Game Economy

“True Ownership” – The Game Economy Trilemma

Asset price floor, mass market user base, progression utility – pick two 

Contrary to what most web 3 and crypto gaming proponents would have you believe, the idea of “true ownership” of your in-game assets is neither new nor unique to Web3. Companies like Blizzard and Valve have been trying to make it happen for years and to some extent have already succeeded with products like the Wow Tokens or the Steam Workshop. The definition and feasibility of “true ownership” as a concept in web3 is vastly misunderstood and played fast and loose with for fun and profit. 

Fun for (game) economics illiterate crypto and tokenomics pundits to fantasize about pie in the sky seamless inter-game economies incorporating every game under the sun with no regard for why any successful game makers would let a third party’s monetary policies influence their game economies.

Profit in that if you handwave the very real structural problems of the above  away you can layer some convincing-sounding jargon on top about tariffs and import duties on virtual commodities that make you sound smart despite being nonsense on stilts – which will get people to hire you because this is how we live now.

True Ownership & Web3

Getting back to true ownership, even the nonsense tokenomics incarnations of it involve some type of ability to sell in-game assets for real money, or real money convertible currencies (crypto or not) or assets. In practice this can take the form of anything from Steam or Blizzard games to Amazon vouchers but for our purposes we will stick to familiar fiat. The real problem with “true ownership” is the one also known as the Diablo Auction House problem. 

This is the issue that has kept game economies built around secondary markets from exploding into mainstream gaming so far despite considerable investment most infamously from Blizzard and most recently from the glut of Web3 game startups riding the 2021 NFT craze  like Axie, Sandbox, Decentraland & co. What makes it so hard to overcome is the fact that under the “true ownership” idea that launched a thousand Discords, both audiences and companies want a system that achieves three separate goals, any two of which are contradictory to the remaining one.

This problem format is popularly known to most as a trilemma and to economy geeks as the “Impossible Trinity”. In our case put your hands together for:

1. Progression Utility 

2. Stable Asset Price Floor  

3. Mass Market User Base

But first some disambiguation.

Utility Is

Another much abused word in the web3 world and pretty much a proxy for broad demand for assets in your loot economy. The case can be made that any game or related activity or even a story is a kind of economy and has a progression. 

Narrative progression is also a potent type of progression utility but while the welfare of favorite characters is certainly an asset players value and a kind of utility, it’s not really feasible (at least not yet) to create a narrative where you can pay fiat to save a character’s life or pair them up in your favorite relationship and still maintain narrative structure and coherence, apart from that one Harry Potter mobile game character.

Thus we refer here only to games with explicit currencies (gold, crystals, etc) and item economies (like weapons, items, potions). This only applies to game items or assets formally organized in a clear increasing power or utility progression as part of the game’s core design (Diablo / Wow Loot, Animal Crossing rooms & furniture, etc ). Cosmetic items work too as part of a Battle Pass for instance.

Utility isn’t

Item utility in informal game progressions like viral fads or market trends need not apply. If a TikTok challenge to collect all the blue items in your game goes viral, that can definitely act as a progression and create the same sort of demand / utility but not a formal one.

Collectability or tradability alone is not for our purposes considered utility because these are effective at creating demand without any type of formal progression and even without any explicit game attached (baseball cards, bottle caps, stamps, etc). Suffices to say classic gambling has the same problem so that is not covered either. Of course there are games where utility doesn’t exist because it’s a poorly made game and there are no actual value anchors for items or goods in the economy. In a bad game players don’t care about progressing. Also just because a game can have two of our three traits  doesn’t mean it necessarily will.

Finally, we have our trilemma factors.

1. Persistent Progression Utility

There is one main thing that the video game mass market Web3 dreams of replacing, both premium and F2P sell: progression. The only difference is premium games sell it all at once for upfront cost while F2P games sell it piecemeal, gated and on demand. 

Thus, when players are sold “true ownership”, it’s demand for these items that manifests itself in the secondary market, items that help players in achieving the game’s main formal progression as laid out by the developers, either expressed as combat power, better items to decorate a player space for a given score or rating, powerups to clear gems and get to the next level, etc. Players also expect these items they “own”to last forever so we’re not talking about consumables.

There can certainly be demand without progression utility or vice versa as well. Demand can be created or manipulated via factors external to the game itself, either by inducing a false perception of utility, by promising future utility which may or may not be achievable or by obfuscating  or replacing in-game utility with progression utility in a different system completely separate from the game (community clout, collecting, value farming, paid raiding, skill coaching, etc).

