Source: SecureCheats

This report was originally written in July 2022 for one of Naavik’s consulting clients and was lightly updated for 2023. If your team would like to explore working with Naavik on market research, please contact us. We’d be excited to chat with you.

With the rise of new marketplace and ecosystem attempts – Steam competitors, third-party app stores, web3 ecosystems, etc. – we would be remiss to not take a look back at the implementations of historic gaming marketplaces and how they evolved. In particular, we want to research what’s happened in the past with regard to ecosystem-wide currency implementations. With that in mind, this report will:

  1. Select three ecosystem case studies that either developed a network of games to create an open market or built very successful games that had their own markets.
  2. Analyze the launch, usage, and outcomes of their markets, virtual currencies, and games.
  3. Take learnings with respect to the incentives and motivations of the four major parties involved in game development and play (platform, publisher, developer, player).

Here are the case studies we’ll dive into:

  1. Valve’s Steam Store - A closed ecosystem with no ecosystem coin but a strong player-to-player marketplace that is still growing today.
  2. Facebook & Zynga - A closed ecosystem with a pegged ecosystem coin and multiple partners.
  3. Second Life by Linden Labs - An open ecosystem with an unpegged ecosystem coin that players created and built their own economy and functionality within.

Each of these ecosystems was labeled novel and innovative at the time. They each interacted with a broad range of individuals, primarily focused on PC gaming, and attempted a unique method of ecosystem design.

Case 1: Closed Ecosystem Non-interoperable Currency - Steam Marketplace​​

Marketplace Overview

Valve’s Steam was one of the first pieces of software that managed the digital delivery of computer games over the internet. The first iteration was invented to allow the publisher to update Half-Life directly via the internet, as well as secure the software with a passkey. Valve was an unknown developer that had built one game, Half-Life. Half-Life was a seminal game (Metacritic of 96/100) not only for its story, gameplay, or fresh take on the first-person shooter, but the way Valve enabled mods for the game. Steam became the primary application layer through which free, hobbyist-made mods were distributed to owners of the original Half-Life game.

Counter-Strike V1.6 home screen including Steam button

The best-known mod was called Counter-Strike. Released one year after Half-Life in 1999, Counter-Strike was completely free to play and became one of the best examples of tournament-based multiplayer competitive gameplay, spawning an industry in itself (Esports). Valve bucked the route to market and was one of the first developers to go direct to consumer. Through its Steam application, it later built the Steam Store which allowed other developers without publishers to utilize the Steam delivery mechanism in order to transfer files and play their games on a large variety of PCs. This was the first digital distribution mechanism and would come to dominate the PC industry.

As many of the most successful games started out as modifications (mods) of the original Half-Life engine, a large part of them were driven by communities of enthusiasts who weren’t paid for their time. The distribution of work went from coders and designers who built the rule sets to map makers and artists who created objects and environments for the games to take place in. The number of skins, items, and maps that were made ballooned quickly, and different servers were quickly set up to facilitate different types of gameplay. The community itself was driving the content design but had no easy method of transferring assets to players. A need for a simple marketplace for assets was born, and Valve saw it as a great addition to Steam’s suite of tools.

Screenshot of the Valve Community Marketplace on PC

The Steam Community Market has changed significantly since its initial inception for strictly Counter-Strike skins. It is a great case study to analyze as it has the most direct reference to a successful “creator-led economy,” since skins and items can be built by anyone. It also has one of the most active and dynamic gaming communities that continues to engage with a marketplace (it is probably the most active gaming market in existence). Steam has no virtual currency or tokens; it uses real-money pricing. For players, there is no built-in mechanism for extraction of value, you can’t cash anything out, only buy more games within the Steam ecosystem.

Marketplace Design Details

As the Steam product matured and game development and monetization changed (Free to Play), certain games decided to increase their revenue by selling additional skins or components that players could purchase voluntarily and use in-game. These items would often be rewarded to players at random for either winning or watching pro games being played online. They could then be equipped or sold at The Steam Community Marketplace which launched in May 2013

A Random Item reward received after a match in DOTA2

One of the most popular games for cosmetic items was known as DOTA2. DOTA2 was a particularly strong game for cosmetic items for a number of reasons:

  1. The game has a lot of heroes (120+), and each round you would pick one to play as.
  2. Every hero was unique and stylistically different, allowing for a lot of unique cosmetics.
  3. The game was a 5v5 online battle game, meaning there were a lot of opportunities for others to see your items.
  4. The game was 3rd person, which enhanced your personal view of your character and allowed for more objects to be sold (HUD, Wards, Backgrounds, etc.).
Steam Platform Top Games Active Player Counts (September 8th, 2023)

DOTA2 is a great game. Even nine years after its original launch, it is still the second most played game on Steam. Cosmetic items launched on the Steam Community Market and engagement grew rapidly. Most items were purchased initially by buying keys. Keys were needed to open special chests which would drop randomly within a battle. Chests contained a random assortment of common, epic, and rare vanity items. The more chests a player bought, the more likely it became for them to receive the rarest prize, often referred to as a Gacha Box. This sort of monetization mechanic is common in lots of games, and people are attempting to recreate it in Web3.

Player-to-Player Sales

The community Marketplace pioneered player-to-player sales and allowed players to sell virtual items for USD value. Valve took a number of precautionary steps in the launch of the marketplace that turned out to be very sensible:

  1. Players could not return the USD earned back to a bank account; it could only be used to purchase things within the Steam ecosystem.
  2. There was a floor price where an item could be sold for $0.05, which included a $0.01 fee to Valve.
  3. A lot of items came with restrictions, non-sellable or transferable.
  4. Items could not be transferred between games.

Each of these measures sought to lock-in value into the ecosystem. Valve was very worried by the economic systems getting out of hand and opted for very tight, closed loops where each game itself managed the supply of items. It charged a 5% fee for the marketplace and a 10% that the game received. The marketplace is very active, having around 161M logins per month. The real-world value of listed items fluctuates as they are bought or sold, but it’s roughly $12M, there being 20,435 unique items. The vast majority of these items are priced at the floor price ($0.05).

Valve Marketplace Item Values (

The marketplace was optional for developers, but when added, they were able to access it directly via API (since 2018) to allow people to make purchases without leaving the game. This was particularly powerful, as the more embedded you make a purchasing experience within a game, the higher the conversion rate of those purchases. Players make more purchases while immersed in an immediately stressful/pinching environment, and the more seamless you can make the purchase, the more likely it is to occur. 

