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The Problem With Breeding Games and How They Can Be Solved

The Problem With Breeding Games and How They Can Be Solved

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The Problem With Breeding Games and How They Can Be Solved

Play-to-Earn breeding games are quickly becoming one of the principal genres within the crypto-sphere. However, with the rapid rise and fall of some of the most significant breeding P2E games, its clear massive economic refurbishment is needed if new games entering the ecosystem are to survive and thrive. What factors we think are hurting these game’s economies, evidence to back it up and how DoRac plans to solve them are all questions we’ll answer below.

What is Breeding With Crypto/NFT games?

Breeding games often, but not always, use one or more (usually two) NFTs to create a third, essentially minting a new NFT into the ecosystem. Breeding often comes at a price, paid in the game’s native token(s) or a set fee to mint a new NFT into the economy.

The term ‘breeding’ was introduced to move away from generic crypto terms and has been used all the way back in 2017 when the game CryptoKitties was the hottest crypto gaming project; also toted as the first breeding game in the space.

What’s the biggest problem?

Without a set lifespan for each NFT, breeding should be considered ‘multiplying’. In real life, breeding is essential to sustaining life as we are all well aware of our lifecycle. 

However, in most crypto breeding games, NFTs never die, so breeding quickly leads to overpopulation and saturation within the games ecosystem. Slowly, each game’s marketplace begins to drown in new NFTs, and prices start to plummet through user price gouging. Astonishingly, almost 8 billion people are alive today, but throughout history, it’s estimated over 100 billion people have existed, so why wouldn’t we follow the same model in our games?

Before diving into a few examples, it’s essential to understand why breeding without deflationary mechanisms in place is a recipe for disaster.

  1. User Saturation: Regardless of market sentiment, a breeding games potential, without the means to reduce the NFT population, is hard-capped by its target market and prone to saturation once all potential players own NFTs, allowing them to earn inflationary tokens. 
  1. NFTs Earn, Instead of Burn: Most breeding games run on a Play-to-Earn model, creating inflationary tokens within the ecosystem. In the first few months, when there is a surplus of new players, inflationary tokens within P2E games see large spikes, as we will see in our examples, before they come crashing down.

However, with NFTs constantly being bred, players and their NFTs are not burning near enough inflationary tokens to reduce the total supply, slowly pushing the inflationary tokens price down as supply increases. Problematically, inflationary tokens are often the primary source of earning potential. 

  1. Irrefutably Alive: NFTs are all about irrefutable ownership. However, it’s natural for assets to slowly depreciate and eventually get replaced, so why isn’t such a system adopted within the crypto gaming scene? This is where the importance of a ‘life cycle’ of Play-to-Earn NFTs becomes paramount. 

Crypto enthusiasts often want more, not less; clearly, the sentiment carried when deciding the economics for the largest Play-to-Earn breeding games.

What’s Going Wrong?

To put our theories to the test, we’ve studied two real-life examples of industry giants as examples: Axie Infinity and StepN. Both projects have been massively successful over the short term; our analysis is only here to demonstrate what’s going wrong and how DoRac will learn and implement the correct economic features.

  1. Axie Infinity

Below is a graph of Axie Infinity’s $SLP token. Earned through daily quests or by battling other players. $SLP is an inflationary token with unlimited supply and the primary way Axie players earn in their P2E game.

Although $SLP is burnt through breeding and each player is limited to the amount of $SLP they can earn each day, the total amount being burnt is minuscule compared to the amount being earnt, which is why the token has seen constant downward pressure since August of last year. 

Axie’s Smooth Love Potion token is down almost 99% since its all-time high in May 2021. If we take data from the end of July 2021 up until May of 2022, a span of 295 days, $SLPs price decreased by an average of $0.001 until it consolidated at its bottom, where it remains today at $0.0035.

Although only a tenth of a cent per day, each $0.001 represents $5 million scrubbed off $SLPs market cap every day. For reference, the circulating supply of $SLP increased tenfold during that time. 

An interesting video by Upper Echelon Gamers demonstrates our point perfectly. The P2E aspect of Axie has been heavily adopted in several low-income countries as full-time jobs, but without proper deflationary mechanics, it leads to a systematic reduction in the price of $SLP. Axie’s (their NFTs), apart from the daily limit, can be battled forever, meaning each new player only has to buy or be lent one Axie to earn $SLP forever.

When the player base begins to stagnate and no new players are creating Axies, revenues are directly affected. Taken directly from Axie infinity stats, our point is perfectly proven.

Currently, there are over 11 million Axies circulating. At its peak, more than 80,000 Axies were coming into existence every day, with no deflationary mechanisms. 

