Building our in-game economy, we've appealed to classic modeling at first. Trying to predict player base growth rate and behaviour, spendings of in-game currency, trading on open market and other variables. Soon, we've understood that such an approach leads to a very thin foundation for our project's in-game economy. We should be prepared for everything and react accordingly to the ever changing ecosystem, instead of blindly hoping for one of a few of our predictions to come to reality. We can't truly predict if we're gonna have ten thousand players in our game in a month or one hundred thousand. Same goes for almost every other basic variable. In the end we came to a certain conclusion, that we believe will help to stabilize the economic system in any possible situation.
For Project Hive economic model our team decided to use a simplified version of the macroeconomics model of real world countries.
Market's invisible hand, by A.Smith
The mechanism which basically means that the market will stabilize itself without any outside intervention. From every individual gamer's actions, aimed for self enrichment, certain common economic benefits will arise, leading to prosperity of the ecosystem as a whole. Supply and demand will balance itself at particular levels, based on in-game spendings of donators and in-game earnings of farmers.
But what happens when we have 1 million players rising from a couple thousands, and the initial balance between spenders and farmers breaks?
John Maynard Keynes comes in play
With a theory that during the times of economic crisis, doom and gloom eventually becomes self-fulfilling. Which won't stimulate business capital investments and labor curve stabilization, exacerbating the situation.
Who would invest more in a project, when everyone thinks it's profits are going to fall more? Who will hire more laborers, when there is zero chance that with a low demand products will be sold out? With those thoughts in mind, the USA government successfully overcame the Great Depression. We strongly believe that Project Hive deserves no less than that.
Acting as a central bank
There are a number of basic principles to follow. Project Hive has a single main consumer product, which is NFTs, trading on our marketplace. Gamers produce and trade this good, spending tokens. We shouldn't allow the price of this final product to drop in the longer term, because any free-market economy stagnates upon falling prices of consumer goods. Huge and constant fall of NFT prices leads to less motivation for farmers to play, less motivation for donators to spend right now, fall in IGT price and in the end to stagnating game economy. Also, we shouldn't leave players without appropriate rewards for their efforts in game activities.
We have to stimulate users' demand for our final product - NFTs on the marketplace during the times of falling prices. Central banks have a huge variety of instruments to stimulate demand. In our simplified case, only a few of those instruments to be used - in-game rewards amount and crafting costs.
Later on, we will create a convenient enough system for our DAO to monitor, control and react accordingly to such price fluctuations.