DOTA2 in-game screenshot of purchased virtual items

In 2019, Dota2 introduced a feature called “Completed Bundles” that would automatically find the missing pieces needed for you to complete an outfit from the store and purchase all items with a single click. This greatly invigorated trading on the market and facilitated the purchase of more items. Players might usually only buy the largest most visual item (Golden Lance), but with a completed set, they would also pick up the arms, armor, and helmet pieces which often were smaller and less extravagant.

Third Party Markets

Due to the fact that Valve wouldn’t let you withdraw FIAT from the marketplace system but did allow API access in order to analyze, chat, and trade on your behalf, third party markets were set up to undercut or auto-buy cheap items. They allowed participants to trade directly with each other by gifting items. This avoided the hefty 15% fees charged by Steam, with most third party marketplaces charging 5-7%. Money that’s used to buy from the market is transferred directly to the third party, then a trade is initiated and analyzed by tracking comments, and money is provided directly to players who can then cash out using various services. One of the largest of these third party markets is called DMarket

DMarket has a clear value proposition to the buyer; it tends to undercut the prices that are available on the Valve Marketplace. It also has a clear proposition for the seller, lower fees, and the money received can be cashed out directly, which is impossible with Valve. 

Value History
DMarket Value (

Most third party sites are growing their value of items owned and listed on their internal markets. Currently, DMarket has 16,611 items listed for a total value of $6.2M with, around half that of Steam’s own marketplace. The aspect that we need to unpack is why Valve has not outlawed the trade of items on third party sites. It’s a gray area whether DMarket is breaking Valve’s TOS, but at this point, third party marketplaces have become part of the esports middleware.

Valve is allowing a direct competitor to sell in-game items from properties it controls. It’s losing money and control of its marketplace each time a trade occurs on these external sites. This seems like bad business practice, but we see four potential reasons for it:

  1. Third party sites contribute to the “voice of the game” across social media/the internet (Engagement)
  2. They provide players with an opportunity to earn money as a living (Monetization)
  3. Players create new and interesting meta-game or functions based ON the game (Utility)
  4. The Markets are small enough that Valve doesn’t care (Scale)
DMarket Market screenshot of the F2F (Face-to-Face) market for Top100 items

Of these reasons, monetization will be the primary motivation for sellers with highly expensive items ($100+) being able to be sell and cash out. This strong desire from the player base is a testament to how well-received the game items have been. DMarket as a company and particularly the influencers that it sponsors are incentivised to feature popular items on their channel. They can become market makers, dictating taste changes for what's in right now. Items that were previously cheap would become more expensive, and the individuals would take a cut. This practice, when done actively and professionally, is known as Shilling (driving up prices artificially) or Scamming (where items are sent to fraudulent accounts), and this creates a very negative experience for individuals being scammed or shilled, but it also creates a lot of activity within the game and marketplace. Most games continue to benefit as more activity outweighs the small number of issues, but if there’s too many bad actors, then the whole game can suffer.

Direct Gambling on esports became another avenue driving engagement. Instead of betting on an esports team with USD, sites enabled players to bet with in-game items (CSGOEmpire). The larger the prize pool, the bigger the number of items a player might win back. Although this was successful in driving engagement, it was leading to games potentially throwing esports tournaments in order to affect the outcomes. Valve ordered a cease and desist as it became difficult to police/ensure legitimate outcomes.

Valve did take action in a few rare cases. The most expensive and rarest skins ($100+) were actively being traded hundreds of times in a day, artificially inflating volume and prices. This would allow manipulators to drive attention to specific items that they could then dump at very high prices. Valve acted with a simple but effective choice — block any traded item from being re-traded for seven days; they called this a cooldown.

A cooldown prevents shilling and stimulates real sellers by ensuring that each item remains on accounts for a lasting period. It also greatly reduces the trade volumes but not necessarily the price. Although a powerful preventative, its adoption was massively criticized by players, with 160,000 people actively seeking its reversal through a petition.

It seems Valve continues to allow DMarket to exist because of the activity and engagement it creates around the metagame of Counter-Strike or DOTA2, but they acted quickly once users were being affected negatively. 

The Marketplace Economic Model

The Steam marketplace follows the standard model of all app stores, where players purchase digital items that are downloaded to their devices and Steam takes a 30% fee for all sales. The community market follows a similar royalty fee pattern — 10% back to the developer, 5% back to Steam on any sale. Developers are able to cash out the 10% fees earned on their items, and Valve pays this as a separate line item in its remittances.

I think the interesting questions regarding the Steam marketplace are more related to the game items themselves. If every item has a real-world value of 0, as it can be replicated infinitely for 0 cost, how do items even gain a value over 0? This is the term of perceived value, and it’s related more to what social value an item has and its rarity or scarcity at being found. 

Developing a Market

Although the Valve community marketplace facilitates a lot of trade, the vast majority of that trade is concentrated in a few highly prized games (CS:GO and DOTA2). It’s important to remember that the game creates the market, and without a market, items are essentially worthless. For every seller, there must be a buyer in order to trade. Therefore, in video gaming, where the number of items can often be in the 100’s or 1000’s, stagnant marketplaces are more likely to exist. In order to drive adoption and usage, games need to invest in Marketing and Metagames.


Almost all games come with some form of marketing budget. In most cases, the marketing budget eclipses the cost of development many times over (Call of Duty:MW had 1:4 difference in dev cost to marketing in 2009). Marketing is used because a successful game has a lifetime of multiple years. So initial launch budgets, although extremely expensive in the short-term, stand to earn the owners and creators much more over a 2-5-year lifespan. Traditional marketing has always been done by publishers for large franchises, as they could also stand to extend the lifespan of an Intellectual Property by creating sequels and prequels. So in the business of games, marketing has always been the primary way to grow a market.

Valve markets DOTA2 and CS:GO using a broad spectrum of traditional and non-traditional marketing:

  • The games have frequent sales on Steam Store
  • The games are well-reviewed and frequently updated
  • Large, sponsored tournaments happen every year
  • Sponsored teams are created
  • YouTube streamers are paid to play and create livestreams

Valve traditionally focuses on sponsoring and endorsing top tier competitive players rather than actively marketing the game or branding around the game.


A metagame can roughly be defined as “the game outside the game”; a clearer definition being any action relating to a game but not taking place within the game. This is not to be confused with the term meta-game in the free-to-play mobile space, which commonly refers to the economy or external objectives that people must accomplish in order to gain power within the small 2-3-minute core game experience. To prevent confusion, we would name this type of gameplay the “elder-game”.

