🗄️General Economics
Last updated
Last updated
The basis of tokenomics for Rocket Galaxy relies on the Quantity Theory of Money, which states that the general level of prices for goods and services is directly proportional to the money supply. For example, should the supply of money in an economy increase by 2%, prices would also follow a proportional increase, bringing in inflation of 2%.
The Quantity Theory of Money is formulated through the Fisher equation:
where M is money supply, V is the velocity of money, P is the Price Level and T is the volume of transactions. The equation has been applied to crypto economics before in valuing Level 1 chains (e.g. - ) and to Web2 games. Holm and Makinen (2018, ) show that new World of Warcraft expansions significantly increase the money supply, which brings inflation to Gold, the currency of the game.
In monetary analyses, V and T are often assumed as constant variables, and hence there is a direct relationship between M and P. Hence, to increase or decrease the inflation in an economy, M has to be changed. The table below shows how Rocket Galaxy will increase and decrease the money supply M of the soft currency through different channels. Numbers of brackets indicate which sub-section describes the mechanism in more detail.
Each element in the table for increasing or decreasing the number of tokens can be adjusted by the game developer to control the rate of the game's soft currency. For example, a game developer can change the prices of resources, prices for buying keys for chests, the price for producing recipes, merge weapons, and so on.
