way to get an edge in life. This is why people spend so much time and money going to school, getting trained, and signing up to additional courses online from top experts.
The Wild Card in an Economy: Luck Factor
The Luck Factor introduces an unpredictable yet fascinating variable into the equation. Whether it’s stumbling upon a rare item in a game or being at the right place at the right time in the business world, luck can dramatically alter one’s economic trajectory.
If you were playing a game, and due to extreme luck, found a powerful sword that, on average, requires a player 1000 hours of gameplay to find. Even though you just spent one hour of Labor, the sword is still worth 1000 hours of labor – something we call “expected value” in things that involve probability. So if I wanted the sword but didn’t want to spend an average of 1000 hours, I still have to pay you 1000 hours worth of labor to get the sword from you.
The Luck Factor is why some people are disproportionally richer than others. Some people win the lottery, while others start a business that has perfect timing to meet the needs of a billion customers. Their “reward” cannot be calculated in how much Labor x Skill they put in, but more as an outlier wildcard in the Luck Factor. As you know, most people who buy lottery tickets just waste their money, and the majority of people who start businesses fail and even go into a lot of detrimental debt.
Some economies have more mechanisms regarding luck and probability, which means there is more thrill and excitement, but also more risk and loss involved. This just depends on whether the userbase likes to be in a stable “work hard and grow” society, or the “Wild West” where you could achieve glory or die every day.
This element of Randomness, coupled with Labor and Skill Leverage, paints a complex picture of how value is generated and perceived in an economy. Navigating the Waters of Tokenomics: Utility and Tradability
Tradable Assets and Inflation
Tradability within game economies refers to the ability of players to exchange items, currencies, or assets with one another. This feature can significantly enhance the gameplay experience by allowing players to trade for items they need or sell what they’ve earned for in-game currency or other valuable assets. However, designing tradability into a game’s economy requires careful consideration of its potential impacts:
- Economic Balance: Allowing players to trade items can affect the game’s economic balance. For instance, if high-level items are easily traded to new players, it can disrupt the intended progression and challenge of the game. Similarly, the ability to trade can lead to inflation if the supply of in-game currency grows unchecked, diminishing the value of in-game earnings and potentially harming player engagement.
- Player Experience: Tradability impacts the player experience by shaping how players interact with the game and each other. On one hand, it can add depth to the game, creating a social economy where players negotiate, barter, and build relationships. On the other, if not properly managed, it can lead to a disparity between players who can dedicate more time or real-world resources and those who cannot, potentially leading to feelings of unfairness or exclusion.
- Real-world Impact: The tradability of in-game assets can also have real-world implications. For games that allow or tacitly support the trading of in-game items for real money, there’s a risk of creating unregulated markets that could lead to legal and ethical issues. This includes concerns about gambling, exploitation, and the unauthorized sale of in-game items.
The decision to restrict tradability often aims to preserve the journey of skill acquisition and progression. It ensures that players experience the game as designed, from the initial learning curve to the satisfaction of achieving late-game milestones. By carefully designing these systems, game developers strive to create a balanced and engaging economy that rewards player investment and skill without leading to overabundance or devaluing player achievements.
In the evolving landscape of digital assets and blockchain technology, the concept of utility has become a cornerstone for understanding the value and application of various tokens and platforms. These utilities can be categorized into three distinct types, each serving different functions and catering to various needs within the digital ecosystem. Below, we explore these categories in detail, providing insights into their characteristics, applications, and significance.
3 Sinks of Utility
By categorizing utilities into these three distinct types, we gain a clearer understanding of the diverse roles and applications of digital assets within the digital economy and beyond. Each category showcases different facets of utility, from enhancing gameplay on a specific platform to enabling global, decentralized transactions, reflecting the broad potential of blockchain technology and digital assets.
1. Platform Utility
Platform utility refers to the specific functionalities or benefits that a digital asset offers within a particular platform or ecosystem. This type of utility is often confined to the boundaries of its native environment, where it can be used to enhance user experience or provide access to certain features. Examples include using Non-Fungible Tokens (NFTs) to jump higher in a game or stake cryptocurrencies to earn returns. The value of these utilities is inherently tied to the platform itself, and their usefulness ceases if the platform becomes obsolete or loses relevance.
