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RBW Tokenomics Primer


enjoi

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Hi Unifam!

Last week Nat Elison wrote a wonderful article on Crypto Unicorns in which he discussed his thoughts on the game as well as our tokenomics. While he largely gave a positive review his analysis of RBW fell short. To his credit, the whitepaper only gives a bare outline and we’ve predominantly circulated updates and details via AMAs. Our hope is this document can be a reference for people today as well as new entrants into our economy in the future.

Why not burn RBW?

Nat suggested that game token value can only be derived via a deflationary mechanism. Nat’s evaluation was based solely on token value whereas we approached the RBW token in the context of game design and community growth.

We designed the RBW tokenomics to support the long-term growth of the game. Burning a finite-supply token is a considerably less productive use of tokens vs leveraging current demand to further bootstrap the DAO treasury for the long haul.

Today, players are able earn a lot of RBW by selling Berries and other items in the Marketplace, spurring them to buy seeds, without much impact on the buy/sell RBW prices due to too much liquidity in the RMP. Between our DAU increasing, a more finely-tuned RMP, and more RBW utility long-term through new features, we are confident that we can sustain and improve the accessibility of RBW over time.

RBW Inflation Concerns

It is correct that we plan to grow the circulating supply from roughly 50M to 200M in the first year. This is typical of projects in the space that want to match the circulating supply of tokens to the growth in DAUs. Let’s break down our circulating supply and explain why we chose this distribution strategy.

Public Sale -

In the whitepaper we reserved 40M tokens to get our players started. Given our highly successful Copper Launch Auction we sold less than anticipated — about half. The remaining 20MM RBW tokens are held in the DAO treasury. It’s up to the DAO to decide how to use those tokens.

Staking -

The reward rate of stakers is not intended to zero out dilution. In fact, the primary purpose of staking is to reward players for participating and voting on governance. Rewards earned can then be leveraged in-game to earn further RBW via a mixture of strategy and skill. Clever players can utilize a compounding strategy by staking in-game rewards. This is fundamental to our strategy as it incentivizes gameplay over passive staking. Ultimately, this has a strong effect on the circulating supply which we’ve seen already with over 28MM RBW currently staked and high voting participation. This means over 63% of the circulating supply has been staked to participate in governance!

We specifically designed our staking system with a timelock. The longer you are willing to stake the higher your voting weight (similar to veCRV). Ultimately, this aligns voting rights (and staking rewards) with those who want to participate in the long term future of the DAO.

Play & Earn -

This is the primary distribution mechanism for RBW. Inflating supply to active players based on their strategy and in-game skill is a fundamental tenet of the space. Accessibility scales with new entrants and the whole community is incentivized to onboard new players and scale our shared economy.

The CU treasury needs a natural, bi-directional flow of RBW to create balance and to sustain the long-term game economy. This bi-directional flow is the fundamental flywheel of our player owned economy.

Given our place in the market, our roadmap in relation to our peers, and the depth of our game economy, we are confident in the community’s ability to meaningfully grow the game over the next year of building.

DAO Treasury

Speaking of economic depth… let’s talk about treasury inflows!

To date the treasury has received a net inflow of over 600k RBW. This is the delta between what was spent vs earned since the game launched. This is even with a temporary imbalance given lower berry utility which is about to be resolved with the launch of evolution!

When designing tokenomics, we think 5–10 years into the future. Eventually the Staking/Play & Earn pools will run dry. So how do we distribute RBW after that happens? The answer is from net treasury inflows of RBW during the first 5 years. Importantly, inflows to the treasury will not be redistributed until the other pools run dry. (A quick note: Our CM team wasn’t correct in Discord when they said these inflows could be distributed anytime). Thus Nat’s claim that we basically have infinite inflation on RBW is incorrect. The Treasury operates as a federal reserve to the CU economy. In the first CU whitepaper we had specific inflation targets that can only be changed via a DAO proposal.

What you have above is our experiment in token distribution. It’s our belief that tokens should predominantly flow to active participants who then have the opportunity to compound their return via staking and participation in governance. For better or for worse we continue to lean in maximally to the idea that player-owned economies and IP will be the future.

Rainbow Token Marketplace

It’s really important to understand why we chose to utilize RBW as the underlying medium of exchange within our economy. Leveraging the Rainbow Marketplace AMM with soft currencies paired with RBW is a first of its kind in the industry.

We chose this design to create further utility beyond just governance. Early on, especially as we progressively decentralize, we want there to be high utility for the token.

