From RuneScape to Networked Economies with Joseph Schiarizzi

awesome thank you um welcome everybody thank you for coming to my talk about RuneScape and network economies the GDP of RuneScape being more than 100 million dollars a year um I think we have a lot to learn uh in defy and in web 3 gaming ux from successful economies like RuneScape so hello I'm Cuppa Joseph I've been playing RuneScape for almost 20 years and I've been doing crypto for not quite as long but I have contributed to a lot of successful web3 projects like uh openc ethereum.org raid Guild metacartel consensus get coin Dow house other things I've been a smart contract developer for about six years um and now I'm working on keep which is an onboarding tool to improve the user experience in web 3 games and apps um so on the left I got my my RuneScape character wearing tetsu armor um and you can follow me on on Twitter at Cuppa Joseph send me a DM if you want to be friends in Runescape and I will double your money if you give me all your money I'll I promise to give it twice as much back yeah so a little bit of context if you're not uh if you're not familiar with runescape's economy um the game runs on on GP gold pieces we got a money stack right here um there's thousands and thousands tens of thousands actually of items in the game they each have a particular value in GP and players can sell their items for GP earn GP in different ways and use that to buy uh use that to buy items from each other there's a place in RuneScape called the Grand exchange who's ever sold something on the grand exchange awesome awesome awesome who's ever sold something on any Exchange right even more so the grand exchange is where all the players millions and millions of RuneScape players there's actually 200 million RuneScape accounts have been created where everyone meets buy and sell their items using GP um and it was one of the first iterations definitely my first interaction with an online digital exchange where I can buy and sell digital Goods unique things like not nfts but unique digital Collectibles and other other digital assets um like I said 200 million RuneScape accounts that's orders of magnitude more users on the grand exchange than on uniswap or any other any other decks or any other Exchange in crypto so there's obviously something going right there that we should learn from um you can go online and check out how much gold is going through the Grand exchange they actually have a lot of analytics and you can go through every particular item see the price history for those items and see what the volume of them going through it is and if we look at the top 100 or so most traded items on RuneScape and we extrapolate how much gold is being bought and sold how much of these items is going through in the exchange and being traded we can calculate what a GDP of RuneScape is and then convert that to US Dollars using the black market price of RuneScape gold and we're going to talk more about that if we extrapolate and we say how much gold is going through RuneScape trillions and trillions of GP every day for all these items but legal just in the grand exchange the legal GDP of RuneScape is well over a hundred million dollars a year huge amount right if anyone here wants to create an app or a game economy in with web 3 tools for the real world if your game has a hundred million dollars a year of volume that would be very successful there would be a lot that we could learn from that if we add the black market GDP for illegal gold trading that's not allowed in the game that's happening outside of the game um that that could double it and on the high end my estimate for the actual GDP of RuneScape is 400 million dollars a year which is massive um so that's all happening in RuneScape gold there's some USD exchanging hands for sure for the black market but this is in-game GDP and the point I want to make today the the most um specific thing I want everyone to come away from this talk having is that in-game GDP is real GDP this is real money and it has real value and if we make these assets real then it can really have serious impacts on the people's lives that play these games so let's talk about the black market for a second um we've got a character here wearing a blue party hat who's ever seen a party hat before yeah awesome uh so party hats are some of the rarest items in the entire game of RuneScape um they're so valuable that the maximum amount of money that you can have on your account stored as a 256-bit integer is not enough to buy a party hat so they're they're extremely valuable um and basically if you want one the most easiest way for you to do so is to go onto a black market um which the developer of RuneScape does not allow so you risk your account getting banned for doing illegal Real World Trading um and it's really [ __ ] sketchy experience so um we have we have black markets on RuneScape we have very valuable items and how valuable are these if we go and look at this is a screenshot from one of the very sketchy online forums black marketplaces that uh sell RuneScape items for real GDP a green party hat costs over 2 000 USD two thousand dollars and it's not even an nft it's just the digital it's just the digital collectible inside of RuneScape that costs two thousand dollars and every time one of these trades hands the developer of RuneScape jagex who created these party hats who created this economy who maintains the servers and maintains the game and keeps the economy healthy they don't get anything they get nothing every single time one of these party hats is exchanging hands it's thousands of dollars and there are even items that cost more than this inside of RuneScape so how does how do they make money how does jagex work how is this game sustainable and how is it kept running for 20 years they have monthly memberships they have um they have Micro transactions where you can buy boxes and hope you get other rare non-tradable items that don't affect the economy too much and I think that those are actually very extractive ways they're taking value away from their players the players are creating value inside of their economy with this real GDP uh and new business models are possible with