Platform utilities are integral to the digital platforms for which they were created, offering unique advantages and enhancements that are not transferable outside of their native ecosystem. This includes in-game advantages provided by NFTs and financial returns generated through staking within a specific platform. The appeal of platform utilities lies in their ability to enhance the user experience and provide value within a confined digital space.
2. Ecosystem Utility
Ecosystem utility extends beyond a single platform, supporting a broader ecosystem of applications and services. This utility type is crucial for digital assets that facilitate or empower a network of interconnected platforms and projects. An example of this is Ethereum’s smart contracts, which underpin a vast array of decentralized applications (dApps). Ecosystem utilities ensure the smooth functioning and development of the broader digital environment, making them invaluable for the sustainability and growth of interconnected platforms.
Ecosystem utilities play a pivotal role in supporting and enhancing a network of platforms and applications. Through functionalities like smart contracts and decentralized storage solutions, they provide a foundation for a wide range of applications and services within the blockchain space. The value of ecosystem utilities is derived from their ability to foster interconnectivity and facilitate a multitude of digital experiences across various platforms.
3. World Utility
World Utility describes digital assets that offer real-world applications and benefits, transcending the digital realm to impact everyday life. These utilities cater to universal needs and behaviors, such as the desire for secure, fast, and decentralized financial transactions or exclusive access to real-world events and experiences. By bridging the gap between digital and physical worlds, world utilities demonstrate the transformative potential of digital assets and blockchain technology in reshaping everyday interactions and experiences.
World utilities represent the most expansive category, providing tangible benefits and applications in the real world. Whether it’s facilitating more efficient money transfers or granting access to exclusive events through NFTs, world utilities highlight the real-world relevance and potential of digital assets to enhance and simplify various aspects of daily life. Their value lies in their ability to leverage blockchain technology for practical, everyday uses, making them a critical component of the digital asset landscape.
External: Purchasability & Liquidity
Purchasability which means that people can just buy resources in the economy. They put money in, and that’s how they contribute their value. They usually use fiat money or whatever—ether and bitcoin—anything they can exchange for a commodity that they can put into the system, and they get the resources to begin with.
Liquidity in the context of gaming and cryptocurrency is essentially the ability to convert tokens into fiat currency or other forms of tangible assets. Many games enable players to purchase in-game assets like gems but often do not support converting these assets back into real money, limiting their liquidity. While some games offer or restrict this feature, players sometimes resort to unauthorized channels, such as eBay’s black market, to sell their in-game items for real money, highlighting the existence of a demand for liquidity.
Moreover, emerging platforms like move-to-earn initiatives provide a unique blend of utility and liquidity. Despite potential fluctuations in coin value and the risk of depreciation, the intrinsic benefits—such as improved health from daily exercise—offer a form of utility that compensates for liquidity concerns. This contrasts with platforms solely focused on profit, where engagement is purely for financial gain rather than enjoyment or health benefits, making liquidity a critical factor for participation.
Confidence / Speculation
The concept of liquidity and purchasability extends beyond immediate financial gain, touching upon the foundational values of Confidence andSpeculation within the market. Assets might have an inherent utility value—like granting access to game features or exclusive events—but their market value often reflects speculative confidence rather than just utility. In both good and bad market conditions, the perceived value of these assets fluctuates significantly, influenced by the collective confidence in their future worth rather than their current utility.
This speculation-driven valuation parallels the traditional stock market, where a company’s stock price can vastly exceed its earnings-based valuation due to speculative beliefs about its future dominance. However, market corrections can realign prices with more tangible utility values, demonstrating the cyclical nature of speculative investment and the enduring value of foundational technologies and utilities.
In essence, liquidity and purchasability in digital and crypto economies encapsulates the complex interplay between immediate financial convertibility, speculative confidence, and the intrinsic utility of digital assets. The market’s perception of these factors collectively determines the liquidity and value of digital tokens, influencing investment decisions and the broader acceptance and use of cryptocurrencies and in-game assets.