RBW as a Speed Up

All items in the Rainbow Marketplace AMM (RMP) can be obtained by players through the gameplay Loops — currently Farming, Crafting, and Gathering. Purchasing items from the RMP with RBW is a way for players to accelerate the rate at which they can progress their Unicorns and Lands. This is very similar to how speedups work in a wide variety of F2P games.

We can afford to allow players to buy items directly from the RMP because of the economy’s depth. Between constructing/upgrading up to 10 buildings on each land across 9 lands, saving UNIM and Berries for Breeds and Evolutions, and using Berries for Gathering and Energy restoration, players need a ton of items. Given the finite amount of RBW in circulation, players will not be able to afford simply buying their way to the top.

RBW as a Fee

We charge a small RBW fee for actions that result in permanent utility creation or improvement. We currently see this with Breeding and Evolution. With Breeding, players pay a small RBW fee to create a baby Unicorn NFT that can be used in Farming. With Evolution, players pay an RBW fee to expand on the NFT’s utility in the game.

Future Utility-Improving actions with an RBW Fee include:

  • RBW costs for Shadowcorn hatching and ascension
  • RBW costs for crafting Unicorn equipment for the RPG Battle loop
  • Crafting Land props that give bonuses

In addition, there is an RBW Marketplace Fee anytime a player sells an Item Bundle to the RMP. Just as players pay an RBW fee to expand or create utility, players pay a fee when earning by selling to the RMP.

RBW as an Entry Fee

Certain Gameplay loops will have RBW costs in order for a player to use a Unicorn to play. Gameplay requiring RBW will typically have better rewards than gameplay that doesn’t require RBW. Instances of using RBW as a special play token include:

  • Certain Jousting tournaments/events
  • Certain Races/special Race events
  • Special RPG Battle events
  • Special Neighborhood events

Despite over 1M in RBW spent to date players have barely scratched the economic depth of our game. This is extremely positive as it signals a strong and robust economy awaits especially as new Land and Unicorn supply begin to hit the market in the coming months. From there we continue to add depth and layers with each Battle loop giving us more and more levers to tune, balance, and maintain the economy indefinitely.

Governance is more than a meme!

It’s important to reinforce that Crypto Unicorns already has one of the most active DAOs in the entire Web3 gaming space. To date, we’ve seen active participation of over 40% of all sRBW in each Snapshot vote. In addition, the team and investors have yet to vote on a proposal, and we continue to lean fully into the idea that we’ve built a truly community-owned economy and IP.

We are just months into a multi-year process by which we progressively decentralize decision-making and control over the DAO. While many believe this to be a pipe dream we find it to be one of the most fundamentally important opportunities in the space. After all, why would you purchase mutable NFTs if you don’t have control over the long-term direction of a project?

There is value in a governance token that actually lets people… govern. We recognize that many projects in the space have yet to even activate governance and thus it’s healthy to scrutinize which projects actually have real governance.

We are currently in the first phase of the DAO. From a corporate structure perspective, the RBW tokens and the governance proposals derive from the authority imbued in the DAO by Laguna Games. Under this structure, the DAO has contributed dozens of ideas and passed three important improvements to the community. This is a start but we want a truly independent DAO.

In Phase 2, coming this year, we will create an independent entity called Crypto Unicorns DAO. This will be a separate organization with its own bylaws operated at the direction of the sRBW holders with the mission of supporting the advancement of the CU community. It will do this through grants from the Ecosystem Fund to third-party developers, contributors, and community members who make meaningful improvements to the CU community.

Phase 3 and beyond will come later to support our multi-year effort to transition to a truly independent DAO that is responsible for directing and nurturing the project for the long term.

Game and Community Growth

So far we feel our approach is working well. Just look at our metrics to date (5/23/22) -

  • 2,200 ETH Primary Sales
  • 17,140 ETH Secondary Sales
  • 428 ETH Treasury Inflows from Secondary Sales
  • Number 3 Project on Polygon all time — Secondary Sales
  • Top 125 NFT Projects all time all chains — Secondary Sales
  • Treasury Value = $30M+

Based on the traction to date and our position relative to our peers we see plenty of opportunity for community growth. Every project in the Web3 space is an experiment. We’ve chosen a structure that predominantly focuses on community growth through the following mechanisms:

  1. Meaningful Governance
  2. Progressive Decentralization
  3. High In-game Utility
  4. 5+ year Economic Design Depth

We aren’t just building a game. We seek to build a generational IP. It starts with the social network of players we’ve aggregated around a basic gameplay loop and expands from there. RBW is the economic engine that drives the health of the game and supports the community’s ongoing participation in this unique shared economy.

— The Laguna Games Team

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