web3 that have never been possible before so instead of taking a monthly fee from your user instead of taking um instead of adding gambling and other extractive things to your games like meta like uh microtransactions excuse me you could be capturing volume you could be capturing a fee on this two thousand dollar sale right and then that way the game can be sustainable and can have rare items that everyone actually wants to use that provide them utility in the game but without extracting value from all of your players and that's not really a uh that's not really a business model that has been possible before uh without having networked economies without having web3 and crypto running it in the back end so we're stuck with monthly memberships and microtransactions um there was uh recently a investigation in the UK someone became addicted to gambling not addicted to RuneScape but addicted to gambling which is a serious problem um and they spent 62 000 on loot boxes inside of RuneScape playing the treasure hunter game 62 000 USD right obviously that's broken that's not a good system and the game itself is worse off because these type of Micro transactions exist and because they're preying on a very small number of people who have gambling addictions so it would be much better if our networked economies were able to take advantage of the value being created in their games rather than just extracting it from a small minority of players in in a really kind of just disgusting way in my opinion so that is just starting to begin right the RuneScape economy has existed for 20 years and it's thriving but it's also in very very inflationary so to combat inflation just two months ago for the first time in the 20-year history of RuneScape they added a two percent convenience fee so every time you sell an item on the grand exchange on this on this exchange to other players uh they remove two percent of that from the game and kind of like burning the base fee kind of like how ethereum works right to just make it less inflationary um and that gold that is getting deleted that gold has real USD value right we know that people are willing to spend thousands of dollars on valuable items in RuneScape that actually give them utility but the developer creating this two percent tax just deletes 100 of the gold whereas if their economy was connected to web 3 if the RuneScape economy was treated like the real economy that it is and other MMOs this is true for as well part of that two percent fee part of that tax could be going to RuneScape and two percent of 400 million dollars you know that's that's enough money to run all the servers for a year so the RuneScape economy is actually sustainable it does create enough value to run RuneScape and to keep it going forever as a sustainable decentralized model but when our our coins and our in-game assets are treated as centralized things that just belong in this game that are isolated and not part of a network economy um the developers don't get those benefits and instead have to rely on microtransactions and other more regressive types of business models that extract value from their customers so I I've said this a lot of times Network economy what does that mean um there's lots of other popular MMOs around uh and there's new ones there's a bunch in the crowd that I think are really cool here today at East Denver presenting what they've been working on and I just think that it would be really amazing if I could trade my RuneScape gold four diamonds in Minecraft four four gold in World of Warcraft for these other games that I want to play and I already have created this value on this network if they were all connected the games could earn additional fees from people trading between different games and just further create more sustainable systems for our online economies for our digital economies and if we look at the number of players engaging in all of these different online MMOs in all of these different games it's way more than our playing web 3 games it's way more than or even interacting with all of D5 so we've created these open transparent and fair Financial protocols and we've put them on and we're not connecting them to the place online where the most value is being passed where the most value is being traded between people and in online economies in network economies where people could be benefiting from defy if there was a lending model if there was more transparency for how the grand exchange Works in RuneScape everybody would benefit from that um and I think those ideals are are worth pursuing especially in popular games that have hundreds of millions of players and and really impact a lot of people's lives so here's my challenge to everyone at East Denver today um turn RuneScape off you know uh to close the laptop engage with your with your fellow players in real life uh fun stuff I love meeting everybody and let's together build economies that that create value those already exist but also pass that value on to the players and pass that value on to the people creating the value so tradable markets open market tradable between different games transparency and all lending and all exchanges inside of our games and taxes or transaction fees that create sustainability for the game and help the game continue to exist and help those communities continue to thrive um these things you don't need web3 you don't need crypto to add any of these features to a game right but web3 and D5 makes it more transparent and makes it better for collecting and using those assets as real real currency that you can actually sell that you can actually pay your server hosting bills in and that can actually translate to real world wealth so thank you for coming to my talk about RuneScape we've got two minutes left um I'm Joseph shirazi I'm working on keep if you're working on a game and you'd like the game and you're the economy in your game to be a real economy come talk to me I'd love to chat um and use keep is working on building onboarding tools for games and apps to make them more accessible for everyone uh when you're building on web3 so come visit the keep Booth we're by the north entrance store down that way and thank you so much for coming