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Why I think DFK will transform GameFi industry to a new era- Thesis

Rotten

Hello, this is Rotten.
If you've been following me on Twitter, you've probably seen a lot of my tweets about $JEWEL #Defikingdoms . I have decided to summarize the results of my research as thesis, so without further ado lets begin.

The reason why I decided to put it together was because I saw this person's tweet. 


I was interested to see his highly accurate summary of the current DFK game mechanism, and his simple illustration of why the price of $JEWEL is rising from mechanism point of view.

Before I explain the results of the study, I would like to share some assumptions with the readers so that we can speak in a common language.

1) What is GameFi?

TLDR:
There are various interpretations, but for the purpose of this paper, GameFi is defined as "a project to create a pseudo-economic sphere in a virtual space by incorporating game elements into the financial economy".

Detailed explanation:
This perspective is very useful to understand the game mechanics of #Defikingdoms , so please read the rest of the paper assuming that the game is only one element to "create a pseudo-economic sphere", and the goal of this project is to establish an "autonomous" "circular" economic sphere in the virtual space. 

> Why is it possible to do such thing?
There are two important concepts to understand:
(2) the token economy and (3) Web 3.0.

2) What is the token economy?

TLDR:
The right to issue $JEWEL token is given to the farmers (=The Gardens). The issued $JEWEL is consumed through various mechanisms (gaming elements) and distributed (=The Bank) to other players. This series of mechanisms allows the economy to "circulate".

Detailed explanation:
The token economy is a system in which all participants will be able to issue, distribute, and consume "currency" in a fair manner.
In order to create an economic sphere in the virtual space, a staple currency is needed, and the token economy defines the purpose of that currency.

With the above in mind, let's take a look at a quick summary of $JEWEL tokenomics.

JEWEL Supply Cap
There is a supply cap of 500 million JEWEL tokens.
Pre-minting
10 million JEWEL tokens will be pre-minted to help develop projects and reward the development team.
The remaining 490 million JEWELs will be supplied to the market over the years as incentives to players (liquidity providers).
However, most of this reward is initially "locked", and the locked portion of the reward will be released gradually on a fixed schedule.

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From the above, we can see the followings:
1/ $JEWEL is a deflationary token because it has a finite number of issues.
(The value of the currency is increasing in relation to other things.)

2/ The development team will use 2% of the total supply to develop the project completely, and will receive 0.2% of the total currency as a development fee before and after the project is completed.
(Long-term development incentive)

3/ 98% of the currency will be distributed to "liquidity providers*" as rewards, but most of it cannot be liquidated (=sold) immediately.
（Long-term hodler incentive)

4/ As a result, players will be forced to hold on to their tokens and will be incentivized to maintain and increase the value of the token.
(Incentive for players to voluntarily increase the value of the token)

5/ In order to maintain and increase the value of the tokens, the following two points are essential
A. Inflow of new player base (marketing incentive)
B. Expansion of usage within the economy (incentive for active economic activities)

*The farmer who takes the risk associated with providing liquidity in DEX, so that the currency can be traded with the outside world at any time.

In addition, even though “the farmer” is essentially acting as a financial institution as well as a currency issuer (=central bank), the name of this role in the project is called "The Gardens," and since there is also a role called "The Bank" for other mechanisms, be careful to confuse the meaning with each other.

3) What is Web 3.0?

TLDR:
Web 3.0 is an autonomous decentralized (not artificially human managed) virtual world where all intermediary activities are managed by autonomous robots (smart contracts).

Detailed explanation:
What I mean here, is that there is no so-called "game dev" in traditional means in this project.
Once all the smart contracts have been developed/deployed, the project will leave the hands of the dev. team and operate "autonomously".
(In reality, the dev. team may continue to have a role in the project, as they will be making various balance adjustments and developing extended versions, but the goal is to be autonomous. You get what i mean)

So, with the above two mechanisms, the project will create an "autonomous circular economic sphere" in virtual space! and that is the essential purpose of the #Defikingdoms .

4) DFK is a project which player participates from the dev phase

In the previous section, I explained the mechanism of issuing "currency" and the "locked" currency element that encourages the issuer (farmer) to consume and distribute it among the sphere.
Now, I would like to explain the mechanism of consumption and distribution (game elements).

But before that, let me introduce one more interesting mechanism unique to crypto projects.
Crypto projects are different from traditional game projects in that both the developer and the player perticipate on the progress of the development on the same time line.
This has various advantages, mainly that the development team can raise funds from the initial conceptual stage without external financing from traditional financial institutions, and the players as indivisuals can invest in promising projects from early on, which they could not do with a traditional stock companies either.
In fact, DFK is a project that is making good use of this fundamental structure of the crypto project, and is turning it into another aspect of a gamification.

By providing the community with a roadmap of what actions are planned to be implemented, in what order, and when, DFK is creating opportunities for players to prepare thier strategic position of the game in advance, as well as providing entry-point opportunities for new players at any phase of the development progress. 
This is the reason why I call the game as "a game to learn about economics and finance" instead of so called idle-style game.

5) How does $JEWEL consumption and distribution work?

Let's take a look at some of the game elements mentioned in the whitepaper and past AMAs.

Implemented game elements
1/ Hero NFT summoning (Gacha element & JEWEL consumption factor)
2/ Marketplace for Hero NFTs (provides liquidity for NFT & JEWEL consumption factor)
3/ Wishing Quest (means to obtain summoning materials) ← we are currently here

Unimplemented game elements: (Author's assumed function in parentheses)
4/ Mining Quest (Unlock Locked JEWELs)
4/ Gardening quests (increase the amount of JEWEL issued from LP staking)
4/ Fishing & Foraging Quests (means to obtain material items)
5/ Hero NFT level up (Gacha element)
6/ Building Land & Castle (Increased quest rewards)
7/ Guilds (shared rewards from same land/castle)
8/ Secondary Quests (means to obtain NFTs for processed items for combat i.e. Weapon/Potions)
9/ Marketplace of combat NFT items (provides liquidity for NFT)
10/ Adventure PVE/Combat PVP (new means of obtaining JEWEL & increased guild rewards & NFT burn mechanism)

And after all these game elements are implemented, the economic mechanism will look like this (Full Speculation)

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(Note: All quests consume hero stamina.)
It is important to note that all resources, including NFTs and game items, will be provided with specific means of acquisition and consumption, and the consumption and redistribution of JEWEL will increase as these economic activities increase.

There are many other elements that will affect the game economy that were not mentioned in this thesis, such as the release of the level cap, the introduction of in-game chat, and multi-chain expansion, all of which are designed to stimulate the $JEWEL economy. The more you learn about this project, the more you will understand that it is all about the establishment of ”an autonomous, circular pseudo-economic sphere" with $JEWEL as the staple currency.

Final Note


The depth of thoughtfulness of the project team is truly astonishing, and even though it is supposed to be a 2D pixel art idle game, I can't help but feel that the game economic mechanism is reminiscent of something similar to an diverse open world MMORPG.

I am convinced that the GameFi model, proposed by Defikingdoms, will be a standard concept for future blockchain game development, and am bullish that this project is running at the forefront of the evolutionary path of gaming industry that lead to the ultimate metaverse.

I hope that all game development communities considering the blockchain game development to referrence this project and expand the community as a whole towards the metaverse.

Glory to the Kingdom!

References:
DFK Doc
https://docs.defikingdoms.com/
DFK Medium
https://defikingdoms.medium.com/
DFK Official Discord Server
http://discord.gg/defikingdoms
DFK Unofficial Japan Community
discord.gg/39jxpN9EKa


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