Entropia Universe - Economic Learnings for Web3 Games
Entropia Universe - Economic Learnings for Web3 Games
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Introduction
What we’ve been noticing
As a real money game, Entropia Universe provides an interesting example of how virtual economies can take shape and provide insights for those building Web3 game economies. The game was launched in 2003 by MindArk studios, well before the creation of Bitcoin. Before NFTs entered the scene with high-value digital asset sales, they claimed the top three spots in a list of the most expensive video game item sales. These included a palace for $330,000, a nightclub for $635,000, and a planet for $6,000,000!
Key Topics this Article will Cover:
The Backdrop
The Market Situation
Entropia's Economy Analysis
Conclusion
The Backdrop
Entropia Universe boasts an unusual economic system. Its currency, PED, has a pegged exchange rate of 10:1 with the US dollar. Though most games have the ability for players to purchase currency at a fixed rate, Entropia is interesting as it allows players to redeem PED back into dollars as well. This is done by maintaining currency reserves to cover the redemption of PED.
The Market Situation
While this Sci-Fi MMORPG is technically free to play, actually playing for free is an arduous task. The few tasks available without any up-front PED costs, like collecting sweat or fruit, pay out the PED equivalent of less than a dollar per hour for very boring activities. The real gameplay methods of hunting, mining, and crafting cost PED in order to start and continue due to needing inputs like tools and ammunition.
The PED output of these activities is variable, meaning that they essentially follow a casino model. Similar to casino games, they have a negative expected return with an estimated 90-96% return to players on average (aka 4-10% house edge). Most of the players participate in these core activities, making gambling the core monetization method for the game. High-spending players are given visibility for their wins and make up a significant chunk of revenue, as high rollers do in casinos.
Though there is another interesting economic component that has actually been profitable for participants over time- investing.
MindArk has sold land, planets, and other assets within Entropia Universe, including the more expensive sales mentioned above. Landowners are able to create businesses, sell housing, and impose taxes. Rather than be the gamblers in the casino, investors are able to buy the equivalent of a blackjack table and get a cut of the revenue.
What else did you miss?
Entropia's Economy Analysis
Conclusion
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Kiefer Zhang | Associate Consultant
E: Kiefer.Z@EconomicsDesign.com | W: EconomicsDesign.com