Example Economy Analysis #1: Brawl Stars
I’m going to use Brawl Stars as an example. It embodies the same concepts: labor time, skill leverage, and luck. In the game, playing constitutes labor—you need to log in daily, complete the daily quests, and you’ll accumulate coins, tokens, and various resources.
Skill leverage comes into play with levels and power-ups, allowing your characters, or brawlers, to level up and gain special abilities. This enhances your chances of winning and, consequently, allows you to gather resources more efficiently. Player skill is also crucial; if you’re more experienced or even an eSports champion, you can win your games more swiftly and amass a significant amount of resources within an hour. Then, there’s the luck factor, which is critical to consider for any project. How significant is luck in this formula?
In some instances, like in a casino, luck is nearly everything—you need to perform the labor of sitting there, inserting coins, and pulling the lever. Although some believe there’s a strategy in how fast or slow, or whether the machine is hot or cold, ultimately, luck dominates the outcome. There are games where acquiring the most powerful unit or a basic one is purely down to luck, rendering labor and skill almost moot. Typically, a game will incorporate a significant luck factor if, on average, players are quite unlucky, forcing them to spend money to ‘be lucky’ and thus guarantee value.
Brawl Stars introduces loot boxes as mystery journeys, a concept increasingly regulated. In the Netherlands, for example, loot boxes are banned due to their resemblance to gambling. This has led to a shift from mystery box designs to fixed outcome designs, ensuring players know what they’re getting for their money or effort, thus avoiding the pitfalls of gambling psychology. This shift aims to make the outcome predictable. If you’re spending money or resources, you should know what you’ll receive in return. Despite some complaints that this reduces fun and excitement, it’s a necessary measure to prevent gambling addictions, especially among younger players.
In advising clients, I discuss strategies to navigate or even future-proof against lottery or mystery box compliance controversies. One approach is to offer something akin to exchange credits, ensuring actions always yield a known reward. This system still incorporates randomness in what rewards are available for purchase with the credits, but because actions guarantee some form of credit, it doesn’t feel like gambling.
Many games allow you to buy tokens or gems as their primary revenue model. This approach sustains the team of engineers, designers, and artists behind the game. However, these games typically don’t offer liquidity; you can’t sell these tokens for real money. This model ensures that if players desire specific in-game items or characters, they transact directly with the company, not other players, ensuring cash flow remains with the company.
This general game model primarily offers platform utility, where expenditures enhance the in-game experience without providing external or ecosystem utility. Once the game is deleted, all associated value is lost. Some utilities, like credit card points or airline miles, offer broader ecosystem utility, usable across various companies and platforms within a social ecosystem. However, there’s no world utility in the sense it doesn’t affect anything in the real world unless you’re considering having fun. This pattern is common, where skill leverage and platform utility often overlap, reinforcing the game’s loop, and encouraging continued play to enhance one’s efficiency or power within the game environment.
Example Economy Analysis #2: Axie Infinity
While conducting this analysis, I was surprised to find that third-party credibility is still relatively rare in Axie Infinity. The game features ‘Axies,’ which are small monsters that players collect. Additionally, there are two types of tokens: SLP (Small Love Potions), which enable you to breed your Axies, and AXS (Axie Infinity Shards), which serve as governance tokens, allowing players to vote on the platform’s evolution.
The value of governance tokens might not seem justifiable—for instance, spending $2,000 for a minimal say in the game’s development might not seem worth it unless there’s an active marketplace that could drive up their value. My research indicates that you cannot buy another player’s Axies with SLP or AXS; purchases must be made with Ethereum, which, similar to fiat currencies like the US dollar, offers more liquidity.
The ‘play to earn’ model of Axie Infinity means that while you’re playing the game, you can sell the resources you’ve accumulated on the open market for Ethereum. This contrasts with traditional gaming, where resources earned or purchased within the game usually have no real-world value.
However, the promise of Web3 includes ecosystem utility—where characters or assets from one game can be used or recognized in others, provided they share the same blockchain. This concept extends to world utility, where having a high-level Axie might grant you access to real-world events or discounts, although this remains largely theoretical in the context of Axie Infinity.