But it remains equally true even in these cases that If games with progression utility were to be added to non-utility NFTs like Cryptopunks they would lose the properties that have made them successful at scale and only a small part of the collectible audience would engage with that progression. 

2. Mass Market User Base

To achieve mass market user number ambitions comparable to successful premium and F2P games in the region of multiple millions of players and transactions per day, secondary market-driven games first need to achieve mass market price points for traded assets. This is harder than it sounds because ”mass market” is relative even in gaming let alone outside. Both an iPhone and a Lamborghini are exclusive, expensive items but one is mass market while the other is not.

To make things worse a niche good can become mass market depending on market expectations. For a good to go from luxury to mass market it needs to either drop to a certain price point, the mass consumer’s price expectation needs to change or both. An example is the smartphone market. Smartphones 20 years ago were a niche item at $1000+ pricing and now are mass market at around the same prices because consumer expectations have changed. 

Web 3 companies like Immutable and Polygon promote and create the expectation that in their secondary market games like Gods Unchained the majority of players can benefit with most people affording to buy in. Indeed that’s the expectation for almost any game, that the majority of players can participate and experience most of the content (at least in theory). 

A game where the cheapest price point for an asset is $1000 fiat would raise eyebrows even for the most financially-driven players or investors even if the asset kept the same price floor on the secondary market. While most are not that egregious though you can easily spend at least a few hundred dollars upfront to be even remotely competitive in Gen 1 web3 games like Axie Infinity and Star Atlas, making them far from mass market by any metric.

3. Stable Asset Price Floor

$60, now quickly becoming $70 is the widely cited price for a console game. However, factoring in sales, game giveaways on stores, key resellers, subscription services, bundle offers and other pricing tactics the price floor for a given game is likely much lower. Even given that the price lifecycle and the resulting floor is very familiar to consumers and well understood.

In F2P the price floor is at first glance “free”, though because of the different unit economics a more correct examination is of the market in aggregate with a few different considerations. One is the average ARPU LTV for mobile F2P is close – $87 in 2022 (Statista). Another is that an individual microtransaction can go all the way down to $0.29. So it’s hard to figure out a set price floor but the vast majority of lowest priced F2P spend most likely hovers around $0.5 to $5.

In the premium game model there is no real concern if the price of an individual premium game goes to 0 on the secondary market because that market is not owned or connected to the developer in any way. In the command economy of a classic F2P game it’s not really possible for an item to go to 0 on its own at all because all pricing is tightly controlled by the developer.

But if Web3 wants the mass market userbase mentioned above they need to create the conditions for it, one very important one being low enough price points. The way to ensure this is designing a market for oversupply. Many do this without thinking anyway via inertia because In digital markets it’s the default anyway as copying digital assets is free.

Doing this without kicking off a “race to the bottom” positive feedback loop which takes asset prices close to zero is a non-trivial problem. But because secondary market games depend structurally on free market dynamics their hands are ironically tied. Let’s call that problem 1.

The second perception web3 promotes is that most if not all their earned assets have at the time of acquisition and will also retain over the long term some fiat value. This is problem 2 as this expectation is so ingrained that when asset price movements contradict it, this can feel like fraud to players. Players say they want a free market but only if their assets go up only as we’ve seen above the developer doesn’t and shouldn’t control price dynamics for many moral and potentially legal reasons which are beyond the scope of this article.

So a studio developing a secondary economy game is automatically in the business of making a game where trash items can’t exist and even the worst most useless tradeable asset has a stable price floor and a sustained demand over the long term for it. You can’t have a player buy iron ore ór a cheap blunt sword for $1 and then when the price drops to $0.1 and they find so many of these swords they can’t fit in their inventory to expect players to just drop them on the ground like a trash item in Runescape. Ditto if they worked hard to get that sword, got it as a reward for saving the kingdom and when they go to sell it it’s worth $0.1. It seems redundant but also necessary given the current web3 landscape to clearly state nobody wants “true ownership” of assets not worth owning.

To make the matter worse in games with progression utility, providing an asset floor can only be done over the short term and this is what Blizzard learned with Diablo 3’s Auction House. This is especially true for games where progression is content-based like Single Player narrative games and compounded even worse by designing a market where it is automatically oversupplied.


