This article describes economies within [[Virtual Worlds]]. In this sense virtual economies are anything that deals with the exchange of in-world resources. This might be an in-world currency, any item or even resources like playtime and access to the world. Virtual worlds are artificial constructs, and thus the economy within such worlds are artificially designed as well. Virtual Worlds are usually persistent and can be categorized into Theme Parks and Sandboxes on a spectrum. ## Goals The goal of virtual economies on a macro level is to drive forward the goals of the virtual world, for example providing "fun" to the players. On a micro level, the goal is to achieve "balance", which means that the designated group of players perceive the world as fair. It is important to understand that these goals can be different from real-world economies. Virtual economies might not be fair, not interested in [perfect markets](https://en.wikipedia.org/wiki/Perfect_competition) or not be capable of achieving [pareto optimal states](https://en.wikipedia.org/wiki/Pareto_efficiency). It might be part of the game to create monopolies. to encourage oligopolies or enable fraud. Some might encourage collaboration, others conflict. Players on the other hand engage with the virtual economy as part of achieving their own goals. For some that might be playing the game as intended, others might play based on their own, made-up goals or metagame. But in most cases, they all interact with the world and its resources — and thus the virtual economy. ## Why people engage in virtual worlds Bartle taxonomy: [Bartle taxonomy of player types - Wikipedia](https://en.wikipedia.org/wiki/Bartle_taxonomy_of_player_types) [Richard A. Bartle: Players Who Suit MUDs](https://mud.co.uk/richard/hcds.htm) Scott Rigby: [Immersyve » Science of Engagement](http://immersyve.com/) ## Resources Operators also fully control every resource within the virtual world since resources usually reside in closed systems. Even if resources reside on a public database, for example a [[Blockchains]], the operators control the game world recognizing individual items as valid as well as control the faucets and sinks of such items into the virtual economy, being able to directly influence the worth of each resource. **Central resources**: Main resource that acts as the "common denominator". Most other resources can be easily exchanged / transferred to the central one. Example: A player can mine ore, pick flowers, kill animals to get fur and hides etc., but all of those can be sold to a virtual vendor for gold. But a central resource can be more than a tradeable commodity. Another example can be "health", where if a player gets reduced to 0 health, they die and might lose other resources. Items like armor might help the player lose less life. Items might also increase stats like health directly or indirectly. And better weapons kill enemies faster, which also saves life. Speaking of: "Time" is always a central resource. Players expect to have access to resources over time, meaning more time played, more resources. Hence central resources are usually measured in "gain over time", for example "gold per hour" or "damage per second". **Secondary resources**: All other resources that are attached to central ones. They provide depth and immersion in the experience and the world. Based on the resource-distribution, we get different types of games, which also have a huge effect on attracted player types: * **Zero sum games**: To get a resource you need to take it away from somebody else, resources in game stay constant * **Positive sum games**: The system generates resources, number of resources is growing over time * **Negative sum games**: The system removes resources, number of resources is sinking over time * **Dynamic sum game**: The system decides what to do based on a given rule-set ## Costs Direct costs: The exchange course for system vendors to resource: "How much gold does this potion cost from an NPC vendor, setting the price ceiling?" Opportunity costs: The value of a resource when used in a game context. "When do I use the health potion? Should I save it for later and use a bandage instead?" Especially in persistent games, items with low value will never be used, normal balanced items will be rarely used, high impact items will be used regularly. ## Systems Systems are chains of individual game mechanics that influence the players access to resources. Example: The players kills a monster, the monster drops items, which are resources. The "fight mobs" is the system, the individual way the fight is happening are the mechanics. All these systems should enable the overall design goal. But balancing is HARD! * Too powerful items need to be nerfed, which annoys players * Buffing weak items leads to inflation * Opportunity costs lead to hoarding * Time played leads to inflation * Time played leads to power creep ## Closed vs open economies Closed economies mean that the platform itself is a [closed system](https://en.wikipedia.org/wiki/Closed_system). While resources might be changed the total supply of resources is fixed. This also means that the game loops within the systems are actual loops. *Example: Global resource manager -> spawns iron ore -> player mines ore -> player refines ore -> player turns ore into item -> player uses item -> item loses durability and breaks -> iron ore value goes back into global resource manager = The total amount of iron ore in the game stays constant.