See all Axie Infinity statistics here.

  1. Stepn

With a different Play-to-Earn concept called Move-to-Earn (M2E), Stepn is currently facing similar problems too with Axie. After a massive IDO, Stepn looked on track to become a unique take on the crypto-sphere, until new users stopped coming in.

Stepn’s economy is based on a dual-token system

  1. $GST – Inflationary token that users are rewarded with for moving
  2. $GMT – Their governance token

At the height of popularity, users paid upwards of $6,000 to mint their NFT shoes to earn $GST, before their inflationary token saw massive capitulation. Over 40 days, from 30 April to 9 June, $GST crashed 94% from its all-time high. This is no simple consolidation; something within the economics is inherently flawed. 

Stepn users can spend $GST to upgrade their shoes for greater earning potential, one of their methods for burning, but it clearly isn’t enough. Many forget that a 95% crash requires a twenty-fold increase to see the same prices. With inflationary token mechanics, is this even possible? 

Apart from understanding why Axie and Stepn have been in steep decline, how could they have done anything to stop it? What mechanisms should they have implemented long-before capitulation started to keep their projects alive and growing? We think DoRac has these solutions.

The Solutions

DoRac will adopt a 365-day lifecycle for each greyhound NFT, which can breed up to six times before retiring. Retired dogs can no longer breed, race or train, removing them from the economy as an earner entirely

Breeding will cost both $DRT and $DORC, increasing in price with each subsequent breed. Dogs are retired when they:

  • Are 365 days old 
  • Have completed 9600 races 
  • Reach six breeding cycles

Dog Merging

On top of this, dogs can be optionally retired early for superior bloodline or elder benefits. You may ask, why would anyone choose to retire their greyhound early if it can still earn them $DRT? 

With each merge and early retirement costing additional $DRT, it’s yet but another deflationary mechanism helping DoRac’s economy. 

  • Elder Rank Dogs

Ten of the same retired dogs, from the same bloodline,  can be merged into an Elder version of that bloodline, granting physically and spiritually stronger dogs. These are the dogs you look out for in your races, the ‘elite’ dogs in the DoRac Metaverse.  

  • Superior Bloodline Merging

Secondly, to help upscale your dogs after retirement, two lower-tier dogs can be optionally merged to breed one superior bloodline greyhound NFT.

We strongly believe that the major problem with breeding games can be kept in check through our dog’s natural life cycles, which may anger some users, demanding they keep their prized dogs in action forever. However, it’s clear that if the largest P2E breeding games can’t make their economic models work, something is not right!

A lifecycle means more than a fancy mechanic; A dog’s earnt tokens are automatically regulated, as earnt tokens are spent on breeding, training or consumables and eventually, a new greyhound as our unique lifecycle kicks in. 

Ultimately, the lifecycle mechanic will mean DoRac focuses on improving the game and adding new features rather than scrambling for more and more new players to falsely prop up failing inflationary tokens. Games like Axie rely entirely on a constant increase in new players, which will inevitably run dry, regardless of whether it’s three months or three years.

Stamina Mechanics are not enough!

Flawed economic models, stamina or earning limitations placed on NFTs only slow down the inevitable demise of a P2E breeding games economy. DoRac does cap each greyhound’s racing volume but doesn’t rely on it to keep $DRTs price at bay.

Compounding Deflationary Mechanisms 

Each activity within DoRac will cost $DORC or $DRT, or a combination of both. This means; Training, Breeding and Consumables all cost tokens placing constant positive pressure on the DoRac economy, provided there is a steady player base.

The key here is steady growth, not constantly relying on new players. Of course, we would love DoRac to continue growing, but it’s not essential for DoRac to survive as we’ve implemented many compounding deflationary mechanisms to make it self-sustainable.

Assuming a player invests $100 worth of $DORC and $DRT into their first greyhound NFT and receives $250 in total rewards from racing it, what is their total gain when their NFT is put into retirement? Instead of profiting $100 and still having access to their income-generating NFT, they have really only profited $150 with no further access to their greyhound.

As they can no longer race their original NFT, they must use a slice of their remaining profit to re-purchase or breed a new greyhound to race with, requiring the same training and consumable costs mentioned before.

It was clear after our research that one deflationary mechanism would not suffice! Therefore, our multi-deflationary mechanism approach means even without new players, the DoRac economy remains stable and enjoyable for our loyal player base.

We hope to see you racing soon! In the meantime, check out our socials below or read our whitepaper here for a full breakdown of the DoRac economy and tokenomics!

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