NewZoo Esports Revenue growth 2016-2021

CS:GO and DOTA2 both have large and complex metagames. There are many third party sites which have dedicated their existence to supporting the community of players by providing them stats, leagues, wiki/reference areas, and training. Valve has no direct affiliation with these third parties, but it does actively create and maintain game APIs which report live data that can be aggregated and analyzed. The growth of these meta properties has actually been the largest proportion of revenue growth within the industry, creating new industry categories (esports). For a game to be able to create a sustainable metagame, it must have three key properties:

  1. Have divergent gameplay actions (they can’t have a linear narrative/replayed)
  2. Have some form of skill that can be mastered (they can’t be purely random, i.e. gambling)
  3. Have Social/Human interactions (90% of the time they are multiplayer, but they can be shared solo experience, i.e. Minecraft)

When all three of these items are present, then a game can support a detailed discussion of itself, its strategy and tactics, and the emergent changes that other players perform over time. The best metagames evolve and change with some regularity. These changes come from the players themselves. A particularly powerful action that Valve and esports created were yearly tournament events, called The International (TI). These events drove the conversation, rules, creation, and release of new vanity items to a specific point in time. This then creates the most awareness and engagement, driving up the community market trades and prices.

Key Stakeholders’ Interaction with Marketplace


Players still use the Steam marketplace to this day. From its first iteration till now, there have been over 200+ games with a marketplace enabled. The two biggest games (CS:GO & DOTA2) each have profitable third party marketplaces and have helped develop an esports culture that is partly driven by in-game items. When the marketplace API was introduced, which allowed players to sell items directly in-game by purchasing from the marketplace, the usage also improved further. So in terms of usage and implementation, the marketplace has been a success.

Reading more deeply on forums and third party marketplaces, most of the grievances with the marketplace model revolve around the 15% fees and the inability to search and categorize things easily. Many sites actively help players by pulling all data via the market API and then reorganizing and reconfiguring a more useful UI. DMarket has also shown that for a subset of highly engaged players making money by selling skins and items leads to more gameplay. 


More and more games are exploring the possibility of a marketplace and virtual items, but only certain games succeed. It’s no surprise that the biggest and most popular games drive the most active markets, and it’s also important to note that none of these games started out with a marketplace. Developer overhead, in terms of implementation, balancing, design, and content creation, is 10-100x larger than in a non-market-orientated game. 

Developers will tend to follow the money, and we feel that if more demand continues to come from players, then marketplaces will continue to proliferate deeper into new games.


Valve took a cautious approach, only opening features and possibilities to new game developers once it had tested and perfected them on its own games. It also manages and maintains the infrastructure needed to conduct the huge number of trades taking place, whilst policing the scams and third parties with direct bans. These are the actions of a large, central authority which wants to maintain high fees.

It remains unclear whether the marketplace is a priority for Valve. The usage and marketplace values are dropping, and the number of large games being developed on top of it remains low. Fixing its UI to make it more usable seems to be an ongoing concern from players, but third party marketplaces seem to be filling this gap too.

Key Takeaways

Virtual Item Metadata

Valve’s community marketplace was one of the first and lasting marketplaces to sell virtual items successfully. It worked out, often through trial and error, what sells, what’s important to players, what items can be sold without damaging the game, and what gamers enjoy to trade with each other. This serves as a perfect model for game development studios to try and imitate in their games. Valve made primarily competitive multiplayer games, and because of that, the majority of its high-value items were:

  • Cosmetic (gave no statistical advantage)
  • Time-Limited Drops (only available for a limited time, not limited quantity)
  • Interchangeable but specific (each hero had its own items, but all items could always be used)

Valve’s items are primarily cosmetic in that they convey no statistical advantage to the players who buy them. This is a golden rule for competitive multiplayer games, since without them, games become pay-to-win, and the average player deems them unfair. In non-competitive experiences, paying for statistics or unlocking future content for a price works, but it offers no further interactions in the marketplace rather than the direct sale. For long, successful multiplayer games that foster massive esports fandom, Valve has set the standard.

Valve also worked out a good way to distribute new content. Players are most actively driven to want new, shiny things, as the latest and greatest cosmetics usually drive a premium. Valve always made the most revenue from releasing boxes of items in unlimited quantities but limited time in order to drive initial adoption and then foster second-hand marketplace activity. Most importantly, Valve has mastered the ability to sell multiple items that replace previous items without damaging the overall market. Through the use of time-limited exclusivity, and because of the fact that new players always demand a large proportion of items, the items owned by each player increase.

All items are specific to each game, but many of those items share a large proportion of categorizing metadata, such as rarity, equipment type, “Use By,” and Purchase Cooldowns. These are item-specific but read by every reader of the marketplace. The more common this metadata layer becomes, the greater the chance for it to be shared between games. 

Control Was Key

Valve (The Network/Platform Owner) maintained a lot of control over its ecosystem in order to protect the marketplace itself. We think it took five clear steps:

  1. USD pricing of all items
  2. No cashing out 
  3. A floor price for all items
  4. Actively banning/limiting third parties that cash out
  5. In-house development for specific titles (DOTA2/CS:GO)

Each step above was taken to limit how each player could interact with the marketplace and ensure limited incentive for players to “earn” through playing. It also made sure that all items secured some value. A floor price ensured that a race to the absolute bottom never occurred and meant that very common items never became too cheap, they became numerous. The most interesting observation is how Valve did allow third party marketplaces (DMarket) to dabble in real-money transactions. 

Real-money transactions were preferred by a subset of players and drove a large amount of awareness of the game, promotion, and influencer marketing. The most active players were the most monetarily driven. Data is very hard to come by on the exact number and quantity of transactions performed by each user, but Valve’s control over the value chain and marketplace led to a healthy number of transactions and usage of the product for specific games. Where it failed was scaling its usage to the vast number of smaller games that are hosted on the Valve platform.

Deep API Layer Integrations

Stimulating demand is key for active, healthy markets. Demand increases price action, which in turn increases players' incentives to find/buy/trade/use the items on sale. Valve built embedded actions that were driven by API calls to marketplace items, allowing players to instantly buy with one click multiple market items at the current market rate. This deep level of integration required a huge amount of work from the game, which is not directly related to playing the game. Most game developers would not be able to afford such a commitment. 

