How Neon District is fixing existing blockchain game NFT token models for mainstream audiences

If you’ve heard me talk at conferences over the last year, you’ve heard me insist that you need to build your blockchain game to take advantage of a short, wide design space rather than a tall, narrow design space. But, honestly, what does that even mean?

Let’s talk about that a bit.

But first of all, hey there! I’m Chris, the Executive Producer over at Blockade Games. I’ve been making video games since I was a kid. In the early 2000s, I started building UGC (User-Generated Content) virtual worlds. And, once Disney buys your UGC virtual world company, it kind of becomes your specialty. I mean, I built the internal organization inside of Disney to teach our game developers how to make UGC virtual world games.

And, just in case you were out getting coffee and missed my talk at Blockchain Gamer Connects, the blockchain is basically one big MMO. (Massively Multiplayer Online game) An MMO, even, where everyone really owns their stuff, can buy and sell anything without a dev getting involved, and can even just burn their own items. This means there’s a myriad of UGC-style virtual world design implications tucked away, hidden in blockchain game design.

But don’t worry, I got you, fam.

Some Been-Around-The-Block Truisms

Your Blockchain Game is Multiplayer

Even if you think your game isn’t multiplayer, it is. Further, if you think it’s multiplayer, but not an MMO, you’re mistaken. Every game that incorporates any substantial part of the blockchain is an MMO because of the shared, persistent world data.

Internally, we like to call this particular kind of multiplayer aspect “golf mechanics” — kind of like how golf is actually competitive multiplayer, but you’re not really playing against one another. Effectively, if you’ve got a giant, public database filled with player data, you’re going to have a bare minimum of these multiplayer golf mechanics. Like leaderboards.

Not to mention, with the blockchain you’ve got a public timeline of events. Enormous amounts of persistent world data. A community filled with competing factions. Buying, selling, trading. A whole passel of features typical for a thriving virtual world.

Yeah, so that single-player or two-player game you thought you made? It’s actually an MMO.

Pay-For-Power Mechanics Break Multiplayer Games

If you have designed a single-player blockchain game, and you allow your players to buy super-powerful gear or abilities, and as a result they easily beat the game? That’s fine. If your players want to play like that, more power to them. (Pun intended) Just keep in mind, there’s game balance voodoo required in that kind of game design.

But, what if you’ve enabled that design in a multiplayer game? Things get complicated.

It means whoever has the most money wins. Especially in something like an RPG (Role-Playing Game) where there’s a strong synergy between game assets and blockchain assets. Those games that lean heavily on gear/characters/equipment/skills tend to be games of Hero’s Journey Accumulation of Power, which is what we mean by a “tall game design”. Whales buy all the best gear and accumulate as much power as is available. They climb that power ladder high and fast.

Unfortunately, that means they burn through your game content at a fast and furious pace. You, as a game developer, will find it very, very difficult to create new content for consumption (read: goals for gameplay) faster than a whale (or any hardcore player, really) can consume it. Players get bored with no new goals. Typically, multiplayer content fills this void. Players working cooperatively to take down raid events or players competitively engaging in head-to-head battles often act as substitutes for grinding through story quests.

Did you notice the issue?

As a non-whale, I would be completely demoralized and quit because I kept getting beaten in head-to-head matches with whales. If the matches were ranked and tiered, I would get bored and quit if there were no mid-game matches available because the players are either whales or n00bs — which further perpetuates that mid-game cliff.

As a whale, I would have lots of fun and engaging times competing with other whales — until I didn’t. Without new content and fresh players, boredom would set in and it’d be time to move on to the next game.

Without a fresh player base who have earned their way across that mid-game chasm, your end-game content stagnates because, remember, you can’t create content faster than it is consumed, so you need powerful non-whales to offset that multiplayer balance.

Practically speaking, this means your pay-for-power multiplayer game has a lifespan of between 6 and 9 months. I’ve seen it over and over and over for a couple decades now. And this applies to every blockchain game because, again, similar to an MMO, a blockchain game is built on a bunch of persistent, shared world data. It’s inherently multiplayer in all the same ways as a non-blockchain pay-for-power design, and also tends to break multiplayer games.

