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Bunicorn Game Tokenomic
Play-to-Earn gaming has become trending in the last few months after the exponential success of Axie Infinity. This prominent example opened an era of hundreds of new P2E games. Some of them grew drastically within a very short time, but most of them failed & died down quickly after a timeframe between a few weeks to a month. This is mainly due to a poor tokenomic design. As we’ve stated from the beginning, our primary goal for the Bunicorn card game is to solve the tokenomic problems of other P2E games so it can last longer and remain sustainable for years. Here is the tokenomic since the perception of this game after thorough research from other P2E projects: https://blog.buni.finance/bunicorn-in-game-tokenomic-announcement-ee6aa1b5ea56
Before going further, we will need to understand and accept the fact that the economic cycle in a game is similar to that in real life. In that sense, there are repeating cycles of growing, overproducing, crisis, and then starting again in relation to supply and demand. However, because of the super high ROI design of P2E games, this game cycle happens a lot faster than in real life. If it is poorly structured, the economy will collapse sooner because of hyperinflation without the ability to recover after the crisis. Thus, there is always a cycle that belongs to a P2E game: growing, over-heating, crisis, collapse. There are 2 ways to come around with this cycle: Expand the growing phase by continuously adding new players Create economic methods to heal the game and recover after the crisis
At first, we examined the existing games to find their struggles and figure out a way to solve them. After conducting research on other popular games, here are some issues that we found:
The entry price to enter a game is normally pegged to the game’s governance token. As the game grows, the token price will surge to continuous ATH (all-time-high), which pushes the entry price to become higher and higher. It will soon become a barrier for new players to enter the game. Because there are no more new players, the game will stop growing and start going backward. Most games only grow by increasing their user-base while not designing the mechanisms needed to burn the tokens or NFT assets and slow down the inflation. After a period of overheating, the reward produced in the game will eventually become higher than the in-flow of new players entering the game. If there is no way for the game to repair itself, it will die. Most of the games only use one token model. It means that not only the entry price but the reward payout will also sky-rocket or collapse quicker than ever. In other words, it’s not stable and economically healthy. This model will attract the pump & dump users who want to take short-term profit but end up leaving the game quickly.
After careful consideration, we’ve decided to use 2 tokens in our game: BUNI - the governance token), and BUR - the in-game currency and reward payout. With these tokens, we tried to achieve the following goals: Low and mangle entry price - pegged the entry price (recruit, hunt) to USD instead of a fixed price in BUNI or BUR. We keep it low enough at around $120-150, so it’s affordable for more players. Stable payout rate - pegged the reward to USD. Extended buying demands for BUNI token so it will increase in value and benefit the project’s holder. A buying demand and burning mechanism for both BUR and NFT assets, so they will be burnt and slow down the inflation rate.
Since we launched the game on 31st August, the Bunicorn game has reached huge success with a massive rate of organic users. We were ranked in the top 3 of Binance’s BUIDL leaderboard and became the monthly star of the MVB III program. However, after more than a month, let’s see what happened to BUNI and BUR respectively.
What happened to BUNI because of the game? The BUNI token had a very high buying demand from the beginning as new players entered the game. Thus, it continues to reach new ATH several times. There were some short periods where the BUNI token’s price has decreased when it comes to the unlocking schedule of the pre-staking pools. However, the price recovered quickly because of the buying demand from the game. At this time of writing, the game’s treasury has collected more than 16M $BUNI that accounted for 11.6% of the total supply. Because the entry price is pegged to USD, if the BUNI’s price decreases, the treasury will collect even more BUNI tokens quickly.
Thus, the BUNI token is almost independent of the BUR. Once the game treasury has collected a great portion of the total supply and the pre-staking farm distribution is over, we’ll see.
What happened to BUR? There are 2 forces constantly having an impact on the BUR price: The minting of BUR through the normal PvE battle. The burning of BUR through in-game activities such as fusion, enhancement, recruitment, and hunting. In an ideal world, these 2 forces are perfectly balanced, or burning is always higher than minting, so everyone can keep their positive profit. To achieve this goal, we’ll have to increase the utilities of BUR in various ways by motivating the players to keep re-investing in the game or acquiring more players. Indeed, Bunicorn has done a very good job in both objectives. Most of the players re-invested in the game or opened multiple accounts, some even making bots to automate and maximize their profit. However, we have seen a sharp decrease in BUR price recently, so what went wrong?