* Open economies control the supply of resources via faucets that inject new resources into the system. They also control the availability of resources via sinks that pull out resources from the system. *Example: If there is not enough iron ore in the world, the global resource manager can spawn new instances. If there is too many iron in the world, the durability of items can be reduced so they break more frequently. Result: The total amount of resources in the game is dynamic, based on a desired balance / optimal state to drive forward the game.* In general virtual worlds use open systems. Closed systems have been tried in various forms of complexity and usually fail. See [[#Ultima Online]]. This is actually in-line with the real economy where the [Gold standard as closed system was abandoned](https://en.wikipedia.org/wiki/Gold_standard#Abandonment_of_the_gold_standard) in favor of an [open system](https://en.wikipedia.org/wiki/Fiat_money). ## Articles & posts [Virtual economy - Wikipedia](https://en.wikipedia.org/wiki/Virtual_economy) [GDC Vault - Building Sustainable Game Economies: The Three Design Pillars (Presented by Machinations.io)](https://www.gdcvault.com/play/1028982/Building-Sustainable-Game-Economies-The) [Extra Credits MMO design - YouTube](https://www.youtube.com/extracredits/search?query=mmo) - We’re an educational YouTube channel made up of entertainment enthusiasts with backgrounds in game design, television production, literature and academia. Our team creates short-form animated video essays every week about game design, world history, mythology, and other subjects, all of which may or may not involve a cat! [Terra Nova (blogs.com)](https://terranova.blogs.com/terra_nova/) [Play Money - P2P Foundation](https://wiki.p2pfoundation.net/Play_Money) [Game Balance Concepts | A continued experiment in game design and teaching (wordpress.com)](https://gamebalanceconcepts.wordpress.com/) [Balancing the Economy for Albion Online - YouTube](https://www.youtube.com/watch?v=aX8f1lE09uY) [The Monopoly of the Commons. We Can Have Nice Things, But We Rarely Get To Keep Them | by Avi Bar-Zeev | Predict | Feb, 2022 | Medium](https://medium.com/predict/the-monopoly-of-the-commons-40ad91cd2efd) ## Looking at economies from different Social Virtual Worlds ### Ultima Online UO is interesting because its in-game economy underwent massive shifts. Although carefully designed, the initially closed economy failed due to player behavior (hoarding) and cheating (gold-duping) and had to be changed into an open one. In 1999, Zachary Booth Simpson looked at the inter-player economy in Ultima Online, especially at how it evolved: [The+In-game+Economics+of+Ultima+Online.pdf (squarespace.com)](https://static1.squarespace.com/static/5bf1bc95506fbe3baadb7063/t/5c00ac140e2e7265722166af/1543547925580/The+In-game+Economics+of+Ultima+Online.pdf) Raph Koster followed this up with a summary of [The evolution of UO’s economy](https://www.raphkoster.com/games/snippets/the-evolution-of-uos-economy/). ### Sony Station Exchange Station Exchange launched in June 2005, allowing EverQuest II subscribers to securely buy and sell the rights to use virtual characters, items and coin for real money. This made it one of the first official, sanctioned virtual-to-real economy platforms. The platform brokered $1.87 million in player transactions during its first year, with players having paid as much as $2,000 for the right to use a single EverQuest II character. The top seller earned $37,435 from 351 auctions. In 2007, Sony Online Entertainment released a report analyzing the first year in detail: [[PDF] Station Exchange: Year One | Semantic Scholar](https://www.semanticscholar.org/paper/Station-Exchange%3A-Year-One-Robischon/d7c9a0f343350b97de5a65fa42b2687707d15745) See also: [Sony Online Entertainment Releases Station Exchange™ Online Gaming Auction Site White Paper | Sony Corporation of America](https://www.sony.com/en_us/SCA/company-news/press-releases/sony-online-entertainment/2007/sony-online-entertainment-releases-station-exchange-online-gaming-auction-site-white-paper.html) Edward Castronova wrote the economy paper on Everquest: [Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier by Edward Castronova :: SSRN](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=294828) He came to the conclusion that the GDP of Everquest was higher than that of Russia and that a player could make an average income of 3,42 USD per hour. Later he explored two questions around virtual economies: First, will these economies grow in importance