Analysis on Drug Wars' Economy + Response From @hightouch
Hey guys! I originally wrote an article criticising the economy of Drug Wars, I titled it "Unpopular Opinion: Why the Drug Wars' Economy Is Unsustainable". However, I respect @hightouch and everything he's doing for the blockchain so I decided to message him before I posted. I told myself if he doesn't reply in an hour I'll just post it, but he replied within minutes, and talked to me for much longer. I'll post my original article below and I'll include a paraphrased version of his response below!
Drug Wars is a new game on the Steem Blockchain that has become widely popular, climbing to number 2 in the daily Steem Apps ranking only a few days after release. I personally started playing on the second day, and was met with some technical difficulties so didn't really start until the third day of its release. I've spent (very roughly) around 100 STEEM in total across my accounts so I'm not trying to FUD, just trying to analyse and discuss some serious issues with the economy of the game.
The Snowball Effect
I assume the game tries to take advantage of the snowball effect, as more players come in and invest STEEM, there's more money to be distributed in the daily rewards thus making it more lucrative, which incentivizes users to invest more, thus continuing the cycle. However, there will be a point where this reaches its peak, and the investment to reward ratio simply isn't worth it anymore.
This is due to a couple of reasons, as you level up more on your account, it costs more and more for the same benefit so there's simply not much point levelling up a single account very high. Therefore, people will simply stop spending money to level up (and thus the rewards pool will start decreasing). The second reason is because the rewards pool comes from others' investments, thus if you're making a gain others are making a loss. This heavily benefits early users, so it's expected that there's a massive boom in users at the beginning and it will slowly trickle down over time. Furthermore, remember only 80% of investments go towards the rewards pool and 20% goes towards the developers (which is fair of course), but that decreases the chances of making a profit even more.
Decreasing Marginal Benefit
So, let's explore the first problem. The more you upgrade, the more it costs to upgrade yet it gives you the exact same return as the previous upgrade, so what's the point of upgrading? If no one is upgrading, then where does the reward pool come from? The rewards pool will simply decrease over time and therefore users will have less and less incentive to upgrade, thus breaking the snowball effect.
Furthermore, the amount of drug production keeps going up which means by purchasing an upgrade, you're receiving less and less of the percentage of total drug production and less of the rewards pool. To keep up with this, the rewards pool should always be directly proportional to the total amount of drugs produced, which means people will need to spend more and MORE money as time goes on, which personally I don't see happening due to the problem above. What I do see, is more and more people turning into "leaches" as they've spent enough money and turn into free to play players.
Leaches
This is the term I'd like to give myself and people like me. I've made my initial investment, I'm close to making it all back and now I just plan on logging in daily to invest some drugs and making no new investments, simply leaching from the rewards pool everyday as a free to play player. This is simply because there's really no incentive for me to invest any more. It costs so much to upgrade my buildings that it's simply not worth it. As more people turn into people like me, it will decrease inventive to invest and thus decrease investors even more, thus creating a snowball effect but in the opposite direction of the one first mentioned.
Putting it bluntly
How do you "win" at this game? You make your investments early, set up your means of production and start gathering resources. You refer more players into the game, thus earning both referral rewards AND increasing the rewards pool which makes your original investments more worthwhile. As soon as there's no more new money coming into the game, it will collapse as the downwards snowball starts. This essentially sounds like a pyramid scheme. Don't forget, the only way for you to make a profit is for others to make a loss!
Gaming on Steem
Personally, I am all for gaming on Steem. I have been pushing for it since 2017 when I first arrived on here and started playing Steem Monsters from the first or second week of its release. However, I don't think Drug Wars is the most well-thought out concept. I respect what @hightouch and his team are doing for the Steem blockchain and can't wait to see what more of their developments like OnGame has to offer!
@hightouch's response
The article in italics was what I was planning to post before I contacted @hightouch, however after a conversation with him on Discord I decided to include his response.