Valve was also cautious with its economics. It knew that externally withdrawing FIAT rewards for in-game hadn’t been done before, and it also knew that items had a permanence to them. As it only had full control over future item releases, it tested and observed the market forces on each item. Over time, more and more data fields were added to prevent resale, market manipulation, or general extraction of value. The Steam community marketplace is one of the only digital goods marketplaces that has not only stood the test of time but actually increased its activity over time. It serves as a valid use case for the user experience of a distributed marketplace.

Case 2: Closed Ecosystem Interoperable Currency - Facebook & Zynga


Marketplace Overview

Facebook, the social network, learned first-hand just how engaging gaming can be when the app opened its doors to developers via a platform named Canvas in 2007. Canvas was quite primitive compared to modern app stores. It allowed developers control of a web page that could be navigated to by a logged-in user, which would then load a Flash app that contained a game. Initially, this was how social gaming started, but over time the Canvas SDK allowed a lot more interactivity with a player’s feed and their social network such as sending messages, liking things, gathering friends, etc.

Facebook Publish
A friend popup request commonly sent on FB in 2010

Zynga was a company set up to exploit the connectivity and virality that the social network provided through addictive and timeless game mechanics. Zynga took classic game designs, like poker or farming, and worked to create features that the Canvas API provided, leveraging the technical features for maximum growth of its games. FB would consistently add and revise features to limit or restrict companies, but it was often playing catchup, responding as developers built highly viral features that spread extremely fast through the network. In the early 2000’s, Zynga had very few privacy concerns, and social data was free to download and store through scraping/API calls, which led to highly sophisticated data analysts further increasing monetization and virality.

The Scale of Facebook

Facebook Monthly Active Users
Facebook Active User Growth between 2004-2017

Zynga launched its first title, Zynga Poker, in July 2007. However, it wasn’t until 2010, when Facebook had grown to 500M users and was effectively growing at a rate of around 50% YOY, that executives began to notice. Zynga’s apps were exploiting the social connectivity of the social network in order to grow at an unprecedented rate between 2009-2012, accounting for over 12% of FB gross revenue. Facebook was quoted as saying, “Social games are currently responsible for “substantially all of our revenue” when it comes to payments.” Zynga’s strategy followed the classic game publisher route of M&A activities, buying any large viral hits that leveraged the social graph. By 2023, Zynga has now launched 40+ titles and made 35 acquisitions, many primarily focussed on social gaming. 

Scale becomes important for social games as the network effects multiply. Zynga games were extremely large. Most games were not considered successful until they hit 1M daily active players (DAU), with the largest hitting 16M DAU and a total of 200M monthly active players (MAU). These sorts of numbers had never existed before Facebook. World of Warcraft, which was one of the largest open world games, had 2.6-4M DAUs at its highest peak in 2010. It wouldn’t be until Candy Crush Saga hit mobile that those numbers would get even larger. 

So as a gaming platform, Facebook amplified virality through its network effects, and publishers like Zynga created compulsive, simple loops that encouraged people to play every day. The incentive to spend was increased by often using time-based reward mechanics that could be sped up by spending real money. Spending was also highly concentrated, with 1-2% of the population accounting for the majority of spend. This phenomenon is amplified with free to play mechanics, as much more people start, but most people never spend (usually well over 90% of players never spend in a free to play game).

Facebook Credits
A Facebook Credit advert for physical credit gift cards

All of these elements create the context to which Facebook decided to create and launch a single, unifying virtual currency that would be used across its platform, the FB Credits system.

Marketplace Design Details

Initially, FB did not have a marketplace or virtual currency; it was left to each game developer to monetize its own games via its own payment systems. Players would purchase virtual currency with credit cards that could then be used in each game individually.

Payment Infrastructure

Every company running a Facebook game would use its own payment processors in order to convert cash into virtual currency. Top tier developers like Zynga invested heavily in securing different deals with payment processors (PayPal) so that they could handle payments from multiple sources. This also created an industry that specialized in processing payments from alternative sources, such as mobile phone bills, cash depositors, or FX transfer houses, some of which were less desirable creditors.

Get Chis and Gold
A Zynga Poker payment screen, before FB Credits.

The integration of a payment processor has always been a convoluted and difficult business for companies. The level of overhead could often be an ongoing task to cover every country and system. Yet, companies that embraced these payment processors would see their global revenues increase because processors provided:

  1. A larger number of payment options for consumers (breadth)
  2. Provided T2 and T3 countries with local currency pricing and services (streamlining)
  3. Handled chargebacks and fraud more efficiently (decreasing risk)

Not only was Zynga the largest third party publisher or revenue generator, but also the primary source of scams and fraud. Scammers always target the most popular games as they have the largest audience that is more willing to perform strange actions in the hope of rewards. The average player would usually not be caught up in these scams, but a vocal minority complained loudly on the network and to the press, damaging FB’s reputation, and the network needed to act to mitigate the risk. Reputation and a loss of trust in the network, along with Apple’s App Store highlighting a potential 30% revenue cut, gave the impetus for FB to act. We believe the planned Marketplace and FB Credits system was hastily rushed through, with a lot of concessions granted to various parties (Zynga and other large publishers) that would cripple the effectiveness of the system in general.

Marketplace Economic Model - Facebook Credits

Marketplace Economic Model
A flow diagram of the FB Credit system for a user purchasing and spending credits

Facebook took aim directly at the payment system. Control of money can often lead to a control of power, but it’s no guarantee. Rather than enforcing direct FIAT payments through its payment gateway, it created a virtual currency, FB Credits. FB decided that $1 was the equivalent of 10 Facebook Credits. This is a pegged currency as it would never fluctuate or change this ratio, pegging itself to the dollar. FB enforced that credits would become the only medium of currency that players could purchase on the FB platform, so developers had to upgrade to the new system. FB Credits were a closed loop currency, meaning that once purchased, they could not be converted into cash, only to buy items within FB apps.

Creating a virtual currency for the network had the following clearly positive effects:

  1. FB would immediately take a 30% cut from all payments, circumventing current payment partners
  2. FB would have transactional data across all games and all purchase of credits
  3. FB could award credits virtually as a way of discounting or incentivising consumers
  4. FB could remove FX imbalances from purchases for game developers
  5. FB can streamline the purchase flow, leading to a higher conversion rate

The downsides and costs to the network were:

  1. An increased overhead in tracking and reporting transactions and people's payment cards
  2. New source code to manage and maintain for all developer use cases
  3. Large marketing and education piece for the users to understand

The upsides clearly outweighed the downsides for the network. But FB hadn’t factored in the other participants of the network and their entrenched status and power. Zynga had at this point grown to over 200M MAU (25% of all the users on FB), FB having 500-700M MAU.