The allure of Axie Infinity, particularly in countries like the Philippines, came from its potential for substantial earnings, with some players reportedly earning more than $3,000 a month, surpassing their parents’ income. This possibility transformed the game into a viable full-time job for some, blending labor, skill leverage, and luck to generate income, particularly from American players willing to buy the fruits of this labor. However, the reality is that for many, the game’s profitability has not lived up to the liquidity value, with numerous players hoping just to break even on their investment.
Example Economy Analysis #3: Step’N
Then we have something like Step’N, which is akin to a move-to-earn concept. I believe they coined the term “move to earn.” It’s essentially an exercise app where you first have to spend a significant amount of money in Solana, another cryptocurrency, to purchase these virtual shoes on your phone. Each shoe has different characteristics; some are better suited for running, while others are for walking. They detect your walking speed, and as you run or walk, you generate resources like GMT and GST. Since GMT and GST have an open market value, you can sell them, providing liquidity in the market. This move-to-earn mechanism allows you to earn money as you exercise.
Many people wonder where the money comes from in move-to-earn. Step’N, the company, doesn’t directly pay you; rather, it creates GST or GMT out of thin air, and there’s a marketplace where other users will pay you cash for these tokens. This setup is fascinating, but one striking difference between Step’N and Axie Infinity is that Step’N offers real utility—exercise and fitness—which Axie Infinity lacks. I have a friend who, realizing he hadn’t completed his daily Step’N jog at 1 a.m., would get out of bed to jog for 20 minutes just to earn resources. At a conference, he even excused himself to run because his energy bar had maxed out.
Even when the market is down, and GMT or GST’s value is low, users are still content because they’re getting healthier, which some argue is worth more than the money spent on the app. Thus, Step’N is arguably stickier than Axie Infinity because of this inherent real-world utility. Despite not being as “fun” or “exciting” as Axie Infinity and lacking certain game mechanics, Step’N offers tangible benefits in terms of health and fitness. So, even if the liquidity or profitability drops, users still receive genuine value from using the app.
This conversation about games and balancing side quests versus overpowering characters addresses a significant challenge. RPG games often face a dilemma where numerous side missions can make a character too powerful for the next adventure steps. Balancing labor and reward is crucial to maintaining game equilibrium. Addressing inflated prices and avoiding economic imbalances requires careful consideration of supply and demand within the game’s economy. Ensuring that hardcore players don’t reach the highest levels too quickly, while also providing average players with a sense of progression, is key to maintaining engagement without overwhelming or underwhelming the player base.
Example Economy Analysis #4: Starbucks Odessey
Starbucks Odyssey presents an intriguing concept, steering clear of directly using the term NFT, which I believe is a strategic move given the current sentiment toward digital assets. They’ve opted to term these as “journey stamps,” akin to digital assets, adding a gamified layer to the coffee-drinking experience. While still in beta and not fully accessible everywhere—I’m in Taiwan and can’t use it—the premise is straightforward: complete “journeys,” which often involve consuming a lot of coffee or learning about it, to earn journey stamps, Starbucks’ version of NFTs. These stamps are tradable, providing a means of exchange within the game for perks like free coffee.
The engagement required involves drinking copious amounts of coffee—labeled here as engaging with coffee—which is essentially the ‘labor’ input. Interestingly, the coffee itself isn’t the resource but rather the stamps you collect by engaging with various activities, such as learning about coffee.
It appears you can directly purchase these stamps from Starbucks, and possibly from other users, allowing for a more straightforward acquisition route beyond just engaging with coffee-related activities. As far as I can discern, there isn’t a skill leverage or luck factor incorporated into their system, making it a unique model that doesn’t rely on these typical gaming mechanics for user engagement or resource distribution.
Trading stamps with others is a key feature, though the platform seems to lack a distinct platform or ecosystem utility beyond the immediate benefits offered, such as free coffee, donations towards fighting hunger, and educational classes about coffee. Starbucks positions Odyssey not as a game but as an enhanced loyalty program utilizing digital stamps and collectibles that resonate with the drink-to-earn model, encouraging users to engage in activities they likely already enjoy—drinking coffee—while offering additional rewards.