As aforementioned, it is almost impossible to avoid a crisis in a fast-growing economic cycle. The burning mechanisms might slow it down, but it will eventually happen once the BUR supply reaches its peak of over-production. There are a few other factors that caused this event to happen sooner: The gas fee. It is similar to the money that a country needs to spend to fix natural disasters. The more money printed for this purpose, the higher the inflation rate. The nature of the Bunicorn game is click-to-earn, so users often click 28 times per day and could potentially pay $250/month for the gas fee. We have to pay $0.5 per fight to cover this fee, it’s one of the main reasons why the decline in BUR happens that fast. Pegging reward to USD linearly. Again, in an ideal world where burning/minting is balanced, this method works perfectly fine. However, in real life, there will be a bull run and a bearish cycle. At the beginning of the bull run, the minting of BUR is slower than burning demand from users. It makes the BUR price get higher and higher. Towards the end of the bull run, the majority of users have finished setting up their account, they stopped re-investing in the game and started minting BUR indefinitely while the demand from new players, fusion, enhancing is not enough compared to the over-production of existing users. From this point, BUR’s price will start to go down, starting a new down-trend of the cycle. The bearish market starts. The demand from new users/re-investing sharply declined. Because the price of BUR is pegged to USD, so if the price goes down, the amount of BUR minted will increase to keep the ROI of users to be the same as before. The more it’s going down, the BUR minting speed happens even faster. It’s like a snowball effect. If we keep it this way, the tokenomic will collapse and cannot recover like any other game.
How to fix this? First, we have solved the gas-fee problem. Now, how to stop the snowball?
We’ll make a mechanism so that Bunicorn Game will heal itself in the bear market and gradually recover again. Let’s see how it’s done. There are 3 factors in this new approach:
- The target BUR price. This is the ideal price of BUR in USD where minting is equal to burning that we aim for. Let’s say it’s $0.05 per BUR.
- The expense price. This is the price of all the activities in the game that users would need to pay for such as hunting, recruiting, fusion, enhancing… It will be pegged to USD in the market. If the price goes down, more BUR will be burnt. If it goes up, less BUR will be burnt.
- We’ll find a formula of the reward payout so that the number of BUR minted will be lower when the market goes down and higher when the market goes up. Because expense and reward go in reversed order, so they will eventually become stable at the ideal target price.
Here is the formula that we’re going to implement:
actual_bur = target_bur * SQRT(expected_bur/target_bur)
- Actual_bur is the actual number of BUR to receive after a battle.
- Target_bur is the amount of BUR you will receive if BUR is at the ideal target price of $0.05.
- Expected_bur is the amount of BUR you want to receive equivalent to the same amount of USD per battle (the current implementation as of now).
Let’s take a look at an example. User A has a trainer at level 10 and a 3-star Bunicorn. He’s making roughly $0.98 per battle which is 19.6 BUR if the BUR is at $0.05.
If the BUR price goes down to $0.01
- Expected_bur = 0.98/0.01 = 98 BUR.
- Actual_bur = 19.6 * sqrt(98/19.6) = 43.82 BUR.
If the BUR price goes up to $0.08
- Expected_bur = 0.98/0.08 = 12.25
- Actual_bur = 19.6 * sqrt(12.25/19.6) = 15.49 BUR.
Here is a simulation for ROI of teams in Bunicorn Game before and after the update:
As you can see, the actual bur he received (43.82 BUR) is smaller than expected (98 BUR) if the price goes down. It’s bigger (15.49 BUR compared to 12.25 BUR) when the price goes up.
In a bear market, the more the price goes down, the more difference between the actual_bur and the expense amount (hunting, recruiting….). When the price goes down to a certain point, the ROI from PvE is no longer attractive, some users will decide to sell off / destroy their NFTs and quit the game. Because there are fewer users, the amount of BUR minting also reduced sharply and its price gained stability while the amount of BUR getting burnt increases as we keep pushing rewards into in-game activities such as the upcoming dungeon, PvP battles, and daily tasks. The yield from the game and ROI becomes more and more attractive, new users start to join the game at this point and restart the bull cycle again.
In a bull market, there is more BUR minted than expected, so it will eventually pull the price of BUR back to the ideal target price at $0.05. Thus, we made a new tokenomic model that automatically rebalances itself and can recover from the crisis. This will be a foundational change toward a long-term sustainable growth of Bunicorn Game in the long term regardless of market conditions.