Lotteries, Gachapon (ガチャポン), and Metaverse Loot Boxes ✨🪙

Exploring NFT distribution models based on loot box mechanisms


Table of Contents 🕹️

  1. Introduction 🐙

  2. The Metaverse Loot Box 🌠

  3. Gachapon (ガチャポン), Trading Cards, and Virtual Treasure Boxes ⭐

  4. Let’s Go Raiding, Anon ⚔️

  5. Further Down the Rabbit Hole 🕳️


“There are two great pleasures in gambling; that of winning and that of losing.” 

French proverb


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I. Introduction 👾

Web3 is the ultimate MMORPG.

Our digital identities are the amalgamation of our on-chain actions, profile pictures, and ever-growing inventories of NFT loot. We go on cooperative raids with player guild DAOs, slaying Moloch together for crypto rewards. And as we amass our electronic treasuries, we display it across the interoperable and increasingly spatial webaverse.

Kei Kreutler discuses this idea in Inventories, Not Identities:

Underpinning [the metaverse’s] “unprecedented interoperability” will be web 3.0 accounts, because they bring persistent and unique identity to persistent worlds. Even beyond supporting interoperability, web 3.0 accounts are the likely candidate for navigating the metaverse because they offer wallets, identity, and login functions in one platform. Within this portrait, web 3.0 and, in particular, multi-signature accounts begin to function much more like in-game inventories, which hold not only assets but identities as assets, complete with cross-platform and cross-game narratives. These identities can be worn like clothing suited to their platform, and their accountable reputation follows them. These identities, also, can be cooperatively shared.

If our wallets are our inventories and our digital collectibles are our loot, then the mechanism by which we acquire them must be similar to raids, quests, and loot boxes. And it is seemingly true—web3 players complete bounties, raid together as DAOs, and participate in loot boxes through the NFT minting experience.

In this issue, we’ll discuss the latter—how the loot box is being adapted for web3 in the form of NFT drops, digital lotteries, and gacha-style distribution models.

II. The Metaverse Loot Box 👾

The current NFT distribution model is very similar to traditional video game loot boxes. For those unfamiliar with the concept, a loot box is a consumable virtual item that is redeemable for a randomized selection of digital goods that are typically avatar customization options, in-game equipment/skills, and other collectibles.

The randomization aspect is what makes loot boxes particularly addicting. A successful loot box roll can release large amounts of dopamine.

Jamie Madigan , a Ph.D psychologist explains:

If you come across a chest in a loot-oriented game, your brain releases dopamine because opening a chest in the past has resulted in coveted loot. Making things more complicated, unexpected meaningful loot results in a bigger dopamine hit, which keeps players coming back for more in the hope that above-average rewards might again ensue.

The trick, though, is that the sporadic nature of loot means our brain is constantly trying to figure out how to get that dopamine hit, despite the other, logical parts of our mind knowing there’s no way to actually control the unsystematic environment.

Psychologists call this 'variable rate reinforcement’.

"The player is basically working for reward by making a series of responses, but the rewards are delivered unpredictably," says Dr Luke Clark, director at the Center for Gambling Research at the University of British Columbia. "We know that the dopamine system, which is targeted by drugs of abuse, is also very interested in unpredictable rewards. Dopamine cells are most active when there is maximum uncertainty, and the dopamine system responds more to an uncertain reward than the same reward delivered on a predictable basis."

Video game loot boxes exploit this psychological system by amplifying the variable rate schedule through leveling systems, rare add-ons, and in-game currency. XP and rare collectibles combine to keep the reward system interesting.

Collectibles in general can create feelings of compulsion. Avid collectors have been documented as feeling as if they are extending oneself through their collection. In our web3 future, our collections become primary focal points for portraying your identity to others, so it creates an even stronger connection than before.

All of this likely stems from the survivalist mentality of our ancient ancestors. Our predecessors scoured bushes for food similar to how web3 natives scour randomized mints for rare loot. Maybe millennia of participating in RNG food drops has made the human psyche evolve a desire for loot that follows us into our technological future.

III. Gachapon (ガチャポン), Trading Cards, and Virtual Treasure Boxes 👾

But the loot box has a more recent past than hunting and gathering. Humans have long had a natural affinity for surprise games, random drops, and RNG rolls.

Gachapon Machines

One such example is the Gachapon machine.

Gachapon (ガチャポン) are vending machines filled with a variety of small collectibles hidden inside of plastic capsules. Players deposit some coins into the machine, rotate the handle, and receive a plastic capsule with a unique and random prize inside. While the Gachapon machine is primarily popular in Japan, the mechanic used is extremely similar to booster packs, ‘blind purchase’ toys, and video game loot boxes common throughout the world.