For improvements, one could consider how these journey stamps might evolve beyond mere images or icons. Is there potential for these stamps to offer skill leverage, similar to how Step’N operates, where certain actions or commitments over time could unlock unique benefits or efficiencies in earning rewards? This could add depth to the experience, making engagement more rewarding and dynamic for users deeply invested in the Starbucks ecosystem.
This concept of skill leverage could take various forms, perhaps rewarding users who drink coffee at specific frequencies with unique perks that accelerate benefit acquisition. Alternatively, long-term commitment rewards could incentivize consistent engagement over time, offering different benefits based on the user’s interaction pattern with the program.
Example Economy Analysis #5: Octalysis Prime
We have Octalysis Prime, one of the educational platforms I’ve analyzed. Uniquely, it either operates on a freemium model or a subscription basis, where you pay monthly. Interestingly, you cannot spend additional money to advance or improve within this platform, which holds true upon further examination.
Although you can refer friends or other premium members to gain benefits, direct payment into the system for advancements is not facilitated. There’s an exception for yearly subscription holders who can obtain a legendary item, but broadly speaking, the model doesn’t encourage continuous spending to progress in the game.
Octalysis Prime’s ecosystem is focused more on engagement with content rather than monetization through user spending. The platform does not currently permit users to sell their ‘Geomancer’ child coins or similar assets, creating a more contained ecosystem centered around content engagement. This approach was decided early on, preferring a model akin to a gym membership where users pay a monthly fee to access, learn, grow, and play as they wish, rather than pursuing a free-to-play model that could potentially lead to users spending thousands.
The engagement (“labor”) involves watching videos, taking on challenges with your gamification knowledge, and similar activities. The system includes skill leverage through various power-ups associated with different status levels and items that provide boosts. Knowledge is crucial; lacking it means your ‘Geomancer’ might escape or you might fail challenges, losing many ‘Geomancers’ due to insufficient knowledge. Luck plays a role but is considered relatively low in impact. Daily chests offer somewhat consistent rewards, and while the Hydra cave challenge’s difficulty varies, the luck factor in encountering mystical or legendary ‘Geomancers’ is minimal.
Tradability is not featured in Octalysis Prime; you can’t trade resources like child points for ‘Geomancers’ with other players. This decision stems not only from a desire to maintain a direct relationship between the company and its users but also due to the challenges in balancing such a trading system. Allowing unrestricted trading could disrupt the journey’s economy, making the experience less rewarding.
In considering improvements, one could explore introducing more nuanced characteristics into the ‘Geomancers’ or journey stamps, potentially offering skill leverage. This could include rewards for different types of engagement, such as frequent coffee drinking within Starbucks Odyssey, which could translate into varied benefits. This approach would enrich the user experience, making continued engagement more rewarding and effective, thereby enhancing both platform and ecosystem utility.
Example Economy Analysis #6: Metablox
Metablox aims to enhance ecosystem utility, distinct from Octalysis Prime, with a different team behind it. For members of my OP community paying a subscription, there’s an opportunity to receive significant discounts on workshops, a direct benefit from being an active, paying member. This strategy allows members to optimize their participation within the rules provided they’re active when engaging in these opportunities.
Metablox doesn’t focus on continuous spending to progress; instead, it promotes engaging with content. Currently, selling or trading ‘Geomancer’ child coins or similar assets within the platform is not facilitated, fostering a contained ecosystem centered on content engagement. The emphasis is on monthly subscription fees akin to a gym membership, allowing users to learn, grow, and play at their own pace without the pressure of maximizing revenues. The platform prioritizes engagement and learning over financial gains.
The labor involved in Octalysis Prime includes watching videos, engaging with challenges, and applying gamification knowledge. The system incorporates skill leverage through various power-ups and statuses, with knowledge playing a crucial role in success. A lack of knowledge may lead to failing challenges or losing ‘Geomancers,’ highlighting the importance of understanding the content. Luck is present but is deemed relatively low in impact, with daily chests offering consistent rewards and the luck factor in encounters with mystical or legendary ‘Geomancers’ being minimal.
