Yesterday, the developer team of Cyberverse, an indie blockchain game on the Ergo blockchain, released a somewhat controversial update.

Previously, each CyberCitizen (of which there are 8,081) earned a specific amount of CYPX (the project’s token and in-game currency) daily. Players could manually claim these rewards at the bank, which ranged from 10 to 440 CYPX depending on the rarity and generation of the NFT.

Tens of thousands of CYPX were distributed to players every single day.

Additionally, players could earn extra CYPX through various activities in the game. These included playing mini-games, selling items obtained from fishing, mining, and gardening, mining CYPX with their rigs inside their apartments, and trying their luck in two different games along with daily free and VIP spins in the casino. These payouts also came from the treasury wallet.

The daily payouts of CYPX from the treasury wallet to the players essentially inflate the circulating token supply. While this method is a relatively fair distribution method (you could even call it a form of Proof of Work distribution method, at least for playing payouts), it has to be sustainable and well-balanced.

Frankly, until yesterday, it was not.

I don’t have an overview of the total payouts, but I tracked my own earnings for the entire month of April. As an early supporter and very active player of this project, I own 4.2% of all Citizens (most of which are Gen3). The last day before the halving, I received 20,411.8 CYPX from the bank, and this number has been increasing almost every day since I leveled up most of my citizens by playing with them (leveling up a CyberCitizen gives you a small bonus).

Through gameplay (exploring, mining, gardening, leaderboard rewards, etc.), I earned an average of an additional 30,000 CYPX each day. Of this, 8,500 CYPX came from profits in the community market, which does not count as inflation since it’s a real peer-to-peer economy.

In total, I earned just over 1.3 million CYPX, of which approximately 1.1 million were “new tokens.” So, 4.2% of the “population” drained more than one million CYPX from the treasury within one month. That’s roughly 0.25% of the total token supply. Potentially every month. Add one and one and you know that we would run into a problem very quickly.

It’s important to note that this isn’t an issue of concentration of CyberCitizens in the hands of a few whales. One player representing 4.2% of the population can’t fully utilize the stamina and energy of all the Citizens, meaning a lot of “CYPX generating potential” is actually wasted. A player with 50 citizens likely generates less CYPX by playing than 50 players with one citizen each, as players with only one citizen probably make full use of all the available stamina and energy. Managing 50 Citizens is challenging; with 300 Citizens, it becomes impossible.

Consequently, if in the near future the CyberCitizens NFTs are better distributed among more active players, the problem of high inflation would worsen.

The new update introduced two new features, all aimed at reducing the current high inflation rate:

Daily Reward Halving: CYPX rewards for CyberCitizens are being cut in half in 5 steps. The first step occurred today, May 1st. The second halving will occur in one month, the third in three months, the fourth in six months, and the last one in ten months. By that time, the rewards will have been reduced by almost 98%.

NPC Sales Limits: Players can no longer sell their items obtained through activities such as fishing, ore mining, and gardening in unlimited quantities. For this, an almost fetch-quest-like mechanism was introduced. Merchant NPCs now only accept certain contingents of items, which refresh every six hours. The prices of items now vary between 80% and 120% of the standard price, which has also been generally lowered. Instead of just farming and selling items, players now need to play more tactically and regularly check for favorable offers from the merchants.

Rewards for playing mini-games, mining CYPX with rigs, and everything casino-related were left untouched for now.

Taken together, these adjustments will radically decrease the payout of CYPX from the treasury over time and simultaneously focus more on rewarding players who actively engage with the game rather than inflating the circulating token supply through passive NFT staking. In the foreseeable future, I assume that these elements will likely be adjusted again when new game mechanics like PvE (player vs. environment) are implemented to shift the focus to more engaging gameplay than simply exploring and fishing.

Cuts like these hurt. My daily rewards will decrease dramatically over time, and I can earn less by playing the game. But is this really the case? We can look at it from two perspectives: in token terms and in fiat terms.

1. Fiat Value: With a price of 1 CYPX at $0.002 USD, my daily rewards are now cut in half, down to approximately $20 from $40. And in one month, it will only be around $10. But is this true? Players or NFT holders who sold their earnings (“cashed out”) will now only be able to sell half of what they sold before. Lower inflation means lower selling pressure, and lower selling pressure means a higher price, assuming buying pressure remains the same. Studying the CYPX chart, it becomes apparent that it is shaped by larger buys accumulating the token and consequent smaller sells, most likely from players or NFT holders cashing out their earnings or daily rewards. This is, by the way, a completely legitimate thing to do; no judgment here. However, under the new circumstances and without giving any financial advice, it’s not unreasonable to assume that the token price will relatively appreciate after cuts in inflation. I remain extremly bullish, now more than ever before.

2. Token Value: From the perspective of someone unconcerned with fiat value but eager to acquire more tokens by playing rather than buying on a DEX — whether for reasons of fiat price speculation or achieving in-game wealth — the reductions in token distribution likely feel more painful. However, these changes also prevent further concentration of CYPX in the hands of NFT whales by shifting from a “Proof of Stake” to a “Proof of Work” style of token distribution. Originally, the daily staking rewards were introduced as a bonus for NFT purchasers and supporters of the project during a period when the game offered limited features. However, those times have passed, and particularly in the coming months — as significant portions of the roadmap are implemented — daily staking rewards should become a relic of the past.

The ultimate goal of CyberVerse is to foster a self-sustaining, vibrant economy with CYPX as the in-game currency. The game is moving away from mindless grinding and selling items to NPCs for CYPX, as well as earning staking rewards for owned NFTs only to dump them on the market. Instead, the focus is shifting towards more meaningful interactions within the game. For example, if Player A enjoys mining ore and needs plastic plates for crafting energy cells, there could be a Player B who expends their energy dumpster diving for these plates to sell on the community market. Player A might use the materials they mined to craft special armor, which they then offer on the community market for Player C, who prefers battling mobs and needs quality armor but doesn’t want to mine. This setup ensures there are roles and earning opportunities for everyone, allowing players to accumulate or spend CYPX to achieve their personal objectives. As the game expands in scope and player base, it’s crucial to establish a healthy and balanced economy. I believe that cutting inflation now is a vital step towards this future.