Launching and Enforcing the Credit System

FB Credits launched in July 2011, and it was enforced that all payment for apps or virtual currencies through the platform must utilize the credits system. This top-down change of policy was non-negotiable. Developers of FB games were forced to rewrite, remove, and adopt the credit system, or their applications would be blocked. 

Zynga was pivotal for Facebook’s rollout of Credits. If it decided to leave the platform and create a standalone one, this could create a deep divide amongst users, which would have created difficulties for both parties. Although it was never disclosed, it is most likely that Zynga received some kind of sweetener after announcing its “5-Year Strategic Partnership”, perhaps a preferential royalty split (80/20) or upfront marketing credits on the platform, lowering Zynga’s costs. Sweeteners such as this were very common when publishers were courting large and successful game developers in the console wars. Content remains king for the simple reason that consumers value the game much more than any network features. 

It’s very likely that there was still a lot of pushback from many developers, but FB had a lot of power because of its user growth curve. From a business perspective, the whole process felt rushed and ill-conceived, but for Facebook, a 30% on all financial transactions on their network was too powerful to resist.

Facebook Credits Death

Within 18 months, Facebook completely pulled the credit system from all properties, with users receiving credit refunds. So what happened in such a short period of time to kill a far-reaching and impactful project?

User Experience

Although it’s particularly murky to tease out the exact reason for the removal of the currency, the official line was “to improve the purchase experience”. When conceived, FB pegged the currency at 10:1 on the dollar; a simple and clear conversion for the user. However, non-dollar denominated currencies were often confusing and irregular; 1,440 credits for £10, for instance. Players then needed to convert their credits back into the virtual currencies of the games themselves, usually at a USD rate. This led to a situation where players were left with small amounts of useless currency or no credit currency at all, essentially rendering the conversion pointless.

Low Utility
Farmhand Money
A typical in-game gem currency screen; FB credits are not present.

Purchasing FB credits could be done at many points within the FB ecosystem, but the most common conversion point would be when someone lacked the resources to perform an action. In this case, a player needs Gems to complete the action. By trying to purchase gems, you would be forced to first buy FB Credits and then convert them further into Gems.

FIAT > FB Credits > Gems (in-game)

The credit system wasn’t being useful to the players, it was hindering purchases, and this was bad for all parties. 

Shifting Market

We believe the real nail in the coffin was the titanic shift to mobile for gaming and developers. FB never produced any hardware or app store, and as publishers, developers, and consumers all shifted their habits to be mobile-first, FB Canvas lost audience and control. FB Credits were non-transferable out of the Canvas application, and as such, most players bought Gems or other virtual currencies directly via the App Store. They didn’t need an intermediary currency. FB doubled down on advertising as its primary source of revenue and focused on its own properties. It had also learned that apps abusing the viral and social messaging systems led to bad user experiences on its primary apps, increasing churn in general. FB Credits never solved a market participant's problem, and as such, didn’t create a win-win scenario for the network. When FB launches its next venture into virtual currencies, I’m sure it will:

  1. Launch with the virtual currency in place
  2. Not use a pegged currency at a non-1:1 ratio
  3. Ensure every application can spend the currency in-app
  4. Focus on the user experience

Key Stakeholders’ Interaction with Marketplace


Facebook prided itself on being a free service driven by ads. For players, the interaction with credits was only useful as a means to an end; they wanted the items in the game. The purchase flow often involved two or more steps, and credits were never retained or held by consumers. The currency was meaningless. It was an interim step taking people from FIAT to in-game currency at an odd exchange rate for most consumers.


It’s difficult to find direct data on the impact it had for developers, but FB had promised that the Credit system would simplify and increase the conversion rate of consumers. At a developer conference in 2012, Kevin Chou of Kabam said he expected the conversion rates with Facebook Credits to go up 15–20%, but instead they ended up 5–10%. Anil Dhami of Funzio said the move to Facebook Credits was “a wash,” with higher conversions but lower revenue per player

Developers were encouraged to use Credits data by an API called “getBalance,” which would allow developers to detect a user’s wallet balance before they spent. FB had very little regard for players' privacy and continued to provide more data to developers to help extract more from each player. 


The initial development of Credits is obvious — capture a 30% chunk of all transactions across your network. The naivety of its development became more apparent when other financial institutions got involved. If your service wishes to convert cash into a virtual good, then you are subject to Money Laundering laws. PayPal discovered that the overhead of fraud risk, funding source mix, and customer support challenges would eat heavily into the profit of every payment. The naivety of Facebook was that these technical risks would be easily mitigated by the increase in revenue. However, most of these are complex problems, with sophisticated users continually trying to break them. 

The platform’s job is to increase convenience for users. The convenience that it tried to solve was:

  1. Simplified UX flow
  2. A single currency across all games
  3. Allowing users from all countries to buy credits with multiple means

What if FB Games only used FB Credits?

As an interesting thought experiment: What might have happened if FB had forced FB Credits directly into the game experience, removing Gems? Could this have avoided the convoluted purchase process? What would each game have needed to implement this feature?

The first step would have been to set a mint price for the currency. Zynga would then have been required to purchase the currency directly from FB in order to then sell it within its games (these purchases could happen on-demand). Zynga could also buy credits up front, possibly for a discount. A user would now purchase credits directly from the developer that would keep whatever FIAT was sold. The biggest issue here is the transfer of risk from FB to the developer that now needs to sell the credits in order to recoup its investment. Gems, on the other hand, were free to create and mint for a developer, and as such, often are given away at a much lower price than the store USD equivalent. Gem prices within games fluctuate as developers use them in a variety of novel ways to encourage more play time. 

Secondly, FB can’t assume all games would be created equally. A crossword game vs a poker game might have very different purchasing habits and sell items in different ways. FB would need to create the infrastructure to manage and facilitate these items. FB will also become ultimately responsible for the trade within these games, being the overseer of the currency. Complaints of Credits being stolen, lost, or used against a player’s will would be directed towards FB, which has no control over the game that provided them. This would have a tendency for developers to mismanage their funds or giveaways that players can then exploit.