Metablox introduces a novel concept where users can submit memories to make their blocks more valuable. These blocks represent real-world land, and as memories are added, they level up, generating more Metablox coin and rent. This process requires skill leverage, as the quality of submitted memories can influence the block’s value. The luck factor is evident in the tier system for blocks, affecting the amount of meta rent received daily.
Metablox is exploring ways to enhance tradability and profitability, considering mechanisms like mystery chests that could offer free NFTs or additional blocks credit. The focus is on increasing both platform utility and ecosystem utility, with efforts to collaborate with other Web3 projects to increase the value and utility of Metablox and its assets. The ultimate goal is to preserve important memories on the blockchain for humanity, akin to a digital museum, appealing to users who value the preservation of memories over the speculative aspects of the platform.
Example Economy Analysis #7: US Economy
I aimed to analyze the real economy, specifically the US economy, to determine how well a particular design framework could be applied. The task proved somewhat abstract, particularly when considering purchasibility and liquidity. Essentially, purchasibility in the real economy involves spending US dollars to acquire resources. The concept of probability isn’t as straightforward in this context, and while I don’t claim to have a perfect solution, I’ve made an attempt to explore it.
Starting with the basics, labor simply represents work—whatever job or tasks you’re engaged in. Skill leverage, then, is derived from education, training, and the technology you utilize; these elements act as boosters, enhancing your capability to perform work effectively. The luck factor can’t be ignored either. Some individuals might win the lottery, start a successful business, or land a significant job opportunity purely by chance, contributing to value creation within the economy.
Purchasibility, or the introduction of external funds into the economy—perhaps through exports—allows for the inflow of outside money in exchange for domestic goods or services. Another avenue for adding value without direct labor is through investment, where money is injected into the economy to foster growth.
Credibility in the economy is high, allowing for the exchange of various assets such as cash, gold, crypto, and securities. These transactions can be seen as trading in-game resources within the economic “game.”
Platform utility encompasses tools that facilitate participation in economic growth, including computers, cars, clothing, and training. These tools provide skill leverage, similar to how education equips individuals with knowledge and skills to perform better in the economy.
Real utility addresses fundamental needs independent of active participation in the economy. Essential requirements like food, shelter, health, fun, and safety are necessary even for those living off the grid or outside the conventional economic system. The existence of an economy simplifies access to these necessities, reducing the need for self-sufficiency in procuring basic needs.
Ecosystem utility remains an area of uncertainty for me. It’s challenging to define within the context of a single country’s economy, perhaps relating to how one country’s economy interacts with or supports international trade and relations.
Status, power, access, and freedom represent elements that empower individuals in any economy. High status and access to resources can significantly enhance one’s ability to navigate and benefit from economic opportunities, both domestically and internationally.
Conclusion: Economy/Tokenomic Design Framework
In developing the Economy/Tokenomics Design Framework, I ventured to bridge the complex worlds of digital and traditional economies, drawing upon my extensive background in gamification, tokenomics, and ecosystem design. This endeavor resulted in a comprehensive guide that I believe is essential for anyone looking to craft economies that are engaging, balanced, and sustainable.
The framework reflects my experiences and insights, tailored to fit a wide range of applications from gamified platforms and decentralized blockchain experiences to influencing the macroeconomic policies of nations. It outlines how to manage the flow of value creation and consumption within any economic system, underpinned by the psychological dynamics of confidence and speculation.
By dissecting key components such as labor, skill leverage, luck, and the critical aspects of tradability and liquidity, I aimed to illuminate the multifaceted nature of economic interactions and their impacts on ecosystem vitality.
As we navigate the increasingly intertwined digital and real-world economic landscapes, my framework serves as a foundational tool, offering clarity and direction amidst the complexity. It’s designed with a human-centric approach at its core, advocating for economic systems that prioritize meaningful engagement, innovation, and societal benefits.
In essence, the Economy/Tokenomics Design Framework is more than just a methodology; it’s a manifesto for the future of economic design, championing a world where economic systems enhance our lives, communities, and the environment, setting a new standard for how we understand and implement economic principles in the digital era and beyond.