Gaming Guilds Are Not The Problem
“Gaming guilds are value extractive” is a common mantra amongst web3 game designers who lament the rise of coordinated min-maxing in blockchain gaming. But are dedicated pools of players and capital really the boogeyman we should be focused on?
This topic discussed in greater detail with Sarutobi Sasuke, Head of Partnerships at Yield Guild Games (YGG) — watch here.
Value Extractooors
The idea of a “value extractor” in web3 describes one who enters a project, contributes next-to-nothing, takes some reward, and leaves. It’s a classic example of finger-pointing and blame-shifting about why project X declined to price Y, and it’s endemic across gaming, decentralized finance (DeFi), and even art.
But what does it actually mean to contribute “nothing” to a project?
Consider the metrics that matter to a project.
- In DeFi, it may be total value locked (TVL) in some protocol
- In art, it may be aggregate social media followers
- In gaming, it may be daily active users (DAUs)
Each of these metrics helps paint a picture about the health of a project, and therefore helps drive further participation or investment into that same project. Any action taken by a community member that supports those metrics is, by definition, value additive.
The problem is how projects reward community members for pumping those metrics in the first place.
Ain’t No Such Thing as a Free Lunch
Rewarding users for participating in your project to any degree must be viewed through the same lens that customer acquisition cost (CAC) has been viewed across a myriad of industries for years. If I pay Johnny a single $SAM token to stake his USDC into my DeFi protocol, I’ve paid some cost of customer acquisition. Same applies if I pay Johnny that $SAM token to sit in my Discord, or follow my Twitter, or play my game.
It’s this last bit that’s getting a bad rap recently. Games have effectively over-indulged on marketing pseudo-expenditures via overtly busted economies that hyperinflate their tokens through rapidly emissive gameplay reward mechanics, resulting in a torrent of dollars in CAC value going out to individual players at a breakneck pace.
This is where guilds enter the picture. Guilds, as quintessential min-maxers,² stockpile resources, arm the proverbial cannons loaded with thousands of players, and fire right into games’ critical sweet spots to exploit economic imbalance and cash out those juicy yields. Wow, that sounds really terrible, doesn’t it?
Except it’s not as terrible and inevitable as certain rapidly-declining games would have you believe. The onus is not on the guilds to completely ignore very obvious vulnerabilities in economic loops. Under what circumstances elsewhere in the world would you ever expect to successfully persuade a large group of people to persistently choose against their own best utility?³
Furthermore, games should be lucky to even have guilds choose to enter their ecosystems. Guilds, almost by definition, are the absolute ideal client for any web3 game. Web3 games require:
- Persistent playerbases (high DAUs)
- Capital injections, or economic activity & volume
- Coordinated community marketing & influence
It is patently absurd for games to come out “against” guilds as if those three metrics are not exactly the dream for any web2 game developer out there. The only difference is that web2 game developers have carefully budgeted their CAC expenditures, because they have to pay them in real fiat, whereas web3 game developers have overwhelmingly borrowed from future players by over-emitting tokens in poorly balanced loops, which will be dumped in spot markets later.
With Great Power Comes Great Responsibility
Web3 gives us an incredible toolset for user acquisition and retention. The things we can do with community ownership, digital asset distribution, and international microtransacting are unheard of in web2. But web3 game designers need to step up to the plate and take responsibility.
Games that aim to scale must be built to handle that scale, full stop.
If your game collapses as soon as ten thousand players charge in and mine a single magical rock over and over and then dump it on your marketplace, perhaps consider some more diverse gameplay mechanics that either limit the amount of magical rocks or otherwise incentivize players to do something with those rocks besides simply selling them.
But do not blame the coordinated groups of players who have taken the time to learn your game mechanics, potentially purchase your game assets, build a community around your game, and then actually play your game.
Recall the top of this article where DAUs in games were highlighted as one of the top-tier quantitative metrics for game health. Under what ordinary, sane circumstances would a project blame users who are actively pumping what is arguably their core metric? It’s a tough justification to swallow, and I don’t expect that part of the zeitgeist to last long. Time for us all to take greater responsibility & push this space to scale sustainably together, no matter how many players the guilds load into their cannons.
¹”Communities,” to date, has been a euphemism for “retail and institutions with excess play money.” We aren’t at real public adoption yet with ordinary consumer communities or fans.
²Shoutout to my team member Chiyoung Kim, who wrote a neat piece on this.
³Probably a well-deserved snarky comment about modern politics somewhere in here.
Sam is the CEO of Playground Labs, a web3 protocol dev organization, and Partner & Head of Interactive at Hivemind Capital, a crypto-focused multi-strategy fund. Follow him on Twitter.
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