All the Problems

6 min read

Welcome to Issue #13

If you live in the U.S. I hope you are enjoying your holiday and the unofficial end of summer.

This is the issue that keeps getting put off by the fact that it will never be complete.

I want to give you ALL the ways you could turn an NFT project, like a game, into a business. Every angle needs to be considered. Every idea has to be actionable and applicable to whatever project each of us might be working on. Oh, and they all have to be original.

But that’s not realistic.

So it’s time to quit stalling and give you everything I’ve got so far.


Adding Value (and Revenue)

Premium Tracks

This is pretty straightforward. We start with a solid collection of free tracks to provide immediate fun and get our players using the game. But there also need to be premium tracks that users can only access for a fee.

Make it More Like the Real Thing

Race To Win - Racing cars in the real world has costs and rewards. For those who want it, our game should offer the same. This means that there are real competitions with prizes for the winners and entry fees for the organizers.

It also means that there are costs to racing beyond the cost to enter a race. Tires need to be replaced. Oil needs to be changed. Careless drivers can cause crashes that cause damage to their own car and those of others.

Create Opportunity Costs - It takes labor to swap out parts. This could be represented by a royalty when players buy and sell Cars or upgrades. But it would be more interesting to allow the players to trade inside the game for free, and charge a tiny “labor” fee to install or remove each of those upgrades for a race.

All of these costs might make the game too much trouble for an average user, but they make the game that much more fun to someone looking for a greater challenge.

Star Atlas is building these features into the universe surrounding their space exploration and combat game. Players can choose from three distinct zones of the game. The “Faction-Secured Safe Zone” gives users a chance to learn and make mistakes without any real risk to their assets. The “Medium-Tiered Safety Zone” lets them stretch their wings by making their assets susceptible to damage as well as wear-and-tear without the risk of permanent loss. While “The Wild Frontier” lets users play for keeps. Losing a battle in the frontier can mean your crew is killed or forced to abandon ship in escape pods while your craft is reduced to scrap.

Build Something Bigger - Some users might excel at the skill of driving while others have the strategic minds required to build a team. Why not create a space for users to play out those roles?

Vertical Markets

While we earn a fixed royalty on secondary sales through NFT trading sites like OpenSea and LooksRare, we can offer our players several benefits if we build our own internal marketplace.

  • Save on sales commissions - OpenSea collects 2.5% on every trade made through it’s market place. LooksRare is a little lower at 2%. This is all on top of our own royalty. If we offer a marketplace where we only collect our royalty, our players will save 2-2.5% on every sale.

    NOTE: The recent debut of SudoSwap has exposed the fact that royalties are challenging to enforce. Their 0.5% fees are also hard to beat. In the end, our vertical markets will be forced to match these rates AND provide a tailored experience. Which leads us to…

  • Better trading experience - OpenSea is optimized for their business model. By building our own marketplace, we can design a branded trading experience that blends seamlessly into our game.

The STEPN Move-to-Earn game is a good example of what this looks like in practice.

Users need to buy a Sneaker NFT in order to play the game and earn GST, the native utility token. They can also boost their earnings by adding upgrades to their Sneakers in the form of Gem and Socket NFTs.

It’s difficult to tease out the marketplace fees from the revenue created by users minting additional Sneakers. But the game’s co-founder, Jerry Huang, told TechCrunch in May of 2022 that the 6% per transaction trading fees inside their marketplace are generating between $3 million and $5 million in net profit EACH DAY.

Sponsors

Early on, Play or Move-to-Earn NFT projects missed a huge opportunity to add value to their economy by partnering with sponsors in the industry. If an IRL brake manufacturer releases a revolutionary new design, they could pay you to air drop it into the game. You could offer it as a prize for entering or winning a race.

If a car maker wants to promote the release of a new model, they could be introduced as well.

Sponsors who want to support the game, but aren’t in the racing industry (think lifestyle brands like RedBull and luxury goods like Rolex) can pay for winners prizes as well as random drawings for race entrants and spectators.

A word of caution… The Web3 ethos dictates that projects and users share in the value they create together. So it’s important that we create, and communicate a revenue sharing system for all proceeds that feed into the game from outside sponsors.

More Cars and Upgrades?

It might seem like the easy solution is to create and sell more assets. But we’ll need to be careful here. If we drop a bunch of new items into the market, our players will roast us for diluting the value of their existing NFTs. So we’ll have to come up with entirely new types of assets. We’ll also have to find a way to release them that benefits both us and the existing players.

This option is one we should hold off implementing until we’ve got the game running smoothly and we’re ready to introduce new users.

Growing the User Base

If our game is popular, it will attract more than our initial 10,000 users. We need to have a plan in our roadmap to add additional Drivers. This plan should be made clear to prospective buyers from Day 0.

Adding drivers poses the same risk as adding more Cars and Upgrades. Existing users who may have made a serious investment will feel short-changed if you devalue their assets by minting more.

So why not cut them in on the profit?

If we want to 10X our project and go from 10K to 100K players, why not evenly Air-Drop 40,000 of the additional 90,000 Drivers, Cars, and Upgrades to current holders on mint day? Yes, we’ll be giving away almost half of the asset value of the expansion to our users. It’’ll be up to them to decide whether to sell or keep their new assets. Either way, they’ve got more incentive and capital to put back into the game.

Defeating Pay-To-Win

One of the loudest and most common objections gaming companies hear when they talk about introducing NFTs into their games is Pay-To-Win. This is the very real fear that players with deep pockets will buy up all the best assets and keep regular players from winning.

Do we want to allow this? One of the biggest features of Web3 is the idea that it’s permission-less. People can pay whatever they want for the things they buy. And they can use them as they see fit.

In the real world this dynamic is already in play. The race team with the most money could just buy the best of everything and destroy the competition.

But they don’t let Ferrari enter NASCAR races. It’s not fair, or all that interesting, to put a truly stock street car up against a Formula One racer.

Instead, races are organized according to class and car type. We can do this in our game too. Drivers with more basic cars and basic capabilities can enter races that exclude higher performance cars. This keeps things more competitive, and more fun.


This is a short list based on a look at the racing world viewed through the lens of the current state of Web3. New opportunities will continue to present themselves as this technology matures. The possibilities here are endless.


Thank you for reading all the way to the end.


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