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Executive Summary

The article discusses the transformation of the iconic massively multiplayer online role-playing game (MMORPG) Ragnarok Online into the Web3 space. Originally developed by South Korean company Gravity Co., Ltd. in 2002, the game gained worldwide acclaim for its unique 2D graphics, character customization, and fantasy world inspired by Norse mythology. While its popularity waned over the years due to changing gaming landscapes, Ragnarok Online’s community persisted, and its transition into the Web3 realm has brought it back into the spotlight. Through a partnership with Maxion, the game has integrated blockchain technology and NFTs, offering insights into the potential of combining traditional games with the Web3 ecosystem. The article delves into the game’s market design, mechanism design, and token design, highlighting its economic and structural changes. It concludes by emphasizing the importance of adapting Web3 features to revive nostalgia-driven, traditional games and encouraging peer-to-peer trading within the platform to retain value within the ecosystem

Ragnarok Online

Ragnarok Online, a massively multiplayer online role-playing game (MMORPG) developed by South Korean company Gravity Co., Ltd., first emerged in 2002 and quickly gained global popularity thanks to its charming 2D graphics, extensive character customization, and a unique fantasy world inspired by Norse mythology. It not only became a cultural phenomenon in South Korea but also enjoyed a dedicated fan base in various countries thanks to the game’s engaging social features, vibrant community, and frequent game expansions. 

The game features a class-based system where players create characters with unique abilities and roles. These characters explore an open world, encounter a wide array of monsters, participate in different quests, and interact with other players. The combat system is real-time and requires strategic thinking, with players needing to master the intricacies of their chosen class’s skills and tactics. Like most MMORPGs, the social aspect of the game is a core element. Players forming guilds, trading items, and engaging in player-versus-player battles contribute to the immersive and community-driven experience that has made Ragnarok Online a beloved classic in the MMORPG genre.

Ragnarok was able to monetize through a wide variety of ways, most of which are how traditional MMORPGs earn. Microtransactions, In-game Advertisements, and subscription models were the main economic loops that directly influenced the game’s revenue. Players can purchase in-game items, cosmetics, character name changes, and other virtual assets and benefits that enhance the gameplay experience through in-game or real-world currencies. Some versions of the game also explored in-game advertisements where real-world brands are featured inside the game. But the main revenue model comes from player subscriptions. Players had to pay just to access the game, while others paid more to be part of the VIP system that gives extra perks than the normal gameplay experience.

Journey to Web3

Ragnarok’s popularity has faded through the years, especially with the emergence of other gaming genres, MMORPG games, and as the population of players aged. Some of its international servers started closing down, starting with its European servers in 2018 and eventually closing down its official servers in South Korea in 2021. Though this marked the end of an era, this wasn’t the death of the game as the community still ran various private servers and mobile versions to keep the game alive.

Gravity’s first venture into the world of Web3 and blockchain was through The Sandbox, a popular Metaverse known for the various experiences built on its platform. Ragnarok LAND hosts various NFTs and content that mainly makes use of Ragnarok’s IP, allowing players to interact with the platform using Ragnarok characters. 

But the more interesting Web3 move by gravity was partnering up with Maxion, a blockchain-based game developer company that provides an NFT marketplace. This service essentially transforms a traditional Web2 game into a fully functioning Web3 project. Virtual economies existed way before blockchain was even invented. This makes Ragnarok Landverse a perfect case study on how blockchain technology can be integrated into gaming.

The article follows an analysis of Ragnarok Landverse using the Economics Design framework. The goal is to highlight the true value of blockchain technology added to traditional games and how these additions change certain aspects of the game’s formerly closed economy. It also offers insights into what developers should consider when building blockchain features to an already existing and popular IP.

Market Design

Market design is all about designing the systems where economic agents will be interacting. This takes into account four factors, thickness, congestion, ease of use, and safety. Thickness looks at the overall attractiveness of the platform. Congestion focuses on the infrastructure available allowing numerous transactions happening at the same time. Ease of use reflects how users get onboarded. Safety highlights the risks hedging the platform undertook.

Thickness and ease of use came relatively easy for Ragnarok Landverse thanks to the Ragnarok Online community. It is essentially the same base game that attracted the same users from the original community. It still has all the appeal the original game had, plus the added factor of nostalgia to help boost its player base. This is evidenced by over 300,000 pre registrations it got in September of 2023 as the game launched.

The increased attractiveness might have caught the team off guard as congestion seems to be an issue early on in the game’s lifespan. At the time when only one server was up, players have been ranting on discord and sharing their stories of how hard it is to connect in the game, sometimes taking hours just to be able to log in. Though another server just recently released, this is a major point that developers should consider when they take an already existing game and add Web3 attributes to it.

In terms of ease of use, the onboarding to the game is straightforward, especially if you’ve played a version of Ragnarok Online previously. But Maxion has opted to take it a step further by introducing an auto attack feature obtainable by paying premium currency. This mechanic allows players to leave their characters on auto and do other tasks instead, making multitasking while playing the game completely possible.