and second, if they do grow, how will that affect real-world economies and governments? [Game Studies - On Virtual Economies](http://www.gamestudies.org/0302/castronova/) In that sense it's important to understand that when you buy items and especially gold from others, you kind of, sort of employ them to do things for you. Namely gold farming. This is also where [Julien Dibbel](http://www.juliandibbell.com/playmoney/) ran his experiment to live off virtual money for a year. ### EVE Online EVE Online has an extremely realistic and complex economic system as a core gameplay mechanic, to the point where people describe EVE as an "Excel sheet simulator". The developer CCP allows access to the economic data and publishes a [monthly economic report](https://www.eveonline.com/news/search?q=economy), which some sites data mine and analyze as part of the metagame. EVE's main currency is ISK (Interstellar Kredits) which is freely exchangeable within the game and PLEX, which is an in-game item that can be traded for ISK or bought with real money through the official exchange: [Buy PLEX | EVE Online](https://secure.eveonline.com/PLEX/) The main innovation that EVE brought was getting rid of sharding and allowing players to interact within one huge community & economy. [The Economy of EVE Online - YouTube](https://www.youtube.com/watch?v=nrW6p5ns8K8) [The Counterintuitive Economy of EVE Online - INN (imperium.news)](https://imperium.news/the-counterintuitive-economy-of-eve-online/) [Rethinking the EVE Online Economy, Part 2 - INN (imperium.news)](https://imperium.news/rethinking-the-eve-online-economy-part-2/) ### Second Life See [[Second Life#Second Life economy]]. ### The Sandbox Launched in November 2021, the Sandbox is a browser-based world developed by the Animoca Brands. It's essentially adding a [[Web3]] narrative to a [[Second Life]]-like experience. The Sandbox is based on the [[Ethereum]] [[Blockchains]]. Note: The blockchain doesn't give you anything really, since the same can be achieved with open platforms like Sony Station Exchange. Blockchain only makes this into a protocol. However the world designers still have full control over resources and systems. The economy is based around LAND (chunks on the map), which can be used as billboards, SAND (a token acting as the currency, currently with limited supply) and ASSETs (player created in-world items). LAND and SAND are supposedly a finite resource, making this a closed economy. See https://www.sandbox.game/en/about/sand/ According to the [General frequently asked ASSET questions](https://sandboxgame.gitbook.io/the-sandbox/assets/general-frequently-asked-asset-questions), creators own "*100% of the rights, including copyrights, for any ASSETs that they make.*" Notable Land owners include Adidas, Ubisoft and Atari. Metaverse real estate firm Republic Realm paid $4.3 million, buying the virtual plot from Atari: [Republic Realm spends $4.3 million on Sandbox property - Protocol](https://www.protocol.com/bulletins/republic-realm-sandbox-real-estate). "*Republic Realm told The Wall Street Journal it owns 2,500 virtual land plots throughout 19 virtual worlds, with two specific investment vehicles focused on virtual real estate, including a mall, a community of 100 virtual residences and a private island.*" In their first Alpha season, they claimed to have 200k visitors with 150k hours played cumulatively, so on average not an hour per user. Leading to this question: [New World Notes: Can Anyone Explain Why The Sandbox Would Be Valued at $4 Billion With So Few Users or Buyers? (blogs.com)](https://nwn.blogs.com/nwn/2022/04/sandbox-metaverse-mau-valuation.html) As usual with NFT's [hacking is common](https://www.reddit.com/r/TheSandboxGaming/comments/rhu8v4/calling_on_sandbox_land_owners_who_have_had_their/). ### Decentraland Decentraland is a browser-based world developed by the Decentraland Foundation. Like The Sandbox, it's essentially adding a [[Web3]] narrative to a [[Second Life]]-like experience, where the developers claim to operate as a [[Decentralized Autonomous Organization]]. Decentraland is based on the [[Ethereum]] [[Blockchains]]. In February 2022, the creative director of the Decentraland Foundation [claimed]([What fashion week looks like in the metaverse | Vogue Business](https://www.voguebusiness.com/technology/what-fashion-week-looks-like-in-the-metaverse)) the platform reached 500,000 monthly active users. Early 2022, luxury designer Philipp Plein [purchased a property on Decentraland for $1.4 million]( (https://fashionunited.com/news/business/philipp-plein-purchases-1-4-million-plot-of-metaverse-land/2022020845646). The [Decentraland Marketplace](https://market.decentraland.org/) is centered around 3D assets like items or templates (looking like cheap asset packs) as well as in-game map land / parcels and names. [Events](https://events.decentraland.org/) are mostly centered around pumping crypto assets of questionable quality, for example NFT drops ranking high on the "rug pull incoming" scale.