While there are a few exceptions to this, my advice on tackling it is “thar be dragons”, so make sure you know what you’re doing. The sheer number of problems around paying for power in a multiplayer environment probably beckons a post all its own. This is doubly true for blockchain games since their current addressable audience is tiny, and they can’t rely on top-of-the-funnel user acquisition to brute force add new players and feed that non-whale mid-game.

Speaking of …

Tiny Blockchain Game Audiences Ruin Speculation

If someone complains that minting more items makes the existing items less valuable, it’s probably because they’re stuck in a “tiny audience” mindset.

I mean, just because DC revived Action Comics in 2016 at issue #957, does that make Action Comics #1 less valuable? No. That’s because the title has a wide distribution, and they can’t print anymore original #1s. So, just stop with silly dilution talk. These are blockchain assets, not incrementing integers in a database.

Further, if there are 5 rare items and only 5 players, that item isn’t really rare. Sure someone may have pulled together all 5. And, sure, that player may burn 4 of the 5 items so it’s “rare” now. The problem is, with a total addressable audience of 5 players — nobody cares.

Because, a hard truth: If your game isn’t growing, it’s dying.

And, if it’s dying, the design had better have mechanics to deal with that, or pretty soon, when your player base falls off a cliff and drops by 90%, the number of people who care about your game craters, and your per-player asset count 10Xs. The value of these now non-rare items craters. Everything craters.

Because you can’t just delete those items when a player quits your game.

It’s tough enough trying to build a speculation market on the backs of 2,000 players. And even the largest blockchain games only have a couple tens of thousands of players. Those numbers are rounding errors for mid-size indie titles. For goodness sake, they’re rounding errors on customer service calls for AAA games. Even the 500th most popular Puzzle Game on the Android App Store still has over 1 million installs — and it’s just one of 17 different categories of games on a single App store on a single platform.

Basically, before you go speculating on the value of game NTFs, make sure you’re asking questions about what the game design modeling looks like for the next 3 years — not just the next 6–9 months.

How to Deal with these Truisms

I can hear you — “But Chris, why would anyone want to make blockchain games because all of that sounds terrible!” Okay, maybe you didn’t actually say that, but I’m going to tell you all about how you can make sure you don’t fall victim to any of those issues.

The short answer is: Build like it’s an MMO with an open market.

The long answers?

Pay for Convenience instead of Pay for Power

Instead of simply buying power, you buy convenience instead. You let players automate features. For example, in a MMORTS game, allow the player to pay money to have an AI automatically respond to attacks on your base instead of you having to stop what you’re doing and respond yourself in an optimal manner. Or, in that same sort of game, paying to queue up a bunch of construction requests instead of having to micromanage how to time them all together. Some players like tactically min-maxing their combat strategies. Some players will enjoy the tetris-like min-maxing of resource generation. Different players will find different parts of your game fun, so be sure to enable them to pay for parts they won’t enjoy as much, but some other player might.

Just whatever you do, don’t let them buy a bigger “instant win” stick.

Decoupling Utility and Scarcity

One of the reasons many of the blockchain games today are modeled after trading card games like Magic: The Gathering is because TCGs are very friendly to open markets. They’ve done much of the precedence work for us around decoupling utility and scarcity.

For example, take these two Magic: The Gathering cards:

Functionally, they are identical with the exact same utility. However, one is from the early alpha set, and the other is from an expansion this year. The difference is that on the open market, the scarce version is a $35 card, while you can get the recent printing for basically free.

When you decouple utility and scarcity, it enables a host of options for your three main audience groups: speculators, collectors, and players. The players have access to the utility while collectors and speculators can set prices based on true scarcity.

A Balanced, Wide Design

A second lesson from TCGs is building assets that are situationally powerful rather than all-powerful. Assets that are flexible with high utility should be common while assets that are special purpose with extreme power should be rare.

For example, let’s look at some more MTG cards:

Both of those cards are super-rare and hard to come by, but extremely different to play. The Scapeshift card would be useless in most green decks, but is easy to build around since it won’t accidentally lose the game for you. As opposed to the Xathrid Demon, which is extremely powerful, but also extremely dangerous to play. Thus, the ease with which they are integrated in a strategy is reflected in the card price. $15 for the Scapeshift, and $0.79 for the Xathrid Demon — despite the demon being a 10-year-old, Mythic Rare card.

