Dragon Kill Points as Example of Token Economics

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Description

Kei Kreuter:

"One economic practice may be keenly relevant for DAOs: Dragon-Kill Points (DKP). Taking their name historically from when dragons were the most frequently encountered enemies in MMOs, DKP emerged as an allocation system within and sometimes across guilds.

Complex, sustained missions undertaken by guilds, such as killing a dragon, are usually referred to as raids, and can range in length from several hours to several days. At the end of a raid, the slain enemy drops in-game items called loot, and guilds must decide how to distribute it. Because guilds require diverse and complementary player skill sets over extended time periods, “It matters that the same people work together again” (20) and the perceived fairness of often-scarce loot distribution is critical for this. As guilds grow in maturity, they often evolve different systems of loot distribution, for example beginning with random distribution, moving toward random distribution weighted by participation, and commonly arriving at distribution through an informal scoring system such as DKP. DKP act as a private money system, separate from any existing currency in a game world, and guild members earn them based on their participation in raids (21). Guild members can then choose to spend these points in exchange for loot after a raid.

Initially designed by a guild in 1999 for the EverQuest MMO, the practice of DKP has been embraced by many guilds across many game worlds, albeit with slight adjustments. Ed Castranova and Joshua Fairfield detailed one example in Dragon Kill Points: A Summary Whitepaper: the Leftovers DKP system, which maximizes the number of participants by not being tied to one specific guild. As Castranova and Fairfield write, “Indeed, this organization is effectively the highest allocative body in the population. If there is an emergent government on [the World of Warcraft server] Silver Hand, it is The Leftovers.” The Leftovers DKP system arises from a few limitations: loot can only be picked up at the aftermath of battle and, in World of Warcraft, cannot be transferred between players. The Leftovers DKP system has a small group of informally appointed governors: players who laboriously, through public dialogue, set and maintain a database of loot item prices in DKP. When loot drops, players with DKP can choose to spend them for a specific item, with all bids and transactions public. Being zero sum, the Leftovers DKP system then equally distributes spent DKP points to all other guild members that participated in the raid.

As Castranova and Fairfield note, DKP supplements the existing currencies of a game world, as much for efficient allocation as for social cohesion, “making possible the exchange of time (spent on those raids in which an individual is not compensated) for goods (obtained on those raids in which an individual wins loot)” (22). Especially in the case of World of Warcraft, because loot cannot be transferred between players, having loot itself also serves a strong signalling function, showing a player has meaningfully participated in raids over time. This DKP system precedes the mechanics of DAO platforms in development today, such as Aragon, Colony, and DAOstack, which all offer mechanisms to distribute reputational tokens based on the participation of members, rewarded for successful proposals, bounties, or campaigns: what might be called raids in other game worlds. These reputational tokens complement other economic systems enabled by DAO platforms, such as DAO-specific tokens or other assets in their multi-signature account treasuries. Often used as an alternative model to the plutocratic one token, one vote model, reputational tokens, earned through participation rather than purchasing power, provide greater voting power in DAOs that amasses over time. DAOs can learn from DKP, which in contrast, acts as a private money system based on participation that can be spent on other digital assets, instead of only amassing over time.

In addition to efficient allocation, contextual reputation, and signalling functions, the DKP system holds another significance for DAOs: generally all guilds resolve disputes independently from traditional court systems, despite these disputes involving expensive stakes. This becomes highly relevant for DAO tooling like Aragon’s digital jurisdictions or Kleros’s decentralized arbitration service that aim to provide internet native dispute resolution tools. In fact, DAO tooling often tries to technically solve problems that gaming guilds have already culturally refined for several decades, and it may be time for DAOs and gaming guilds to merge their practical knowledge more closely."

(https://gnosisguild.mirror.xyz/t4F5rItMw4-mlpLZf5JQhElbDfQ2JRVKAzEpanyxW1Q)


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