Finally, and this might be the biggest reason, is that the context of the FB Credits system launch was at a time when developers were already taking payment. If FB was trying to force developers to remove their own currencies and then purchase FB Credits, it would have affected their bottomline and increased their perceived risk. This might have led to a revolt from the developers, leaving the platform and FB itself. We feel this was a risk that FB wasn’t prepared to take, and as such, compromised by pegging Credits to the dollar and allowing games the intermediary step.

Case 3: Open Ecosystem Non-interoperable Currency - Second Life

Second Life

Marketplace Overview

Second Life is a 3D virtual world which attempts to simulate all aspects of real life. Although it was released in 2005, in 2023 it still sees a median daily concurrent player count between 35k-40k and roughly around 200k daily active users. The Linden Dollar (L$) is the only currency of trade within the game and was one of the first true economic experiments of a virtual currency for virtual goods. The Linden Dollar is an unpegged closed currency that people could trade, swap, or gift between each other for goods or services but cannot withdraw from Second Life directly. 

Virtual Dance Floor
A virtual dancefloor event taking place in Second Life

The purchase of L$ also contains a transaction fee, and this is kept by the Linden Foundation. Once the L$ have been printed, they then enter the world in order to be spent freely among people and can be transferred an infinite number of times within the world.

The community of Second Life is considered one of the oldest and highest spending digital communities. Mona Berhart, a long-term player, calculated that on average a new player would need to spend: 

  • $150 on upgrading the basic character models and animations
  • $99 per year on premium
  • $100-$1,000 on outfits/items/land, depending on the size they require
  • $10-$50 on uploading your own models

Approximately $400-$1,200 in year one.

Instant Buy
Lindex Interface for purchasing L$ directly with credit card

These upfront costs serve as a barrier for new users and an ongoing pain point for old users. Interestingly, the world has been running since 2006, peaked in 2009, and ever since has seemed to find a natural level of between 40-70k simultaneous users per day. This is a very flat long-term retention rate which shows that certain people find real value from the experience.

Marketplace Economic Model

LindeX Exchange

LindeX Exchange
Flow diagram of currency exchange between the real world and Second Life

Any time players need L$, they must purchase them directly through a specifically hosted exchange called LindeX by the Linden Foundation. This exchange has a free-floating cost for L$ that oscillates between 240 and 250 L$ per USD. The volumes and general usage have changed a lot over time, but as the game is now stable and the player base is much reduced, this price has also remained relatively stable.

Lindex Daily Market Data
LindeX Volume (L$) and Transactions per day - Grid Survey

Players are able to make limit orders as well as market orders, but in each case there is an associated fee that Linden Labs retains. The commission is roughly 3.5% per transaction, and Linden Labs makes around $16,000 per day from fees. For any player who wishes to cash out L$ for real $, they must use this market and its associated fees. 

Premium Membership

The final way Linden labs incentivises users to own and spend L$ is through a premium subscription. Players opt to spend a monthly subscription that provides three core benefits:

  1. Players receive a direct stipend of L$ monthly, in essence recouping some of their USD costs.
  2. Players can now participate in Premium aspects of the game (Land, Events, Groups).
  3. Players get free ground rent.
Choose your Membership Plan
Second Life Premium Membership benefits and cost breakdown

It’s unclear exactly how many of the daily active users pay for this subscription, but given how old the game is, we would assume that’s a high percentage. 

How Users Make L$ in Second Life

Second Life is a particularly interesting case study as many claim it is not really a game but a virtual world. It comes with no tutorial and no goal or questing mechanics for the players; it stands as an open world sandbox. The interactions and choices that players have regarding what to do in the world are almost as deep as in real life. The majority of people value vanity-based products, and the most valuable properties to own are nightclubs and bars that are all staffed and equipped with real people, as well as purchasable in-game items. The world exists to service the fantasies people might have in real life but want to experience in a virtual life.

Second Life Marketplace
Second Life external marketplace on browser

There is a great deal of wealth floating around, based on the size of the world and the length of time it has existed. Those who have earned and retained L$ primarily want to use it for social interactions and events, particularly 18+ events. If you are a woman and you are willing to work in these more seedy and unsavory aspects of the world, then you can earn wages, in some cases equivalent to real life. Some of the best ways to earn L$ are:

  • Jobs (Hosting, Escort, Waitress)
    • You can search for jobs using external communities on Google
    • Internal Jobs Board
  • Starting a Business (Selling an asset in the marketplace)
  • Buy/Rent Land (Weekly cost)
  • Entertainment/Entrance Fees (Tip your location)
  • External Actions (Become a blogger/photographer of in-game events)
    • Paid in USD
    • Paid in-game items

One of the interesting transactions that occur here is tipping. Tipping is a useful empowerment mechanism that allows individuals to directly pay one another with no gain for themselves. Tips are a common method for paying for social services or actions directly from other players. Tips also serve to bridge the borders between players who have large amounts of free capital and those who don’t. Just like in normal society, high rollers become known and talked about in the world, and tipping creates value and social status within the virtual world.

Who Plays Second Life?

Streamer MEELAVANDE showcasing her outfit to fans

It’s difficult to categorize all residents and players into a single group, but based on what’s currently popular on YouTube, blogs, and Google searches, there seems to be a large African American community and a large number of “club” girls. Many of these players are attracted by the ability to earn and make money and show off their fashion and glam. These communities have created strong secondary communities that are more locally relevant. One such community is called XeoLife, which is an add-on HUD that incorporates more realism for the sim (hunger, thirst, toilet issues) that don’t come as standard.

Streamer MEELAVANDE utilizing Xeolife’s “continence” feature live on-stream

XeoLife’s “day-to-day” activities impact stats that can then be employed in Role Playing. What’s interesting is, there being no specific goals, users desire more and more realism to be added, even if that realism (going to the toilet) is not considered gaming or fun. These actions — eating, drinking, etc. — provide a lot more options for trade. Players with the XeoLife HUD then purchase drinks and food from a large variety of shops and restaurants. The consumption of those is purely optional, and if not done, your sim will never die. Thus, its gameplay point is non-functional, it’s pure vanity.

These sorts of emergent gameplay actions would not have been considered core functionality, and it has been through accepting third party in-game plugins that many use cases (eating, pooping) and industries (restaurants, toilet makers) were created. Linden Labs has had a very open and accepting relationship with plugin developers, but unlike with FB, developers must conform to the Linden Labs’ game engine guidelines, and as such, features are easily embedded within the world for all users.