Stable Price Floor and Progression Utility / No Mass Market Userbase

Second Life (700k – 900k players in total)

Entropia Universe (100k players total)

Sandbox (40k DAU)

Million on Mars 

Gods Unchained


Axie Infinity

MTG Online

Progression Utility and Mass Market Userbase / No Asset Price Floor 

Diablo 3 Auction House

Path of Exile


Maple Story M

Stable Asset Price Floor & Mass Market Userbase / No Progression Utility

Bored Apes/ Top Shots / CryptoPunks, most purely cosmetic NFT collections 

CS:Go skins

Team Fortress 2 Hats

Like any “cursed” problem it can’t be solved directly, only side stepped or lived with to an extent. Here we’ll look at partial solves traditionally used in games to mitigate the effects of this trilemma, from the problematic cop outs to the more sustainable. 

Secondary Secondary Market

The most popular solve is also the simplest: have your game’s secondary market separated from the main formal progression.This can be done a number of ways, from level gating to combined UX, level and quest gating to the inelegant but effective paywall gating of the P2P trading feature. Blizzard deserves a mention here for creating a secondary market for subscription time with its Wow Tokens which while does not offer progression utility, it comes pretty close and at a scale which puts any current web3 game to shame.

Gray Markets

A dubious solve to say the least as even though gray markets can achieve all three traits they don’t achieve them towards the direct benefit of the game’s creators but it’s worth discussing. While all three conditions above can be achieved with gray markets, this can only be done intermittently and not sustainably or consistently. 

Any outsized growth in a gray market is likely to trigger a crackdown from the game creator which will shrink the market right back by introducing risk for suppliers. If the gray market is left unchecked, oversupply  can completely destroy the economy of the game in question by going from a separate underground economy to an actual part of the game’s above ground economy and unleashing price effects into the main economy that destroy both progression utility and mass market scale.


This is pretty much the only known type of game-like economy where progression utility and demand can scale to mass market numbers while enough price variety and low enough price points can be generated. Mostly because of gambling’s addictive properties and exploitation of cognitive effects in the brain that make us think we can predict the unpredictable and make progress in an impossible progression – solving randomness. This is essentially a print-your-own progression card for the brain where it doesn’t need much of a structure except the false “promise” it will eventually figure out the pattern, which of course it will never do.

However the reason it works is also the reason it’s regulated (at least where regulation has caught up to reality). CS Go skins are arguably the largest, most successful game-based secondary market economy in the world. Also because it is effectively propped up by a huge number of unregulated online casinos with no age limit or oversight and assets are traded to be gambled.

UGC / Economic Ecosystem Play

This is basically the only non immediately troublesome method of figuring out this problem for the mainstream market. Roblox is probably  the best example of this approach, though it’s not without significant problems. The biggest danger, which is clear in Roblox too, is the same one as our broken real world economies: exploitation, outsized capital accumulation and rote boring jobs which are incompatible with fun gameplay.

Reports of exploitation by creators of other creators (children and adults) as well as of creators by the platform itself abound. To also put it very bluntly, like kid friendly YouTube Roblox content is very low quality and the platform is unlikely to solve the content curation problems that would lead to better content and attracting an adult audience without significantly disrupting their current model in the process.


The secret sauce in solving the “True Ownership” trilemma is emulating real economies closely enough to have their variety of price points and complex value chains but keeping them simple enough to power a mass market offering where players need to actually understand what they’re playing.

In a very real sense to solve this we need an economic model that solves many of our real world economic problems, where value chains are constructed to both add value to the finite product *and* making sure the act of adding value is compelling and entertaining for the person doing it and the people in it are compensated fairly.

Of course, dealing with virtual economies makes things a lot easier and if done right can offer a model for the real world. But to get there we need to abandon seductive but bankrupt models like Play To Earn and fuzzy utopian notions of seamless “True Ownership” and ”Interoperability” and start grappling with the hard problems of creating real sustainable secondary market-driven games.

About the author

There are probably less than 100 game economists on the planet who can consistently build sustainable player-driven economies. You’ve found one. Catalin Alexandru is the founding economist for C/A, the only consulting firm covering all aspects of virtual economies – content, macro and behavioral. 

Catalin has worked as a consultant, game designer and game journalist with 45+ leading game companies and global brands including EA, MIT, Horizons Ventures, R/GA, McDonald’s, Pocket Gamer, Pearson on IPs like Star Trek, C&C Red Alert, Medal of Honor, Bioshock, Mafia, Thomas & Friends, Octonauts, Moshi Monsters, Peanuts and more.

Catalin is also the creator of Intersheets, a “Figma for game design” platform and the first modeling software that allows full spectrum UX impact modeling on game economics, currently in closed Alpha. Catalin’s first game economics book “Build Sustainable Metaverse Economies” is out November 2023.

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