His focus on this GAME isn't about it being an investment, it's about it being a game! His vision is to make it a competitive and fun to play game, with financial gain as an added incentive, not the main goal. Personally, I think the best example of this is thinking why do people spend tons of money on free to play games with NO potential financial gain associated with it at all? It's for the competition and fun! @hightouch aims to make this game fun and competitive through battles and many more features and as he said, "I made it like a game not as a way to make money".
He also mentioned if the snowball effect downwards does begin, he has ways to "reach other players ;)", not really sure what this means but I am excited to find out! He also mentioned "reaching other blockchains with our technology" a couple times, I'm not sure what he's alluding to but I'm excited!
His final words were:
"let finish the fights
and we will make a priority of missions
so everyone can have fun
even when they start"
Despite starting quite pessimistic of the project, I've now gained a new perspective. I now see it more as a game, rather than an investment and will play accordingly, have fun guys!!
Ongame.io
Lastly, since I had some time with him I mentioned his platform ongame.io which appears to be down at the moment. I was wondering if it's still in development. He assured me it very much still is and he's gotten a partnership and a potential new investor. This is very exciting news for me, an avid gamer, and I'm sure by integrating gaming into the Steem blockchain will be a MASSIVE addition.
Although there are blockchains like Enjin, I feel like the Steem blockchain can be the all in one ecosystem for gamers, where you can buy/sell games, play games, make games, stream games, watch games, explore games, write about games, literally everything related to gaming, something exists for it on here!
Nothing bad for a game to be unsustainable in the short run. When the critical mass is reached the economy will be pivoted to a more reasonable basis.
Great analysis. I have had the same concerns as you about the sustainability of Drug Wars.
The question of whether something like this is legitimate or a pyramid or ponzi scheme essentially comes down to what @hightouch mentioned.
If the main reason people are playing is because it is a compelling game and only secondarily for investment, then it is legitimate and sustainable because people will keep joining and playing even if they are not earning.
If the game itself is not good enough and people are mainly playing for "investment" then, if allowed to continue in this way, it would be a pyramid or ponzi scheme.
I know a lot about this topic as I ran and won a big court case in Australia on this very question.
I doubt drugwars brings any game play breakthrough to the table.
Thanks! I completely agree that if the game continues this way, it would be a pyramid or ponzi scheme. Since there is nothing stimulating about the game's core features, the only reason to "play" would be for investment. However, if they can get battles going and gangs implemented and create a sense of competition and fun, it could be a whole different story!
Also, you mentioned you won a big court case in Australia, are you an Aussie too?
Yes, I'm an Aussie living in Tel Aviv. I'm from Sydney originally.
BTW, you should sign up for the new big legal case I'm organising - The Class Action against Facebook & Google's Crypto Ad Ban. Its being run in Australia but people worldwide can join. https://www.jpbliberty.com/class-member-signup
Ahhh, I'm an Aussie too and I'm living in Melbourne despite being in Beijing right now! I'll check out your lawsuit when I'm back in Melbourne and have some time, thanks!
Is it possible to still join the legal case, and what would be the benefits if any @apshamilton?
Yes. It’s still possible to join at www.jpbliberty.com. Benefits include chance of getting a substantial payout, bonus SUFB tokens and many more set out in SPS Proposal.
Posted using Partiko iOS
Perfect.
At it's current state, it's going nowhere fast. The numbers on different things are all wrong. Level 4 Pharma Lab takes 315k alc, which to even hold, you have to upgrade the storage to insane levels. People have only been playing for days, and they've already hit the point where they take days to build up resources to build each new level for a building. Additionally, you have to build storage up to insane levels to even hold that. It's completely unbalanced.
But, all these users will put the pressure on them to fix these things. Unfortunately, if they do lower the requirements for some levels, everyone that's already upgraded those is shit outta luck.
The game will change a lot...and hopefully it will become more fun and easier for people focused on money to try to earn it in-game, and more reasons for users to spend it, giving a bigger pool for development and to earn. I'm not sure if I'm that hopeful right now though. They had to have at least done the math on how long it will take to build things up. Was it supposed to be practically near the top of your drug empire after a week?
