Play and Earn Case Study

Decentral Games ICE Poker: A Case Study on Monitoring the Health of a Play & Earn Economy

April 18th, 2022



We have seen increased commentary around the rise and sustainability of play and earn gaming. With players becoming more active and involved in these new gaming ecosystems and economies; we are starting to see high rates of issuance around the game’s native currency causing, in some cases, price declines driven by this issuance outpacing the flow of new capital (or burning of capital) within these respective gaming ecosystems. It is worth remembering we are in the early development phase within a new sector of gaming. We believe game economies will continue to improve over time primarily through the evolution of token design, creation of fun and enjoyable game design, and enhanced quantitative analyses around play-and-earn health data and metrics. This paper focuses on quantitative analysis through the lens of Decentral Games Ice Poker to provide our readers with the tools to better understand and analyze the health of a P&E economy. We chose Decentral Games as our case study given their first mover advantage in building a socially immersive game economy within a virtual world.

Decentral Games ICE Poker – Game Overview

Decentral Games (DG) is an entertainment DAO built within Decentraland. In October of 2021, the DG team launched ICE Poker, a socially immersive play and earn metaverse poker game. Poker players can purchase, or be delegated, NFT wearables as their ticket to begin playing and earning the game token ICE by completing daily challenges and competing against other players. The wearable supply is controlled by the team, with future mints done in either ETH (going to the treasury) or ICE (burned from supply).

Upon purchasing or being delegated a wearable, the player receives a specific daily amount of free non-transferable chips depending on their wearable count. Once playing is enabled through checking in with the wearable, it is in the players best interest to complete as many challenges (easy, medium, hard) as possible. Each challenge has a specific ICE reward for completion. ICE is then required (and burned) to upgrade your wearables, up to level 5 for the most earning and cosmetic value, giving ICE inherent value. In the future, the team plans to implement the following additional ICE burn mechanisms through other areas of the entertainment DAO: ICE emotes, guild league uniforms denominated in ICE, a secondary ICE marketplace and ICE advertisements.

What follows in this paper is an overview of the key quantitative health metrics we actively monitor which aids in bootstrapping a sustainable play and earn economy. Quantitative data points we touch on throughout the paper include DAU growth, new supply side asset released relative to new DAU, mint-to-burn, active supply, upgradability totals, % of supply side asset for sale, scholarship percentage, treasury growth, game token price, floor price, annual yield, break even days, and monthly income. In most cases, we believe these are the key metrics to monitor the quantitative health of play and earn economies and look forward to refining our approach as the industry adapts and grows. 


Population Growth 

Quantitative Metrics: DAU Growth, New Supply Side Asset released relative to New DAU

New play and earn games are highly dependent on new users. It’s hard to escape in the early days of a project; but overtime, successful game economies should become less dependent on new users.  Along with building a fun game, game developers who leverage their community, social media presence and brand can help kickstart DAU growth. ICE poker has experienced steady DAU growth since launching in October 2021, ending with a DAU count of 11,471 in March of 2022.

We believe the sweet spot for DAUs is to grow at a sustainable rate in-line with the new supply of assets, measured by the ratio of New Supply Side Asset released relative to New DAU. In the case of DG’s ICE Poker, new wearables released relative to new DAUs ended March at 1.4, suggesting that for every 1.4 new wearables supplied one new daily active user came into the ecosystem. A ratio far greater than 1.0 would be a worrying sign, as supply of the wearables outpacing demand could lead to a quick decline in wearables prices and a resulting negative feedback loop. Play & Earn games should target a ratio that is in-line with the number of supply side assets required to play the game. For example, if a game requires five supply side assets to play, then a ratio closer to 5.0 would be more appropriate. We believe DG’s approach to releasing wearables at a methodical pace has allowed them to keep the ratio near 1.0, though the recent increase to 1.4 is worth monitoring closely. Should we see a ratio far greater than 1.0 for an extended period of time, the DG community could consider slowing the pace of primary wearable sales. 

