Professor Pavun of Yale University recently published a paper sharing his views on the future development of the gaming industry and the Web3 gaming industry, and proposed a new theory called ServerFi. Overall, it pointed out the important reasons for the collapse of Tokenomics, and shared part of the ServerFi model to ensure the steady growth of the price of game tokens.

In traditional WEB2 games, such as Fortnite, CSGO, etc., the players’ game assets are managed by service providers, and the players do not have full ownership of the game account assets. This limitation has an adverse impact on the sustainable growth of the circular economy within the game.

🧵Gamefi's background

The original Gamefi originated from the NFT narrative (earn while playing-P2E model) Axie Infinity. Allowing players to collect, breed and battle NFT cards, which have unique properties and abilities that can be enhanced through strategic breeding and gameplay, this GameFi game not only provides economic incentives similar to CryptoKitties, but also introduces more complex game mechanics and a powerful in-game economy. Setting a benchmark for all future blockchain games.

In these games, we often view token economics as isolated events, where the number of newly generated tokens in the market increases, causing the market token supply to expand rapidly. This supply and demand imbalance causes the value of tokens to decline over time, depreciating the value of tokens held by players. Second, during the token generation event (TGE), many players and investors flood the market to try to make a quick profit by buying and selling tokens. As the initial novelty wears off, player enthusiasm may wane due to the limited economic incentives.

Addressing any flaws in the game will help attract new users and potentially increase demand for the token. Participating in Axie Infinity requires players to purchase Axies, which involves a high initial investment cost. This high cost poses a barrier to new players, limiting the game's accessibility and widespread adoption. Additionally, the market price of rare Axies can be ridiculously high, making it unaffordable for the average player.

💗ServerFi: Privatization through asset synthesis

ServerFi involves players accumulating and merging various NFTs and other digital assets in the game to gain control over the game server. This form of privatization not only encourages players to invest more deeply in the game, but also fits in with the decentralized and community-driven spirit of Web3. For example: we can design a lottery mode that allows players to draw fragments, collect fragments, synthesize NFTs, pledge NFTs, and experience the value of players' contributions to the game server.

🦁Reward high retention players

Projects can monitor player behavior and engagement, providing targeted rewards and incentives to players who demonstrate strong commitment and high activity, by airdropping server revenue daily to top users based on the value of their contribution to the system. This approach will create a "play and earn" dynamic that rewards players for participation and contribution.

🍎Analysis of Serverfi model: Ti = Σvi

Left side - Total player contribution value shows a consistent upward trend, indicating that the model is effective in keeping players engaged and driving long-term value growth.

Right - Player contributions initially show a significant increase, but then decrease significantly. While the model showed high player contributions in the early stages, declines in subsequent iterations indicate challenges in sustaining player engagement over the long term.

In modeling statistics, we argue that while strategies that consistently reward high-retention players may drive significant engagement in the early stages, this approach inherently exacerbates player stratification in the long term. Specifically, this approach may marginalize tail players due to a lack of sufficient positive feedback, ultimately causing them to quit the game. This stratification also tends to set a high barrier to entry for new players. As a result, the reduction of new players, coupled with the departure of tail players, reduces the rewards for existing top players, thus leading to the formation of a vicious cycle.

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Based on the Gamefi token economics model in the entire report, the traditional economic model, buying and selling NFTs cannot really retain real users. On the contrary, it will quickly lead to the decline of the game and have a negative impact on the game economy. Compared with traditional economics, ServerFi introduces a dynamic and competitive environment in which continuous value contribution is a necessary condition for maintaining status, thereby effectively promoting social mobility among players, fully ensuring the circulation of the game token economy and the inclusiveness and activity of the game community, and providing a sustainable development path for decentralized technology in games.