When Blockchain Games Die - The Importance of Tokenomics

More and more blockchain games are being created every day, but not all of them will make it. In this post, I'll look at the case of LiteBringer and try to come up with the reasons why it failed.

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Some weeks ago, I wrote about my 2022 strategy for LiteBringer, a blockchain game on the Litecoin blockchain. In that post, I said that I wasn't very confident about its future, and I even thought that it was at the risk of being shut down:

In fact, I wouldn't be surprised if CipSoft itself announces the game is being discontinued soon.

Well, it turns out I was right because not long after I wrote that post, the team behind the game announced its discontinuation on the game's official blog.

... we will discontinue the development of LiteBringer, our active support for the game and all CipSoft-related services with the release of a final update around the end of March 2022.

I can't say it was a surprise since I called it on my post days before, but it was a bit of a shock because when I first found out about LiteBringer I really think it had what it takes to succeed.

Why did LiteBringer fail?

First, let's take a step back because the fact that the game failed so quickly leads me to believe that most people won't be familiar with it.

I wrote an introductory post on my other account, and I also suggest checking out their official website for more information. Still, to put it simply, LiteBringer is a fantasy-themed blockchain game where you must create one or several heroes, equip them and send them to dungeons to complete missions earn experience and loot.

It's very similar to most fantasy RPGs, except you don't actually play your character in the dungeons. You just click the mission you want to do and wait for it to complete.

Now, before discussing why I believe it failed, I want to point out a few things that it had going for it that made me think it would succeed.

First of all, CipSoft, the company behind the game, is an established german game developer with many years of experience and a very successful track record in the gaming industry. Its flagship game, Tibia, is a world-famous MMORPG that stood the test of time and has been around for over 20 years.

Speaking about the game itself, it was more polished than most of the blockchain games that I've seen. Everything about the game looked promising: the maps, the characters, the equipment.

The gameplay wasn't bad either. Even though it was essentially an idle game (like many blockchain games, by the way), it had some level of complexity and required some strategy and planning if you wanted to play it properly.

So, to sum it up, LiteBringer had a well-known company with a solid reputation behind it, a dedicated development team working on it, a potential player base they could pull from their flagship game and possibly the best game engine and graphics that I've ever seen on a blockchain game. So why did it still fail?

I'm not an expert in the game industry or even in crypto, but I do have a theory.

Tokenomics

The game's economy, or tokenomics, as it's often referred to in blockchain games, is a vital aspect of the current state of Play to Earn. This is my opinion, and I could be wrong as I don't speak for every blockchain gamer in the world, but most people are into blockchain gaming because of the potential financial gains rather than because they actually like the games.

If you removed the earning potential of blockchain games, how many players would stick to them? Not many, I'd say. If any at all.

Play to Earn is still in its infancy, and at this point, tokenomics are vital to the games, and that's where I think LiteBringer got it all wrong.

First off, it's important to mention that the game didn't have a native token. It ran on Litecoin instead - actually, the in-game currency was called "lite," which was nothing more than a fraction of a Litecoin.

There was no reward for merely completing missions and playing the game. You had to sell the assets you got in those missions to other players in the internal game market, so the economy was heavily dependent on an active player base.

Another thing was the fees. Players had to pay mining fees for every transaction they performed on the game, which is not actually CipSoift's fault because they had no control over that - except for the fact that they could have built it on Hive a much superior chain, but that's a whole new story. On top of the mining fees, the game charged a percentage of every transaction performed in the internal market. Also, players had to pay a monthly subscription for every active character they had. That was, in my opinion, one of the biggest reasons why the game failed.

That monthly subscription started at 2 lites (2/1000 LTC), which wasn't too bad, but many people still struggled to make ends meet because the player base wasn't large enough. Hence, the internal market lacked the liquidity it took to sustain the game's economy. And that's where things really started to go south.

In November 2021, the development team announced that they would raise the monthly subscription to the equivalent of 1 Euro per month per active character, which was, at the time, approximately 7 lites, more than 3x the old fee.

I never understood the reasoning behind that decision. They had an economy that was dying because there were not enough active players generating demand for the internal market, and they tripled the value of the monthly subscription, raising the entry bar even more.

Many other players also didn't understand that decision because many quit not long after the price raise, and no new players were getting in. That started a death spiral culminating in the recent announcement that the game is being discontinued.

As I said, it wasn't really a surprise to me, but I was sad about the game because it had potential. I was able to exit with a small profit, so that's not even the reason why I was sad. It really could have been a great game, and I was curious to see how big it would get if the company could turn things around.

Final thoughts

We're still very early in blockchain gaming and play to earn, and I genuinely believe that a lot will change in the next few years but right now, I think that getting the tokenomics right is vital to the longevity of any project of that kind.

If LiteBringer taught us a lesson, it is that having sustainable tokenomics is even more important than having a good-looking game with intricate gameplay, excellent graphics and an exciting questline. That may be the second or third stage of blockchain games, but right now, as someone famously said: "It's the economy, stupid."

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