You're right, the time it takes is absolutely ridiculous. I wouldn't mind if they halved the cost of each level and doubled the player's current building levels or something, just so there's a little bit more interaction. At the moment, I literally don't know what to do in the game anymore. Hopefully some massive changes are coming soon.
If they do adjust the costs of buildings, I doubt they will up anyone's levels. I doubt they have any idea how crazy it is though, because they actually made the Cocina more difficult to upgrade. They said some bullshit about it being harder so it's more fun. Um...waiting around to click a button isn't fun for me.
Drugwars is a gambling game, sometimes you can win and also lose but you have fun playing.
If they get combat wrong, they'll kill new users completely. I noted that some players have literally invested $1000s (dollars, not Steem) already, and they're buying goons by the thousand. If such investments mean they can simply clean out players who've less (financial) power, there'll be a mass exodus, and no new players will come after all those disappointed that their little empires were wiped out.
There's gonna have to be a balance that doesn't disenfranchise the little guy if they want to keep little guys in the game.
Thanks!
TO wage war you need three things:
money, money and money
Money is worthless without goods and services to purchase with it, and warm bodies to wage war.
All I'm saying is that enabling total war and winner take all on @drugwars will leave only one player on the platform eventually. During the elimination of all other players, the platform will suffer decreased participation incrementally, and eventually exponentially, once the demoralization is beyond a tipping point.
No one wants that, except enemies of this game.
Thanks!
If there is something worth struggling for in the game the competition will come. Otherwise just forget it )
Exactly.
That's a very interesting issue you've raised. We want to incentivise spending, but not make it so pay to win that free to play players will be completely powerless against bigger players.
However, free to play players have less loot to offer, if there's some sort of cost to attacking someone perhaps players will only attack people similar to their level to maximise their spending. For example, x weapons per unit used to attack, but make defending free? Maybe something like that could work haha
I am pretty confident that simply allowing unrestricted rapine of everybody by the best armed will kill your game. There needs to be a mechanism that enables smaller accounts to band together to resist warlords, or there will be no reason to even play.
Also, there need to be limits on the amount extracted via raids. Winner take all will simply guarantee ragequits. Consider making the percentage of loot from successful raiding tied to equivalence of military might, enabling new players to opt into gangs that can help protect them until they can grow some defenses, and you'll see that massive empires raiding puny villages will not be worth the time. If a player with 20k units can only extract 1% from someone with 200 units, they won't bother, if tackling a player with 10k units will extract 50% of their drugs.
Either balance or you'll end up with one player and no income at all.
Thanks!
Great perspectives provided here and in the comments! I think that as long as there is a path to play without being obligated to pay for entertainment or a little Steem payout, it is sustainable.
Posted using Partiko iOS
Thank you for sharing this post, @cryptoeater. I can just agree with it. I have nothing against those who just enjoy the game. Everyone likes something and DrugWars may be a good choice for those who like browser MMO games.
I do not say that the developers have bad intentions and will necessary run away with investors' STEEMs (although they already have 20% which is quite a good amount of money). Discussing this possibility is just speculations... But it has to be said that it is not a good idea to centralize that amount (about 100k STEEMs) at one place.
Again, I say that I have nothing against those who are in the game for fun. But you have to admit that the majority of players aim just to make a profit out of it. I find this game thanks to articles that were talking about very good profits, nice ROI and who knows what else. And that is why I wrote my article about DrugWars and why I said it is a Ponzi scheme. I wanted to warn those who want to join the game just for making profits. The first investors make money from investments of those who came after them.
Just look at the #drugwars tag. People are talking mostly about ROI and STEEM rewards and about how easy it is to make money.
So I think that now it is not a good idea to invest for making profits, but probably just for having fun in DrugWars. I personally do not find the game fun yet. Now it is just about upgrading buildings. But I hope they will sort this problem out and provide a good game for Steemers.
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