Name: Max Manuel P.

Bosano ID No: 12114448

Subject: FDNECON

Virtual Economy of Society

Virtual economy is the system of online jobs, assets, marketplaces and traders on various online
platforms stated by John Egan. These platforms mostly revolve around online multiplayer games
as they usually contain a virtual marketplace where people are able to sell, buy or trade virtual
assets with real money or in-game currency. However, in order to actually start a virtual
economy for a game, this requires the virtual marketplace which functions differently per
platform. One of the multiplayer games that is widely popular in the fps genre is known as
CS:GO or Counter Strike Global Offensive.

The marketplace of CS:GO is widely known for its Skin Economy. The Skin Economy of
CS:GO is extremely different from the in-game economy since now, in-game assets are being
used as a way to gain real money is involved mainly through the access of the Steam
Marketplace. Specific Skins are mainly accessed through specific cases and opening one requires
a specific key which costs money. Another method of gaining in-game assets to be sold in the
market is by simply playing the game. Each match can award a player with a random asset like a
crate or a skin at a random chance. Skins have three factors which reveals the price of the skin.
These factors include quality, type and conditions. Of course, players can also just buy skins
from the Steam Marketplace to get a guaranteed chance to get the skin they want. All these
methods are a form of investment if a player chooses to eventually sell their skin to make a profit
of the assets. Overtime, price of each skin appreciates as more and more case collections are
added which results in newer skins.

Another kind of game that uses virtual economy in terms of using NFT’s is called Axie Infinity.
This game utilizes NFT’s to purchase in-game characters for players to use which is called
Axies. These axis are then used in battle in either PVP or PVE in order to be rewarded with SLP
which is then the resource in order to actually earn money. SLP can come from battle or doing
quests within the game. Another way of earning SLP and another kind of resource called AXS,
in through breeding. This process involves two axis in order to make a third axie however, the
process of breeding has an increased cost every time it goes into a breeding process. Once a
player is satisfied with their resources, they are able to sell SLP, AXS and their own Axies to
make money through the use of the marketplace where players are able to trade, sell and buy
resources.

Now, what kind of basic economic principles do these games have? Well, for starters both games
applies concepts of financial economics. Players have to make a decision if investing in a key or
a skin can net them a profitable return as the market can be volatile most especially cases since
they’re mostly by random chance if a player gets a skin that can make or break the cost of the
key. So the analysis of financial assets, inflation and supply and demand can be found within
CS:GO. The same concepts apply within Axie Infinity. Within the game, players are already
taking care of their financial assets which are Axies to battle, improve or breed another Axie to
sell on the market. Different types of Axies can be bought within the market and even rarer more
powerful Axies are hard to get which is why more people tend to buy those which are limited in
stock which is how the low supply and high demand can be illustrated. Inflation can be seen on
the selling prices of the in-game resources which are SLP, AXS and even Axies on the
marketplace.

Both games are widely popular for a reason however, how do these games maintain their
stability within the marketplace despite its volatility. CS:GO has been a long running franchise
with tons of skins being released with every update. Inflation is present but not severe despite it
being a 9 year old game. Older skins are only becoming rarer, and rarer due to new skins being
released thus in every update, it is only reasonable for a skin to appreciate in price.

However, Axie infinity is unstable and currently falling into a recession. This is because the
barrier for entry is high, that even a powerful player, is having low amounts of return of
investment. Scholars within the game are also asking for a 60 to 70% cut from earnings and this
is already being processed as their wage from playing the game. This then causes their earnings
to not be spent within the game like being able to breed new axis. This causes problems as
without new Axies being breed, productivity within the game is declining which only makes the
game run on new players as they require to spend money within the game in order to try and
make a return from it. Which will help fix the inflation however, without new players being
added, the problem may remain.
In conclusion, games can have a standard economic marketplace that behaves like it would in
real life. As such, these games rely heavily on the player base as the players themselves are not
only the consumers of the product but they too are the foundation of the economy to keep the
game going.
 Reference List:

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November 28, 2021, from https://penpoin.com/financial-economics/.

Gill, P. (2021, November 22). Axie Infinity has an inflation problem - and without more players,
it's going to be a tough fix. Business Insider. Retrieved November 28, 2021, from
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and-without-more-players-its-going-to-be-a-tough-fix/articleshow/87840750.cms.

Huang, W. (2020, September 29). Analysis on the CSGO economy. The CSGO Skin Economy.
Retrieved November 28, 2021, from https://whuang37.github.io/csgo_market/.

Jesse, S. (2020, July 1). Ultimate Guide to make money with cs:go skins [2020]. CS Spy.
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John, J. (2021, August 2). The economics behind Axie Infinity. Decentralised.co. Retrieved
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infinity/.

Nason, A. (2021, September 29). Axie Infinity: Play-to-earn is the new economy of video
gaming. LinkedIn. Retrieved November 28, 2021, from
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aaron-nason.

Raja, V. (2021, November 24). Can you make money on Axie Infinity? Pro Game Guides.
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Licsi, A. (2021, August 29). Axie Infinity explained: How do people make money from play-to-
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