How to build a sustainable X to Earn economy?

The broad and narrow sense of X2E

X2E, in a broad context, can refer to all behaviors that gain benefits in Web3, including:

  • Run nodes of public chain networks for block rewards, including in PoS public chain networks, where tokens are delegated to nodes for revenue.
  • Funding in compounding DeFi dapps for yields.
  • Move to earn: StepN
  • Learn to earn: Let me speak
  • Drive to earn: HiveMapper, CPLE
  • Write to earn: CoinHub, CyberNote

Commonality and individuality of X2E projects

In many X2E projects, X is the variable and is the behavior incentivized in the economic system, and Earn is the commonality, which is token revenues generated by the users’ behaviors, and players can exchange those tokens into stablecoins or sell them or reuse them in the system. The token earned by the player may or may not be the same as the governance token of the project. More and more projects are choosing a dual-token model, which separates the governance token from the game token in order to decouplex governance risks and risks within the economic system.

Ponzi scheme ?

People are rushing to X2E projects for speculative and profit-seeking. But they are also generally apprehensive about its sustainability and are always ready to leave. What entrepreneurs on the track should be thinking about is that can they create a sustainable X2E model? How should it be done?

Five possibilities for X2E program sustainability

Type 1 : pay-users feed earn-users

Without external funds, the X2E economy would be impossible for every player to Earn , as those who earn money for spending it, and those who earn money also need someone par for it. If there are players willing to pay, that mean such an economic system provides players with value other than profit only. Maybe this value is physical and joyful by playing the game, or it is helping users to develop a good habit, or a way to make a group of like-minded partners.

Type 2 : “Laziness” feeds “Diligence”

Move to Earn and Learn to Earn projects are with the characteristic of “laziness” feeds “diligence”. These two types of programs have a common feature, that is, they use monetary gains to help users be more self-discipline which is not an easy thing. However, if good living habits can lead to positive and instant feedback in the form of money, it may will be more easy to do. When learning or exercising becomes an act of gain money, users are more likely be bouncy and full of energy.

Type 3 : “clock in” model

There is a gym business model where annual fee is $2,000 and you will get $20 back every time you go to the gym in a certain time period, so 100 days is the payback period in ideally. Compared to others, this is a model has a greater incentive effect for customers to persist in.

Type 4 : Group feeding Individual

We found some X2E programs that have a clear and profit model. After forming a network through X2E, they can provide social services through the network and earn profits that inject back into the bonus pool or use to buy back tokens then burn them to raise the token price. In this case, the profit of the whole network supporting the revenue of each single point.

Type 5 : Cash the flow

The development of Web2 told us that the flow almost the most important element for a business to success and there are many opportunities to cash in it as long as the media traffic can be gathered. Take Tencent as an example, as we know WeChat and QQ are not profitable, but with the huge traffic of them, there are many profitable businesses could do for Tencent, including QQ music, Tencent video, Qzone, King of Glory and so on.

Conclusion

We believe 2022 will be a great year for the X2E track. PAKA labs will support quality projects in this track. At the same time, we also would like to remind Web3 users to be aware of the X2E risks, because of its low entery barriers. However, we believe the programs that succeed in creating an sustainability X2E model are the ones that will survive, and even make another brilliant in a new wave of growth.

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PAKA

PAKA

Founders fund in Polkadot ecosystem, running as a DAO venture. Long Polkadot, short Web2.0