EVE Online’s success shows why gaming doesn’t need NFTs

Nearly 19 years after its launch, EVE Online still has one of gaming’s most robust virtual economies, as the game’s detailed monthly economic reports attest. So when developer CCP says it has “no plans to add blockchain technology into EVE Online… for the foreseeable future,” it should probably cause proponents of crypto gaming to wonder why.

In a Monday blog post, CCP CEO Hilmar Pétursson wrote that the company is always “exploring new technologies and new possibilities” to help fulfill its mission to have “the EVE Universe outlive us all: EVE Forever.” But while he said that blockchain tech has “a lot of untapped potential,” he noted that there is “a lot of work needed before [blockchain is] ready for EVE-scale games.”

Pétursson leaves CCP a bit of wiggle room, though, by clarifying that non-fungible tokens will be absent from Tranquility, the main server cluster that serves as the home for the game’s global player base. So CCP may still experiment with blockchain technologies on the Chinese Serenity servers or mobile spinoff Eve Echoes, which have their own completely separate economies and player bases [Note: This portion initially misstated the nature of some alternative EVE Online servers. Ars regrets the error].

Pétursson explicitly nodded in this direction in his post. “While we remain intrigued by the technology, for us, NFT stands for ‘Not for Tranquility,’” he wrote. “Overall, the EVE IP will continue to push the boundaries of digital economies and virtual worlds—and we will continue to explore that outside of [Tranquility].”

Deriving value from fun

Proponents of NFT gaming often imply that the technology is necessary to impart true “value” and player “ownership” of in-game assets, which the game’s creator will otherwise lock up and render valueless for the players. But the long-term success of EVE Online‘s economy serves as a key counterexample, proving that NFTs are unnecessary for the creation of a stable in-game value exchange between players.

Players in EVE Online can use real money to buy PLEX, which can be traded for the “Omega Clone” game-time subscriptions that offer access to most game features and cosmetic and character-enhancing items.

But PLEX can also be traded for ISK, the main in-game currency used to purchase ships, modules, and much more. ISK can also be converted back into PLEX on the open market, thus encouraging players to earn more ISK through in-game mining, industry, or plain-old piracy (via PvP battles, for instance).

(While PLEX and ISK can’t officially be converted back into real money, black-market exchanges allow players to “cash out” their in-game assets.)

Hundreds of dollars’ worth of PLEX, which drives EVE Online‘s in-game economy.

There are a few prerequisites to making an in-game economy like this work. First, there has to be a core group of players interested in playing the game for its own sake rather than playing primarily as a way to make money. EVE Online‘s appealing gameplay helps give some inherent value to PLEX, which can be traded for more game time. With a steady average of 34,000 players online at any given time over the last five years, EVE Online has definitely satisfied that requirement.

Many NFT games thus far have put the economic cart before the appealing-gameplay horse, though. Last May, a Twitter poll from Axie Infinity co-founder Jeff Zirlin found that only 15 percent of players said the gameplay was their favorite thing about the simplistic beast-battling game. Nearly half of all respondents said the economy was their favorite part, suggesting there is too much focus on asset speculation among the player base.

Finding your balance

Stable in-game economies like the one in EVE Online also rely on a balance between “makers” and “takers” to keep things flowing. Such economies need a roughly equal mix of players who invest time and effort into generating assets to sell and players who want to spend real money to buy the product of that work as a shortcut to in-game success or status.

An imbalance on either side of this equation can lead to rapid inflation or deflation for an in-game currency, which in turn can quickly ruin the value of the whole economy. See Diablo 3‘s real-money auction house for an example of how this sort of situation can spiral out of control very quickly.

CCP takes this balance seriously, and it tries to make sure that the creation and consumption of ISK happen in roughly equal measure. The Eve Economic Council offers detailed monthly graphs tracing the creation and destruction of aggregate in-game value across many variables, for instance. And an in-game economic review posted by CCP in early 2020 noted how CCP’s “anti-botting” efforts had restored faith in the underlying value of ISK and thus increased the “value of labor” in the game.

One of the many monthly graphs the EVE Economic Council uses to monitor the balance of in-game assets in the game.

Credit: EVE Economic Council

Axie Infinity, on the other hand, seems to suffer from a fundamental imbalance in this area. A detailed look at Axie Infinity‘s economy from consulting firm Naavik showed that game was dominated by players seeking to earn money through play or financial speculation, with a relative dearth of long-term players on the other side willing to pay money for the fruits of that labor.

“The value of new Axies and SLP is propped up by new players putting fresh money into the game,” Naavik said in that December report. “If new player growth diminishes, it could send Axie Infinity into a recession.” Sure enough, as user growth has slowed in 2022, that seems to be what is happening.

It’s hard work

Keeping an in-game economy working smoothly isn’t an easy job. CCP hasn’t been a perfect steward of EVE Online‘s economy, either; when the company rolled out expensive in-game cosmetic items in 2011, the move led to player riots and a quick rebalancing.

But it’s also clear that CCP takes its responsibility to manage EVE Online‘s economy seriously. In a 2014 DICE Summit talk, CCP’s then-CTO Petursson discussed how he spent months of real-world time earning enough money for a ship rather than just using his privileged access to grant himself a ship out of thin air.