Would a deck built around either of them be better than a deck with much more flexible cards like our Giant Growth above and maybe some Llanowar Elves? Both of which are common and very cheap. Dunno. The answer is, “it depends”. Expert play is more important than just stacking together a bunch of rare cards.

That’s what we mean by having a nice, wide, balanced game design. There is no power ladder to climb, and there is no all-powerful, “always win” strategy.

Banded Tournament Play

As your game grows, you will inevitably run into balance and power issues. Especially once your available unique assets get into the thousands. For example, since Magic: The Gathering has been around for over 25 years, there are now over 18,000 unique cards to choose from. How do you balance across such staggering breadth? With banded tournament play.

Basically, what that means is you can still play with all of your old, broken, thoroughly overpowered assets — but only with other people who have the same access to those assets. Meanwhile, most of the popular tournaments can be based on a Standard Format. In other words, contestants will come to play with the most recent, highly available assets based on a common criteria. These will be far easier to obtain and much more likely to meet any modern balancing requirements.

With banded tournaments, whales and casual enthusiasts are on the same basic footing when it comes to asset acquisition, and it’s all about who is the most skilled player. As it should be.

Broaden Your Player Base

I cannot stress this enough — You need to be chasing a mainstream gamer audience. None of us will survive if we’re all depending on the same 10k crypto enthusiasts. You can’t sufficiently make an item or game popular with that few players. A game needs millions of players to build long term incentives for value accumulation. You need critical mass to get people to care about those super-scarce items of yours.

And, if you’ve got millions of players, that means you’re going to be minting hundreds of millions of items. Which, again, is why it’s crazy to worry about “diluting” your asset pool.

But.

(You knew there was a “but” coming, right?)

But, make sure you’re not just spam-minting those items. They need to be tied to some measure of play. Think of it like “Proof-of-Play” item creation. You can’t willy-nilly flood the market with junk. It has to be an intentionally created item, with value to the player.

The beautiful part about this is that once you get a few million players, you’ll have pockets of player types who will value different types of assets. Maybe they like weapons. Maybe they like crafting ingredients. Maybe they like lightning bolts. The important part is, the more players you have, the more diverse your item set needs can be.

The more diverse your item set needs are, the more room you have to play with scarcity and utility.

If you want speculation, collecting, and playing to work in your game, you need to enable more players.

Specifically How We’re Doing It In Neon District

This is the part you were waiting for. Now that we’ve got everyone up to speed with enough context around why we’re building things the way we are, here’s how we’re doing it.

Leveling Up

The core of our entire model is a combination of scarcity and a concept we call Power Ups. It’s how we’re decoupling scarcity and utility and powering everything with play.

Characters and gear in Neon District are all represented by Non-Fungible Tokens. Also known as NFTs. In general, when a player finds a dropped piece of gear in-game, it will be a base item with its art demonstrating its rarity. Of which we have 5 levels of rarity: Common, Uncommon, Rare, Ultra-Rare, and Legendary.

Following so far, yes?

Good. Here’s where it gets fun.

As you play Neon District, you earn Juice (basically bottled XP) and Parts (salvaged parts used to upgrade your gear — basically XP for gear). By applying Juice and Parts to your characters and equipment, respectively, you Level Up your NFTs.

Every time you level up your character or gear, you get to choose another Power Up. These will be either an ability, stat boosts, or both. Upon leveling, you’ll be presented with a choice of three options, each pulled randomly from a pool of hundreds upon hundreds of Power Ups, representing varying degrees of power, and influenced by attributes like class, rarity, or weapon type.

Think of it as building a unique skill tree for your assets, being guided by both probability and planning. This guarantees a large variety of gear differentiation, making it ripe for both play strategy and speculation.

So, yes, Neon District allows you to individually level up both your NFT characters and NFT gear.

Modeling Scarcity and Power Ups

In this decoupling of scarcity and utility, we’ve got multiple levels of item rarity and multiple levels of Power Ups. Let’s look at how those two concepts intersect in our distribution model.

An important bit of information that chart shows is that even common items have the potential to have the strongest Power Ups — Even though it’s a vanishingly small chance, it’s still a chance.

Charting Utility and Scarcity by Play Strategy

Finally, how does all this fit within the player’s strategies? The concept of leveling up with Power Ups adds another dimension to the utility vs. scarcity diagram. To demonstrate that, I’m going to add some new “Character Roles” to our diagram.

