Knights of Cathena’s Web3 strategy staves off inflation

Knights of Cathena is a turn-based free-to-play strategy mobile game with Web3 capabilities. Players earn cryptocurrency by playing and winning PvP games, but there is no initial buy-in.

According to publisher fivefingergames’ CEO Lukas Anetsberger: “The game is a seamless blend between Web2 and Web3. In our case this means, everyone will get a wallet while logging in, but this happens all in the background so the users do not get in contact with it. In a best case scenario, our players do not even realize they are playing a blockchain game – which is the key to mass adoption in our opinion. It’s important to understand that in our game there is no distinction between a Web2 or a Web3 user. Just players who want to play the game and at some point, players who wants to cash out their earnings are free to do so.”

The question is – will it work? GameDaily spoke to Anetsberger to find out more about the difference between play-to-earn, and play-and-earn.

GameDaily: Can you tell me something about Knights of Cathena, as a game?

Lukas Anetsberger: Our community often references it as ‘chess on steroids’. You have turn-based tactics which are chess-like, but which are enhanced with RPG elements. You have basic characters, or pieces, but you can equip them with NFT items. This makes the game more complex and deeper as you encounter uniquely equipped enemies, and you build a formation that outplays your opponent.

GameDaily: A shibboleth of Web2 gaming – and likely for good reason – was that purchasable in-game items should be strictly cosmetic. Games that sold items that rendered gameplay advantages to players existed, but were frowned upon. One of Web3’s challenges isn’t merely to change this tradition. It is to present the world with games that are fun because they feature economies that favor capitalist gain. How are you going about this?

Lukas Anetsberger: We don’t aim to create a game that is fun because of the Web3 components or the capitalist gains you mentioned. The focus must always to create a game that is fun like we would focus on if we would build a Web2-only game. The Web3 part is a secondary feature that is a nice addition to an already great game.

Regarding the purchasable items. In Knights of Cathena every in-game item that has an impact on the actual gameplay, can be obtained simply by playing the game with the rewards you will get by winning against other players. You will earn our $CGO token for playing matches and the utility of this token is basically being the currency of the ecosystem that players can use to progress.

For example, you can use your rewards for buying an item chest to draw equipment from so you can equip your formation with it or you can buy items directly from the Marketplace where players trade in a peer-to-peer manner. Of course you can simply buy our $CGO token to speed up your progress but we have a very advanced ranking system in place that prevents the gameplay from being a Pay-To-Win hell for everyone. In the end you will have an advantage the better your items are but it’s always the strategical gameplay that ultimately wins matches.

GameDaily: You say that players do not have to invest their own money to participate in the game’s earning potential. How do you create an economy from zero investment?

Lukas Anetsberger: This is the most important question in our project. The token economy that we’ve designed is pretty unique. Simply put, for every minute that is spent in our ecosystem, the [in-game economy] gains value.

How does that work? It’s actually pretty easy. We have a token model that is based on a fixed inflation model rather than an unlimited inflation model. For a lot of play-to-earn games, you distribute more and more tokens as you gain more players. This results in very high inflation, to the point where the tokens become worthless.

We did the opposite, basically. We distribute a fixed amount of tokens to the active players every day, which results in a situation where you have dynamic scarcity. The more players join the ecosystem and are actively playing, the less tokens get distributed to each player. This increases the scarcity, which increases the value of the token.

The players need to do more and more to earn those valuable tokens. So you play, you win, you draw your winnings from the reward pool. The more active the player gets, the more value they bring to themselves, without having to worry about their earnings becoming worthless as the game gains popularity.

GameDaily: So, if I understand this right, the Web2 economy is funding the Web3 economy?

Lukas Anetsberger: Exactly. The game’s economy is fueled by play time. The token holds or increases its value based on the game’s overall popularity. Of course, if we suck at game development and we deliver a project that is not worth playing, then the token will be worth nothing but that’s basically the risk of game development.

GameDaily: So, to be clear, if there are 100 people playing and 100 tokens, they will get one token each, on average. If there’s 1000 players they will get 0.1 tokens. How do players translate that into “play-and-earn” so they can take their winnings and go buy a pair of sneakers or whatever?

Lukas Anetsberger: We’re building on the blockchain. Our token will be listed on several [cryptocurrency] exchanges which can be traded on every major exchange. Players can just cash out if they want to.

GameDaily: Are you also funding the economy through the sale of NFTs?

Lukas Anetsberger: No, we didn’t want to be one of those games that tries to fund the economy by airdropping NFTs. The users create the NFTs, while playing. The tokens you earn within the ecosystem are used to buy an item chest, and the item chest contains random NFT equipment for their characters. Every purchase will burn the amounts of tokens used. So the tokens get out of the ecosystem, and therefore you have some kind of an inflation blocker. Buying NFTs burns the money which places it back in the economy.

GameDaily: This seems like an extremely challenging problem, both from a gameplay perspective, and from the notion of managing an economy that is both in-game, and has links with real money that can be spent outside the game?

Lukas Anetsberger: It’s extremely challenging. If you have real value involved – digital assets that have actual monetary value – you have to be very careful about distribution. One example – in a one versus one multiplayer game, you have to guard against players making two accounts who ‘play’ against each other and draw the resulting rewards. That would be a huge problem for the ecosystem. You have to be aware of loopholes that will destroy the game’s economy.

GameDaily: Have you hired professional economists to advise you on the intricacies involved in managing an economy that traverses a fantasy game world, and the real world?

Lukas Anetsberger: All of the team members are very interested in economies and investment. We spend a lot of time discussing this stuff. It’s pretty much the focus of our lives, even since before we officially have worked together.”

You can find out more about Knights of Cathena, here.