Marketplace Design Details - Linden Marketplace

Second Life Marketplace
Second Life’s official marketplace design

Linden Labs controls the primary marketplace. However, creators stock the marketplace with all manner of items. These items range from static clothing to animated items, such as twinkling jewelry. Players can also create large pieces of furniture or buildings that can contain multiple moving or animated items, such as jacuzzis or fridges that can be opened. Players create these using a 3D modeling software, and they can rig and animate them too.

Once created, a 3D model and mesh is imported into the world using standard tools. We are not sure if there is a vetting process or if there are additional functionalities, such as interactions with APIs, that can also be baked in, but overall the process is very open and simple.

Direct purchasing of items in-game via conversion service Tilia

Players can then list their items for as many L$ as they want, and as a free and open market, they can actually sell an infinite amount of their items. Linden Labs works with an intermediary, Tilia, to facilitate smooth payments and auto-purchasing L$ when using their marketplace.

How Does Linden Control its Economy?

Linden Labs has very smartly opted for low-touch liberal policies within its virtual world but kept very tight control of L$ through a central exchange. The LindeX exchange is the central exchange of Second Life. Market forces move the external price of L$ in line with supply and demand. This is the only exchange to supply L$, and it only trades a single paid L$:USD. 

LindeX Exchange
Lindex Daily Exchange Data -

Unlike cryptocurrencies, which once created, any participant is able to create an exchange pair on any distributed exchange, Linden Labs has been able to enforce vertical integration as it effectively controls all market participants (Network, Publisher, Developer) for this game.

  1. All transactions take place on properties it controls.
  2. The Virtual World contains no partnerships with other developers, only creators (no one can mod the game).
  3. It built features that were decentralized by design (Marketplace, Exchange, Land) and never sought to actively compete against its users.
  4. It built fair fees within the system but allowed users to withdraw into USD.

Evolution of the Marketplace

Once the currency of exchange had been established (L$) and the methods to obtain or exchange it were clear, the next most important step was facilitating its usage. Linden made a number of specific product features that improved the usability of the marketplace:

  1. Dedicated monthly land auctions (these became a focus of conversation).
  2. Better search functionality outside of the game to find items before you visited the world.
  3. Groups where people could easily share information and buy both in or out of the game.
  4. Improved 3D modeling import tools so that more items could be uploaded more quickly.
  5. Created secondlife:// links that can transport players directly to a hotpoint.
Concurrent Users in Secondlife 2009-2019
Concurrent Users in Secondlife 2009-2019

With each iteration, Linden Labs focused on improving the usability of services and features in the ecosystem. The Historical Daily Concurrency for the game grew initially and then dropped, but from around 2015 onwards, the number of users has remained flat. This is consistent with a game that has found a product market fit for a subsection of games and maintains a steady inflow that equals the old users leaving. Through the times when the L$ exchange rate remained relatively stable, it’s unclear whether Linden Labs was propping up or manipulating that peg, but in general, the market was predictable.


Second Life 3D game island visuals + the 2D abstraction of the world space

Second Life straddles between the ideas of the developer and the network in terms of their economic incentives and control within the environment. On the one side, they have created an open sandbox full of opportunities and features to play with, and on the other, they control the worldspace and on-ramps and off-ramps, such as a network would. One of the primary forms of control is Land.

Land is a finite resource, but Linden often creates more of it; there is no edge to the map, so in essence it is a limitless money earner. However, players want to be where others are, and enjoyment is primarily a function of social interaction over the items you own and use in the game. This makes some land (centrally located) more desirable. In Second Life, land is linked to a direct need. It is the only place that you can store and display items in the game. You are able to buy jewelry and clothes without land but unable to buy other items until you own land. This is a hard-locked gameplay feature behind a monetized asset, since you must purchase a plot of land and pay a tax to keep it. 

  • Private islands can be owned by anyone, and ground rent is paid to the owner. They may also have their own rules, laws, or ban lists.
  • Linden-owned mainland, which ground rent is paid to Linden, but many rules and conventions exist that are enforced.
  • In order to own land, you must purchase it via an auction, and to participate in the auction, you must be a premium subscriber.
Main Grid Regions
Land Ownership in Second Life - GridSurvey

As of 1st September 2023, there are 27,792 regions in the game, with 9,422 being owned by Linden, and the rest being private. These are large areas that can then be subdivided into plots. This model has been replicated in a number of blockchain games, such as Sandbox or Decentraland, because the model is particularly favorable economically and easy to incorporate NFTs into. Simpler games ignore land entirely because it tends to favor whales with large amounts of upfront capital, which then turns the game more towards rent-seeking rather than playing.

Land Auctions

One of the largest earners for both individuals and Linden Labs are land auctions. This is the only way to buy new land. New land is created rarely, but often old plots would go up for sale by Linden. The auction format limits the supply coming in and creates an active pricing market as people bid up the best plots. Linden Labs charges no additional fees on land auctions, but users must be premium players in order to participate.

Key Design Evolutions of Marketplace

Game Design Changes Over the Last 20 years

Unlike other gaming projects which usually aim to have a core loop of players playing in order to win or progress, Second Life’s goal has always been to replicate real life in a virtual world. So Linden Labs released hundreds of extra features over the game’s lifetime. We will focus on three powerful game features that had deep ramifications for the users and marketplace interactions:

Point-to-Point Teleporting

As early as 2005 (2 years after launch), P2PT was a requested feature and was introduced in version 1.10. The power of this feature for more advanced users is exciting — it saves lots of time when traveling around the world. The initial world landmass also grew fast. Land was being bought up and developed quickly, and the time to travel between events or to visit specific people could become many minutes. There was a lot of discussion on the advantages and disadvantages of this in the Second Life Forum. Let’s take a look at the advantages/disadvantages for each of the parties of the game:

Point-to-Point Teleportation
Point-to-Point Teleportation advantages vs. disadvantages

Overall, the P2P feature had more advantages than disadvantages of supporting players within the gaming world. It led to much more engagement with user-built shops and events and generally increased the time spent in the game itself. It is very difficult to find any form of usage data, but we would assume that the more time spent in the game led to a greater number of premium accounts and a greater inflow of USD via the LindeX exchange.


Version 1.12 worked on adding a large amount of group functionality. Although groups existed in the game (crowds of people who could communicate with one another), they were not used excessively due to functionality. Linden Labs prioritized feature development in order to enhance three main areas:

  1. Ability to add more role types to any group (chairmen, accountants, plebs).
  2. Residents can now join multiple groups; initially, they could only belong in one.
  3. Owners became admins and could now assign or remove roles.