Speaking of Web3 attributes, safety is where these blockchain characteristics shine most in this version of Ragnarok. Previously, players would trade in-game currency, items, or cosmetics for fiat directly with each other, either through third-party sites or through peer to peer trading. These kinds of deals, especially when done online, pose a risk of being scammed for all parties involved. Maxion integrating a Web3 marketplace for these transactions to occur helps minimize this risk if the transaction happens on the Web3 platform.

Mechanism Design

Mechanism design defines the rules of the ecosystem and how each of the economic agents react to one another and behave while inside the virtual boundaries of the platform. This is where the policies of the protocol align with the expected outcomes of the different interactions of the platform, which in turn pushes the ecosystem towards a desired objective.

Majority of the mechanism design of Ragnarok Landverse is largely based on the original Ragnarok Online game experience. This essentially means that the core game loops, revolving around levelling up a player’s character, crafting top tier items, and participating in player vs player activities, as well as all the rules that were set in the original game still apply. This also means that the majority of the revenue streams applied to the original game are also viable in its Web3 version.

Mechanism design can be broken down into three main categories, governance, non-financial incentives, and structure. Governance focuses on problem resolution and overall decision making inside the ecosystem. Non-financial incentives have to do with the intrinsic motivation that users have and the value they obtain from the game. Structure highlights how the participants transact with each other and how they collect information from the ecosystem.

Since Ragnarok Landverse is based on a traditional MMORPG, the governance mechanism is still centralized to the development team. Any disputes are coursed through a customer service channel on their Discord or through their website.

In a similar way, the non-financial incentives inside Ragnarok Landverse ultimately come from how the game was traditionally designed. Players grind to increase their level and craft strong items in order to compete in “end game content” like PvP and Guild vs Guild events. Reliving the nostalgia of playing the game is also another non-financial incentive players get by participating in this ecosystem.

The main difference from the traditional game comes in the structure of Ragnarok Landverse’s mechanism design. Peer to peer trading within the ecosystem is limited to quest items, forcing players to trade high value digital assets, like weapons, armor, cosmetics, and cards, on Maxion’s marketplace instead of inside the game. One interesting note here is that Maxion opted to put a floor price of $10 on all items that can be listed on its marketplace, making players really think which items will be worth listing.

Another interesting feature added is the availability of daily stamina. Stamina is needed to open up loot boxes that give players the chance to acquire a high value item. This essentially limits the supply of these items, making it more valuable. It is also needed to mine Adamantine Blessings. More on that when we discuss the $ADAM token. Essentially, this mechanic gives the team the ability to charge players who want extra stamina within the game by offering up the sale of stamina potions in their cash shop.

Players will have to purchase a VIP subscription in order to be able to mint their in-game assets into NFTs. The developers also opted to implement an offchain in-game currency deflationary measure in the form of a 20% tax rate on actions that prompts Zenny to change hands. The team did say that the tax will go towards the guild wars reward system later on.  Lootboxes were introduced to replace monster drops so players would have more flexibility in choosing where to level up without sacrificing the acquisition of certain items. The team also added new game design mechanics that gives utility to one of its high-value NFTs, Land. 

Token Design

Token design focuses on crafting the core functionality of a protocol’s cryptocurrencies, making sure that token incentives follow the rules of the economy and aligns with the overall objectives set by the team. For Ragnarok Landverse, they have mentioned two specific tokens inside their platform, the $ION and $ADAM token.

Token design is broken down into three parts, token policy, financial incentives, and architecture. Token policy looks at the monetary policies inside the ecosystem and how the tokens are valued. Financial incentives focus on platform activities that reward the token and the returns a player gets from holding the token. Architecture zeroes in on the property rights, distribution structure, and the codes related to the smart contracts for the token.

Use cases of Ragnarok Landverse’s tokens will be the focus for the game’s token policy and valuation. $ION, the game’s main token, has its value pegged to $USDC at a 1:1 valuation. This token is mainly used to purchase assets off Maxion’s marketplace, and can be converted back to $USDC if a player wants to cash out. This part of the token economy is straightforward. $ION tokens can also be converted into a premium in-game currency called moonstones, allowing players to purchase temporary in-game buffs and other items.

The interesting part comes from the $ADAM token as the game’s utility token, used to upgrade the weapons and armor inside the game. $ADAM can also be swapped to $ION, and eventually $USDC. The token itself isn’t out at the moment, but an offchain and in-game equivalent is already present to facilitate vertical progression of in-game items. 

According to their whitepaper, $ADAM can be acquired from converting Adamantine Fragments. These fragments are gathered by farming ores on different parts of the map. The catch is that the valuable ores that produce large amounts of Adamantine Fragments are located in areas where Player vs Player (PvP) combat can occur, adding an extra challenge to acquiring this material. It can be inferred that the value of the $ADAM token is directly tied to the demand players have to upgrade their in-game items, and the difficulty of acquiring Adamantine Fragments to convert into $ADAM tokens.