Sinks & Faucets 

Quantitative Metrics: Mint-to-Burn Ratio

Mint-to-Burn is one of the most important metrics to analyze the health and issuance of game tokens. Generally, game tokens are minted (earned/distributed) as users complete tasks and win games, while tokens are burned (removed from circulation) as users sink those tokens back into the game’s economy. 

A mint-to-burn ratio slightly >1.0 with a bit of inflation is desirable; however, an extremely high mint-to-burn ratio will present problems, which could lead to stagflation; a situation where the tokens are inflationary and the game’s user base is decreasing. To keep a healthy mint-to-burn ratio, games should create mechanisms that aim to control both the issuance of tokens, the faucets for how rewards can be earned, along with mechanisms to burn tokens, the sinks, and remove them from the circulation. In a healthy economy, issuance should go to those players that are most likely to add value within the ecosystem as their contributions can outweigh token dilution. On the burn side, economic burn mechanisms primarily come from new users, current users, or outside partnerships, with outside partnerships being the most long-term sustainable and new users being the weakest. 

The Decentral Games ICE mint-to-burn ratio ended March at a relatively healthy 1.39. ICE is earned from playing, winning and achieving different milestones on the poker table. Wearables are the supply side asset and ticket to earning ICE, with an unlimited life span. One important factor to note, and one we view favorably, is that a heavy weight of the ICE reward emissions goes to the top performers.  This is to disincentivize those players whose primary goal is to farm ICE and immediately convert the ICE into their base currency.

One ICE burn mechanism used comes from current users upgrading their wearables. Users pay anywhere from 5,000 ICE to 12,500 ICE in order to upgrade their wearable to a higher level (with 5 being the highest level) which not only provides the player with a cosmetic and status boost but also provides that player with a higher earning potential. We believe this burn mechanism provides more sustainability for ICE when players are upgrading primarily for the cosmetic and status boost rather than for pure earnings. This will likely happen more as users scale and the community continues to grow. We do wonder what may happen when the majority of wearables reach the level 5 diamond hands rank. If/when we reach this point more ICE would need to be burned coming from new wearables in circulation, which would be highly dependent on new players entering the ecosystem, the weakest form of token burn. 

Another mechanism where ICE is largely burned comes from primary wearable mints denominated in ICE. As more and more wearable drops are denominated in ICE this will help remove a significant amount of ICE at a single point in time from circulation helping maintain ICE price stability. This, however, becomes less proportionally meaningful as more wearables are in circulation and is highly dependent on new users which can become challenging should ICE Poker enter a period of slower growth. This potential concern is compounded by the fact that the wearable ICE issuance has an unlimited life span. 

In our view, however, short to medium term the ICE primary sale burns are a positive strategy, but longer term we believe the most important step DG can take is to continue to build a fun and enjoyable experience that encourages current players to burn more ICE within the realm of the socially immersive experience. As more and more people spend time within Decentral Games digital locations and experiences, whether that be through ICE poker, concerts, festivals, or exhibits; the team can continue to add ICE burn mechanisms as wearable holders become more willing to spend ICE for social and entertainment purposes and not strictly to earn income. 

Lastly, as the Decentral Games Entertainment DAO scales, it’s not hard to envision advertisements on and within their digital land and properties, enabling outside capital to effectively serve as another burn mechanism for ICE. We believe the DAO’s focus on building the most entertaining, fun and socially immersive application within Decentraland bodes well for the future health of the mint-to-burn ratio.

Usage vs Speculation 

Quantitative Metrics: Active Supply, Upgradability Totals, % of Supply Side Asset Listed for Sale

It is vital for play & earn ecosystems to have an environment where the assets within the economy are actively used rather than held for speculation. This sets up a less volatile environment and more constructive playing environment. There are a number of indicators that can be utilized to analyze the activeness of the supply side earning asset. 

Active Supply is the percentage of supply side assets in circulation that are utilized within the core game. In the case of ICE poker, nearly 80% wearables in supply are actively used within the game. Games should shoot for percentages of greater than 75% for active supply, with higher percentages especially important during the early life cycle of a game. At 80% for ICE Poker, this suggests strong demand to play ICE poker and shows purchases of wearables are to play the game rather than to hold and resell on the marketplace.