Tank — A character built to absorb massive damage, focusing on survivability.

Support — These characters focus on skills and abilities, rather than damage or toughness.

Healer — Everyone loves to have a healer in the party.

Ready?

Here we go.

Now, two important things about this chart:

1. It’s wildly simplifying some fairly intricate nuance for the sake of making a point.
2. It’s incredibly dense and is making a LOT of points.

Let’s look at a few relationships between the various icons, and I think that’ll help you wrap your head around the information it contains.

Different Gear is Important to Different Players

We’ll start simple. Note the lens with which to view this chart is from a player (not a collector) who values utility over scarcity — In other words, they care about winning. In addition, they’re desiring to play a Tank strategy. This assumes they’re interested mostly in Tank gear.

Now, find the two, mostly-gray triangles in the bottom-left corner. Of those two, the one on top represents a piece of Tank gear. The one on the bottom, Healer gear. They are equally terrible in quality — both common and their Power Up, when they gained Level 2, was weak. The only reason the Tank item is higher (with more utility) is because it’s more valuable to a player building around a Tank strategy.

The exact same principle holds true for the two blue squares. They are both average Power Ups, and are both leveled to 8, but one is a piece of Tank gear, and one is a piece of Support gear. Same general scarcity, but a Tank player would value the utility of the Tank gear over the Support gear.

Audience Does Not Affect Scarcity

Now, look at the middle-right side of the chart. The two gold pentagons — One is a Healer item, and the other is a Support item. Neither of which are terribly useful to the Tank strategy, but both they and the gold Tank item at the top-right corner are all of exact equal scarcity.

A neat thing about having a mainstream audience is there’s room to specifically target different audience segments. Players play differently, and you’ll want to make sure you are catering to as many player types as possible.

Expected Value Varies

Notice the dynamic of the four items in the center — the level 8 golds and purples. The more powerful, pentagon version of the gold legendary is going to be less rare than its average-power, square version. This is because, as is visible on the distribution chart, legendary items get a boost during the early levels for their Power Up table rolls. So, most legendaries are going to be strong, and not average. In order to balance out to an average strength, the leveling rolls need to be just a successive avalanche of terrible luck, so the average ones will be more scarce. More scarce, but with less utility.

The purple ultra-rare versions, however, don’t start quite as powerful, so they should be closer to the same in scarcity, with obviously the more powerful one having more utility.

Quality, Max-Level Items Will Be More Rare

Not everyone is going to level their items all the way. Often, you might not want those choices made for you — Maybe you want to acquire a base common, and level it up according to your own planned strategic utility.

But, more than likely, strategies will fall into basic, predictable buckets, and people will be hungry for the items that received strong, focused Power Up rolls. Because this requires both a heavy dose of luck along with the skill to make the right choices, these well-leveled items will be the exception to the average-leveled items’ rule.

This means most items that have been leveled all the way to max level will be of average strength. The strong, high-utility Power Ups will be far more scarce. And, since rare items get a boost in the early levels, the strong max-level items are more likely to be legendary or even ultra-rare in rarity. Notice that of the 9 items on the right side — the scarce side — of the 9, 7 of them are strong. And most of those are high level.

Even Terrible Gear Can Be Scarce

If you look at the top-right corner, at the green, uncommon item, you’ll notice it’s more scarce than the gold legendary right next to it. That’s because, based on the “Item Power Ups by Rarity” chart above, it’s unlikely an uncommon will roll high-level Power Ups at every level. It’d be like rolling a 6 on a 6-sided dice — 15 times in a row. Could happen, but not likely.

The same is inversely possible. For example, the purple, ultra-rare triangle in the bottom-right corner. Again, based on the distribution of the “Item Power Ups by Rarity” chart, it’s very, very unlikely that an unltra-rare will roll a 1 on a 6-sided dice 15 times in a row.

However, even Legendaries will be probably be, at the very worst, average in power because, well, they’re legendary. Now, whether or not all that legendary power is focused and useful? That’s another barrel of fish altogether.

I’m sure there are even more interesting intersections between scarcity and utility that our model exposes. Probably enough to, again, warrant its own blog post.