So how do players earn in this ecosystem? The main financial incentive stems from the sale of in-game assets that have been upgraded in-game. There are certain risks involved with upgrading your item, like receiving bad enchants or getting your item destroyed completely. The better the upgrade, the higher the risk. This mechanic makes high level assets valuable to those who don’t have the time, or the guts, to upgrade their items.

Most blockchain games associate earnings with tokens players get from participating in the ecosystem. As outlined earlier, the closest mechanic that Ragnarok Landverse has to that is their $ADAM token game loop. But even then, players have the option to convert their Adamantine Fragments into Adamantine Blessings to upgrade their items. 

The team also opted to integrate a new mechanic with the introduction of high value NFTs in the form of Land NFTs. Landowners can put up their land NFTs for rent in exchange for $ADAM tokens. Renters would receive various in-game advantages, including teleporting, temporary buffs, and a chest box, from renting land.

In terms of token architecture, the $ION token was designed to be the main stable currency in the ecosystem, bridging the blockchain world to midgard, the realm where most activity in Ragnarok Landverse is set. For $ADAM, it’s more of a utility token connected to in-game interaction. $ION tokens are created from $USDC, while $ADAM tokens are a mix of in-game activity and Moonstones, an in-game premium currency players get from putting $ION in the game.

Token Economy Analysis

Ragnarok Online already has a lot of mechanics that serve the purpose of a token sink connected to the main game loop of the platform. Examples include upgrading your equipment and purchasing buffs and other utility items using a premium currency. Cosmetics are also available in the game which can be acquired through a gacha system. A 20% tax to all peer to peer zenny transactions, plus all the items required while levelling up, depletes a player’s in-game currency reserves fast, forcing some to sell items from the cash shop. 

What Maxion added to Ragnarok Landverse was swapping the way users top-up and bring value inside the economy, from fiat purchases to crypto tokens ($ION). To add utility to the token, Maxion created mechanics to consolidate the player to player purchases from inside the game to their marketplace. Since the game itself already has an economy with great token sinks, competitive players find a need to constantly top up in order to meet their in-game objectives.

One of those objectives is item progression as this is one of the ways players can earn from the game. This is nothing completely new as most traditional MMORPGs have a similar characteristic. The only difference is that Ragnarok Landverse allows players to freely trade these digital assets on a centralized platform instead of a third-party one.

The interesting mechanic relates more towards their $ADAM token. Since ore deposits that contain large amounts of Adamantine Fragments are found on maps where PvP can happen, acquiring the material becomes all the more competitive. This is especially true for players who have already reached the max level for their characters and are looking to participate in end-game content.

Because these Adamantine Fragments are tied to item upgrades, price action for the utility token is something to watch out for. $ADAM tokens are not yet available as of writing,  but the Adamantine Blessings needed to upgrade items are already available in-game through daily quests. Bonus blessings are given to VIP holders for additional utility to acquire the item.

Ragnarok Landverse is essentially a free to play game that Web2 gamers can easily jump into. Maxion opted to go a subscription route, in the form of VIP membership, for players who want to participate in the supply side of its economy, targeting the Web3 gamers. Purchasable with Moonstones, VIP membership is also another token sink that gives utility to the $ION token. 

Land is the high value asset that Maxion looks to introduce to Ragnarok. Though it offers a lot of perks, accessing the land is assumed to be only available by talking to the “land manager” on each map. Therefore it is very location based and that directly affects the demand for certain land NFTs. 

Since the team opted to introduce lootboxes, players have more freedom to choose where to level up. That feature affects the demand of landplots players usually go to because they’re farming a certain item. Additionally, the automation in attacking also speeds up the levelling of characters, making demand for lower level land plots more dependent on how many new users come into the game.

Web2 To Web3 Learnings

Ragnarok Landverse is a great case study for a fully traditional game to transition into Web3. There are a lot of learnings that developers can take into account from how Maxion is building out their blockchain game.

From a market design perspective, make sure that the game’s infrastructure is ready for when the original community of the game comes in. Since fully Web2 games already have a significant following, especially if you’re reviving old games, then developers should be made aware that a large chunk of its original community will want to play the game, especially if nostalgia is a big factor.

Do not just rely on the original mechanics of the game. Web3 adds another layer to the game in the form of digital ownership and the possibility of extracting value from the game. Ragnarok Landverse opted to introduce more burning mechanics at key points of the ecosystem even if the original game already had a lot of it. 

Promote peer to peer trading on your platform. Maxion opted to create peer to peer trading limitations in the form of only allowing certain items to be traded as a way to force people to use their marketplace. Though I think this is taking it to the extreme, I do agree that trading digital assets for cryptocurrencies should be done through the platform. The logic behind disabling peer to peer trading of certain items inside the game is to keep the value inside the ecosystem by preventing players from trading those items between themselves in game, then making a payment on a different platform. 

The move by Maxion to create a Web3 version of a traditional MMORPG  highlights how digital economies have been existing way before cryptocurrencies and blockchain. Maxion added the infrastructure needed to facilitate trade between economic agents within the platform with the use of blockchain technology.