Upgradability totals show the number of supply side asset upgrades and demonstrate current users willingness to reinvest back into the ecosystem. Since October of 2021, ICE Poker has experienced a steady increase in wearable upgrades, though this has partially slowed in March. Growth in wearables upgraded suggests users are willing to re-invest money back into the ecosystem to upgrade earning potential and their wearable flex status. The cost to upgrade, which consists of burning ICE, paying DG to the treasury and non-transferable XP points, increases as owners level up from 1 to 5. These costs are critical to ICE Poker’s current flywheel and highlights users’ willingness to progress within the game. 

The slowdown in March has us on elevated watch, and should the slowdown continue, we believe the community in the near term should adjust the cost to upgrade and potentially the earnings bonus as well. More importantly though, and longer term, upgrades should be a result of the status and cosmetic boost, which is more likely to happen when users scale higher and the team builds horizontal experiences within the Entertainment DAO. For example, potentially higher level wearables can provide gated access to certain other areas of the DAO such as VIP access at a virtual concert. 

Another key metric to monitor is the % of supply side assets for sale. The steady down trend within ICE Poker suggests users increasingly are purchasing the wearables to play rather than to resell on the secondary market. A sharp hike in this percentage would suggest that the demand to play (relative to supply) is decreasing and would be a worrying sign. We expect volatility around this metric and view anything below 10% as extremely healthy. 

Delegation vs Ownership

Quantitative Metrics: Scholarship Percentage

Given the often high cost of NFT gaming assets, the majority of play and earn games utilize a “scholarship/delegation model” where owners of the in-game assets can lend their assets to other users who play and earn for a revenue split. Some games utilize third party solutions, though we believe games should build their own in-house delegation tools for their users. For example, and one we view extremely favorably, ICE Poker has its own in-house delegation dashboard to facilitate this process along with creating fixed revenue shares dependent on the wearable level. 

In many cases, owners tend to be those who have accumulated crypto-assets while scholars are those that cannot yet afford to purchase the required in-game asset. Scholars often utilize the income earned within the game to help pay for everyday expenses, a groundbreaking feature of play and earn gaming and one we helped bootstrap with Sponsor-A-Scholar. However, if the majority of players are scholars who are selling the in-game rewards, the economy might suffer from a lack of participants reinvesting back into the economy. 

For this reason, we analyze the scholarship percentage across games. For ICE Poker, the percentage is around 85%, which, at present, is high but in-line with what we are seeing across most play and earn games. Teams should have an approach for how to bring this percentage down, which often involves helping scholars generate enough wealth to purchase their own game asset. The DG team has been launching mints directly in ICE to try and encourage those players earning ICE to save enough ICE to purchase their own wearable.

The percentage can also decrease by having more players willing to spend the money for enjoyment (and a potential to earn), rather than the sole focus of earning an income by playing. We believe this is what every game economy with a scholarship/delegation model should push for. As ICE Poker develops and improves through different layout structures (ie. higher stakes tables) and faster gameplay, we expect a lot more owners to come in and play for themselves. We also can see an environment where wearables can obtain utility outside of just ICE poker and expand to other areas of the entertainment DAO.

Project Treasury

Quantitative Metrics: Treasury Size

With the rise of DAOs, treasury management is vital to the overall success of a project and can help a project continue to grow in both strong and weak market environments. Creating a substantial and diversified treasury provides the team and community with the financial support to continue to fund the developments of the project and can backstop the play and earn economy. Analyzing the treasury size is thus part of our quantitative framework. 

At the end of Q1 2022, DG’s Treasury had ~$63M in value.  Funds within DG’s treasury are raised through a few different mechanisms:

  • ICE wearables primary sales
  • ICE wearables activation fees
  • ICE wearable royalties generated from secondary sales
  • ICE wearables DG upgrade fees 
  • DG NFT Marketplace fees (launching Q2 2022)

Excluding primarily sales, the mechanisms above can be viewed as a “tax” on day-to-day ICE poker activities that flow back to the community owned treasury. While taxes are often viewed unfavorably, we view them as a necessity for P&E games as they can dampen the volatility of the economy. Specifically, tax revenue will generally increase in times of economic growth, which can then be used as a backstop in times of economic slowdowns. 