These Are All Unique Items

Something very important to keep in mind is that these items are individually unique. For example with our Tank above, these charts don’t apply to ALL Flechette Pistols — just one, very specific instance of a Flechette Pistol. Because that player leveled that pistol up, making choices from hundreds of options, and finally ending up with a unique item with unique individual properties.

So, as you can imagine, it takes almost as much skill to speculate on the value of items in Neon District as it does to play. And we’re super-excited to see where this goes, because it’s not a thing that’s ever been done before.

Thank you, blockchain!

What Happens Next?

Well, because we’re moving into this new method of designing player-owned digital assets, and the interest in the way it affects a bunch of persistent worlds all wired together, it’s time to do a little prognosticating. I can’t speak to how you should do it in your game, but I can talk about where I see our stuff going.

Loadouts

Gone are the ways of “Kickstarters” and “Pre-Sales”. Loadouts are the new jam.

Think about it. Since we’ve applied this unique style of scarcity/power mechanics to Neon District, we can both sell items, and have them earnable in-game. Many (but not all) of the same F2P mechanics still function wholesale, so we can blend the gameplay with a “Loadout” website. This will let you shop and participate in open marketplaces outside the game. Think of it like the game and comic stores where anyone can swing in and pick up MTG singles.

Additionally, it’ll bend toward full inventory management and equipping on the web — Pieces of traditional games that are historically clumsy in a game interface, but are perfect for a website. Think about all the time a player spends strategizing and organizing their gear and equipment. This out-of-band gameplay is a critical component of almost all TCGs. Enabling a portable, efficient, connected interface for this step is very exciting to the min-maxer in me.

The decoupling of power and scarcity allows for this smooth, integrated experience between purchasing and asset management.

Cottage Industries

Probably my favorite aspect of all this is the sprouting of dozens of “cottage industries” around game asset marketplaces. Everything from standard auction houses to more exciting things like guild collectives.

Imagine — We’re enabling the concept of spending time to create value. This means it’s entirely possible for someone to play a game they love, and it counts as working part-time for a collective, where they take the leftover, valuable assets they neither need nor want, and sell them not to an in-game NPC merchant, but to a company they contract for. That company can then slap a 15% markup on the item, and push it out to their storefronts. Or maybe it’s a guild, and the guild members pay their guild fees in useful NFTs they discover through play. Or maybe it’s a junk collector who takes second-hand gear and recycles it for Parts.

Think of all the times you’ve pulled a duplicate rare from a pack of MTG cards, or you’ve outgrown and replaced your awesome socketed helmet in Diablo, only to have it sit around, taking up space in your stash. A group of people pooling their efforts to effectively mine valuable NFTs is incredibly interesting to us.

Healthy Secondary Markets

Unlike previous in-game item economies, blockchain enables easy 3rd-party item sales. Typically, this is a terrible idea for game companies because they don’t get a cut of any sale — Not so with blockchain. The ability to take a small, 5% fee on top of each player-to-player transaction is just another revenue stream for the developer, one sufficiently large enough to negate the need for all of those super-nagging F2P mechanics. “A/B testing says If we pester our users by putting this annoying button in their face, it increases our sales 2%.” Or, we could just take a cut of secondary sales and let our players enjoy a cleaner experience.

An interesting question continuously brought up to me when I talk about this particular subject: “But, Chris — Won’t secondary sales cannibalize your own asset sales?”

Nope.

Think about it. Free-to-Play games don’t make anything on selling already-existing items. Those sales are typically soft currency sinks inside your game. From a player purchasing items perspective, we’re replacing in-game, soft currency merchants with external, 3rd party, real-world merchants — And taking a cut.

Besides, this open market model doesn’t interfere with the traditional F2P game revenue streams like limited edition items (they’re limited, so we only sell them once, to collectors, for cheaper than they would be on the open market) or consumables (which are a terrible use-case for NFT item sales anyway). So, no. I’m not afraid a healthy secondary market will cannibalize our asset sales.

There are many, many exciting times in front of us with this game and the entire concept of true ownership and earnable in-game NFTs. It’s going to be an amazing time for both players and speculators alike.

I certainly hope you join us for the ride!

Written by Christopher D. Chapman of the House Blockade Games, First of His Name, Executive Producer, the Unburnt, King of the Andals and the First Men, Khaleesi of the Great Grass Sea, Breaker of Chains, and Mother of Dragons

NOTE: I originally wrote this for the Blockade Games Blog.