SKILL: The Jet Fuel of our P2E
Presenting tokenomics and regulation mechanisms of our inflationary in-game token
SKILL ist the in-game token of our play-to-earn. We have already introduced SKILL in the V1 of our Whitepaper. Below we present an upgraded version of SKILL’s tokenomics, which will also be included in the V2 of our Whitepaper, to be published next week.
Summary: What is SKILL?
The SKILL token is the in-game token of Avalanche Riders. Contrary to POW, which is our utility and governance token, the use case of SKILL is restricted to the game itself, meaning it will be earned and spent within the game only and has no purpose in the real world.
SKILL is an inflationary token, meaning it’s unlimited in supply and gets minted at a variety of occasions. These are:
- Players can send their Riders to the Gym (= staking their Rider NFTs) and earn newly minted SKILL proportional to the stats of the Riders they stake.
- If players are learning a new trick in the Snow Park, they get rewarded with newly minted SKILL for both training and mastering a new trick.
- Players will earn newly minted SKILL for participating in PvP- and PvE-competitions.
SKILL that is spent by players will be burned immediately to counteract the infinite supply. Players can burn SKILL in two ways:
- To directly upgrade the stats of their Riders without buying new Gear.
- To mint a new Rider to play with (after initial mint in AVAX, future Riders can only be bought in SKILL)
So in short, SKILL is needed as the “jet fuel” of our P2E. It allows players to advance in the game without needing to pay real money and it rewards players if they stake their Rider NFTs. You now may have the one important question: What if there’s inflation? How do we regulate the value of SKILL?
How is SKILL regulated?
Since SKILL is an ERC20-token, it can be traded on the open market, meaning people can actually buy SKILL insted of earning it in the game. This requires some additional thoughts on the exchange value of SKILL, and how to regulate inflation and deflation to keep the game attractive. (For example, imagine you needed to play the game 3 days straight in order to earn the same amount of SKILL than what you can buy for 1 USD on an exchange. Who would still play the game? This is why price considerations are important.)
Here’s where our regulation mechanism comes into play. Let’s first look at the more realistic case for an inflationary token, namely: Inflation. If there’s too much SKILL in circulation, we can counteract this using regulating methods:
- Decreasing the amount of SKILL minted in staking and in playing. This makes it harder to obtain SKILL, meaning players start buying off the open market until the prices are high enough for it becoming more attractive to earn SKILL by playing again.
- Increasing the amount of SKILL needed to be burned in order to perform upgrades and mint new Riders. This increases the value of SKILL directly, as new players (who need to mint a Rider in SKILL) can only get SKILL from the open market. If prices get higher, more SKILL needs to be bought, decreasing the amount of SKILL in circulation.
Here it’s important however to find the golden line between too low and too high prices: If prices get too high new players might get deterred from playing at all.
- A part of minting incomes will be stored in a treasury to buy back SKILL from the open market and burn it if needed.
Now for deflation we could just reverse the above steps, meaning increasing the amount of SKILL issued while decreasing the amount that needs to be burnt for upgrading and minting Riders. Since SKILL is inflationary however, we think that deflation is far less likely to occur than inflation. Still, better be safe than sorry, right?
These are some insights on our in-game token SKILL. Stay tuned for updates on POW, our utility and governance token, of which its Tokenomics will be released alongside V2 of our Whitepaper within the upcoming week!
Thanks for reading Riders, and LFG! 🚀