The Decentral Games community can vote through governance on the control of treasury funds. For example, should ICE Poker go through a period of slow growth, governance could vote to buy and burn ICE. While this can be a powerful economic mechanism and backstop, we believe teams should use this tool cautiously. More generally, having a large treasury provides confidence for players and investors that the game token has a theoretical floor as aggressive mechanisms can be implemented should the game enter a period of stress. 

We are happy to see the DG treasury at $60M+ and believe the taxes should largely remain in-place. That said, should we enter an extended down market, the community could replace some of the DG taxes with more direct ICE burns.

Quantitative Metrics: Game token price, floor price

A more direct indicator we track closely, and in some ways provide the most live state of the economy, is the game token price and the floor price of the supply side asset over time. It is worth noting, especially during the early phases of a game, these are expected to be highly volatile due the nature of early speculators and, in some cases, limited liquidity. What teams should aim for, with time, is stability around the in-game tokens and assets. This is largely managed by the development of enjoyable game design, along with communities and teams conducting policy decisions centered around controlling the mint/burn ratio previously discussed. Teams should pull economic levers when necessary and then carefully analyze the impact of such levers prior to making additional changes. 

In the case of Decentral Games ICE Poker, we have experienced volatility and a recent decline in the price of the underlying wearables and ICE. With the Decentral Games Entertainment DAO still in beta form, this volatility is not overly concerning on a long term time horizon, especially given some idiosyncratic tech issues and the broader macro environment. Some policy changes may be necessary, however, and should be given enough time to play through the ecosystem prior to conducting additional policy changes. We have been broadly impressed with the proposals set out by the DG community. Longer term, the best thing the team can do is continue to build an entertaining experience that introduces more natural ICE sinks. It’s worth remembering that play & earn games are a new, cutting edge industry in its infancy, and extreme volatility is largely to be expected at present. 

Return on Investment

Quantitative Metrics: Annual yield, break even days, monthly income

At present, many players and investors try to build and monitor return on investment equations across play and earn games. For games where players are most focused on earning capabilities rather than playing for fun, the potential financial return becomes one of the most critical components of player growth. In the case of ICE poker, based on current listings on OpenSea, the annual yield ranges from ~55% to ~58% (depending on wearable level) for owners of wearables who delegate their asset. This results in a financial break-even from purchase on OpenSea of 600 to 650 days and a total monthly income of $96 to $176. These metrics are highly impacted by the price of ICE, which is highly volatile, along with the price of the supply side asset and daily earnings potential.

We believe that over time as games evolve to become more competitive and dynamic, return on investment equations should become a lot harder to approximate.  Gaming is meant to be fun and competitive; and, reward users for skilled play rather than solely participating in the game. As it currently stands, yield generated from play and earn gaming is often similar to the yield one is able to calculate and receive from current DeFi protocols. We believe long-term successful games should have ROI models that are difficult to build given the variability and, in some cases, randomness of earnings. In its current form, ICE earnings are somewhat predictable due to the quest-like approach in earnings, but we believe longer term more emphasis on rewards based on seasons or tournaments and/or more elements of fun drops/randomness can add more variability to financial returns. We are excited to see how ICE earnings / issuance evolves. 


We believe Decentral Games ICE Poker has the foundation to become the first widely played game and entertainment ecosystem within the virtual world space. We will continue to work with the DG community to analyze and make recommendations for their economy. We hope our readers can utilize the quantitative tools we discuss to evaluate the health and growth of other play and earn games. Through more real-time analyses, we believe as an industry we can learn together and more quickly react to issues within respective digital economies. We welcome any thoughts and feedback to our approach, and we plan to continue to refine our models over the coming years as the industry adapts and matures. 

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