Although simple, these changes were effective in helping players manage themselves. Due to the inherently complex nature of people interacting without a clear goal, groups lacked the ability to manage and organize the people within them. Rather than remain as they initially were, representing large, informal groups, the change enacted more specific small groups with multiple roles that could each have assigned powers. This formally allowed players to dictate their own power structures within the game. These features were probably developed to combat a rise in external sites and forums managing how people found things in-game.

The systematic integration of features which dissolved power from the developer whilst also removing power from third party sites set up to facilitate these things enhanced the in-game experience.

Vacant Plots is a website set up to specifically investigate what the parcels of land are used for in Second Life. As land has been generated infinitely and released over time, Linden Labs doesn’t reclaim plots that players have left dormant. These plots now represent 21.7% of all the land within the world. Most of the used space is also clustered together, so the number of dormant plots gives the sense of a ghost town.

From a game design perspective, this is quite difficult to solve as removing user-generated content has a huge negative effect if that user ever wanted to restart or replay the game. Most synchronous multiplayer games solve this through matchmaking to remove non-participating bases or plots from the game, but in a true virtual world, that is impossible. This feeling of vacantness has an ongoing drain on active users and would be one of the key areas Linden might need to make a seismic change to rekindle user activity.

Key Takeaways

Linden Labs owns and runs a vertically integrated virtual world with a positive economy that is still active after 14 years. This is a very difficult thing to achieve as a game developer. It has continually added and grown an active user base by supporting creators and allowing an internal ecosystem to thrive, without too much oversight. We think it is safe to say that the company didn’t expect its virtual world to be as it is today, but nevertheless, it’s still happy with its progress. 

Freedom to Create

Linden has let its community take over. The experience set out with no goal, and it is a product of the people who cared about it. This was different from the Valve approach. Linden accepted that with any form of large decentralized community, you must ensure that the community itself benefits more than the network. The more active they are, players enjoy a mutual benefit when creating or using other players' goods and services. Linden developed more open and helpful tooling for creators to increase the number of models and interactions that people could have.

One potential critique of Second Life is its expansive nature. Linden Labs has remained greedy throughout by creating more Land Plots. This has led to an expanse horizontally for players as they each want to own a piece of land. Because of the sheer scale, this can create the sense of a digital ghost town, compared to the number of active participants. Activity should be aggregated at the expense of further monetization, or else the community itself will start to leave. This comes back to one of the primary functions of a network — to become more convenient than what previously existed. As Second Life has grown, this has not held true.

A Stable and Trusted Exchange

The economics of the L$ are clear and simple and have stabilized. This stabilization has allowed players to trust that there will always be a way to extract value from the game if they invest time. Linden has not tried to floor the market or take Ponzi-like mechanics from the purchase of L$, and thus over time, the game's gross value of items has grown. A deeper investigation will be needed into specific events that shook the game’s world.

Linden Labs provides the best example of a controlled virtual world with direct on- and off-ramps. The world has replaced all FIAT currency with a new form of value that only exists within it. This wouldn’t be possible in a blockchain-enabled game, since on-chain you don’t have this form of control. It’s unclear whether if Linden hadn’t exercised as much control as it did, would the L$ have retained its value and flourished?

User Freedoms

Unlike in many games or platforms, the most interesting thing about Second Life is what the community gets up to, what it creates, what it values. These questions were never specifically answered in the game design and have evolved over time through mods, HUDs, groups, and communities. Linden has done a good job of staying impartial to those actions of the community (18+) whilst protecting players who don’t want to take part in that (with safe adult islands). As the community developed and created more items based around partying, Linden responded by helping the community to throw more parties

These actions help to maintain the community and make it feel like it’s listened to. The sustainability of users becomes one of the most valuable aspects of any game. Linden’s clarity on what aspects it kept control of (land, exchange, single currency) while allowing users to own (items, events, groups, and HUDs) was a good split that others could mirror.


Non-blockchain-enabled virtual currencies and marketplaces serve as valuable examples of what drives people to find value and enjoy themselves. The three case studies above all show how centralized creators seek to control players either via a marketplace, virtual currency, or both. Creating a virtual currency like FB Credits or L$ revealed there are many perils in managing price/conversion/creation, while the Steam Marketplace USD-backed virtual assets required a hard floor of $0.05 to ensure items remain valuable over time. In all cases the developers required active feature development and maintenance to ensure that a strong and healthy market continued to exist without damaging the game or players.

What stands as a testament to the gaming industry is how players quickly trial and test complex financial experiments for items in the games they love. Players quickly and actively engaged with a new marketplace immediately in all scenarios. They all discovered novel ways to trade directly with each other, either to bypass fees (DMarket) or for convenience (gifting in Second Life). Players quickly priced rare, powerful items, and then trading them captured the largest attention and most transactions on each market.

Developers benefited the most when they put the game first. All the games required fun, progressive, and interesting features first, with a healthy marketplace being second. Successful developers didn’t call it quits on launch. Most of these games are 5+ years old, if not 10+ years old, and still enjoy a thriving community of players. There was evidence of a smaller proportion of hardcore gamers who play games to earn money, but there was also evidence of scams and hacks. It wasn’t clear from all the game case studies whether the majority of users were motivated by cashing out. Valve showed how deep loyalty and fandom could be capitalized on through metagames and esports, creating alternative industries that build and maintain lasting IP fanbases and create more revenue sources. Each additional fan increases the action on the marketplace.

Control was a major theme for each case. However, the most successful marketplaces (SL and Steam) remained reasonably flexible over what was on sale and how items were bought. The major aspects of control were the on- and off-ramps of the system — something that would be impossible on a blockchain, creating a big potential challenge.

FIAT currencies, and especially the dollar, have still remained dominant in how all members of the value chain measure wealth. We believe no matter what actions are taken, the USD is still set as a measure to the ultimate value of the asset. Second Life showed how explicit control in and out of the game can act as a safeguard against terrible runs on the value of your in-game currency. Players within the world actively use L$ for pricing, but within the external marketplaces conversion rates back to dollars are common. Facebook Credits’ system showed how ill-conceived virtual currencies that inhibit convenience always lose out to those that are widespread and easy to use. Usability and direct interactions with a marketplace in-game increase usage in all cases, and DOTA2 and Linden’s in-world shopping showed that the more embedded the transactions within the game are, the more likely players are to make a purchase.

Naavik has helped 250+ games teams with game & economy design, market research, user acquisition, and more. If interested in how Naavik can help your team, make sure to learn more and get in touch.

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