The gacha mechanic is ubiquitous in digital games, but it evolved from analog origins: the invention of the gumball machine in 1888. The original gumball machines were relatively bland, allowing one to insert a coin and receive back a stick of gum. It wasn’t until 1907 when the machine was upgraded to an attractive metal version that dispensed colorful balls of gum that it became overwhelming popular. The gumball machine was later exported to Japan in the 1920s and 1930s, and by the end of the American occupation after the Second World War, Japanese children were exposed to similar machines that dispensed small imported American toys. It was so popular that BANDAI Corporation trademarked the “gashapon” machine in 1977.

While the entire NFT minting process is reminiscent of the Gachapon machines of Japan, no projects quite capture the look and feel of the machines better than Doki Doki.

Doki Doki is a gamified marketplace platform that combines NFTs, Gachapon machines, and yield farming to create a fun and addicting NFT collecting experience.

Players are able to collect NFTs from various artists, brands, and projects through digital Gachapon machines. Artists can deploy their own Gachapon machines loaded with custom NFTs. Yield farmers can farm tokens by staking or providing liquidity for the native $DOKI and $AZUKI tokens.

The project recently announced in their v2 roadmap a mission to gacha-fy everything. They plan to add support for third party collections and NFTs, turning the DeGacha platform into a distribution protocol. DeGacha’s gamified model could be used to distribute digital art, in-game items, virtual land parcels, and more. For example, Axie Infinity could stock a machine with a variety of Axies and give players a chance to roll a rare Mystic or land parcel with all proceeds from the machine going directly to the Axie Infinity community treasury.

In addition, a new feature is planned to be rolled out allowing for the distribution of encrypted files alongside NFTs—a model whereby creators could have unlockable content (e.g. NSFW content, source files for interoperability, redemption codes for physical items, etc.).

In a push to integrate into the metaverse, Doki Doki plans to distribute 3D interactable Gachapon machines into existing virtual worlds (e.g. Decentraland). It isn’t difficult to imagine the Gachapon vending machine being the primary infrastructure for NFT sales within these games.

There is something particularly fascinating about extending Gachapon machines to the metaverse as a distribution mechanism. Rolling for virtual land or rare art in a highly gamified collectible experience seems like the ideal way of distributing NFTs in-game, and DAOs and artists could utilize this mechanism to increase community engagement while improving profitability as players attempt to obtain rare loot.

Trading Cards

Another analog version of the modern day loot box is the collectible card game. Collectible trading cards date back to almost 150 years ago when cigarette cards were introduced in the 1870s as a way to stiffen flimsy cigarette packs. These cards typically featured images of major league baseball players, and they became an enticing gimmick that proved effective at drawing interest from buyers speculating on which card they would pull next.

Today, online trading card games such as Magic: the Gathering Arena and Hearthstone sport over 3 million active players and bring in half a billion dollars in revenue. Digital trading card games tap into our loot-loving psychology, and it appears the advent of crypto technologies such as NFTs will likely upgrade the experience’s ownership model, making the cards more satisfying to collect and the rewards greater than ever.

Parallel, a sci-fi themed digital collectible card game, is an example of a web3 application embracing the trading card distribution model for its NFTs.

In Parallel, players find themselves in a universe where Earth’s resources have been depleted. Scientists, in a race against extinction, deployed a new type of renewable energy by augmenting nuclear fission with anti-matter. However, the nuclear fission sites became radioactive centers during a catastrophic event known as the Priming. This forced a mass exodus from the planet. But the Priming ultimately resulted in transforming the Earth over time into a radically abundant utopia. Now, the human colonies which have grown distinct from years of separation, armed with new technologies and biological advancements, descend back to Earth to claim it as their own.

Gameplay for Parallel is still in development, so it currently centers around collecting cards from purchasable booster packs during scheduled drop events. In the future, gameplay will focus on 1v1 pvp matches where players compete using their own constructed decks similar to Magic: the Gathering. The game will feature a sophisticated resource system, the ability to modify decks to match distinct playstyles, and special heroes known as Paragons that can define gameplay metas.

Tiered packs allow collectors to pay for higher chances of rare cards, a common feature of booster pack-style loot boxes. Card types range from standard editions of varying rarity to pre-sale ultra-rare Prime cards, and include concept art, special editions, and asset cards which can be burned for $PRIME, the ecosystem token. Some cards come with physical editions that include holofoil and augmented reality graphics when viewed through an AR filter.

Booster pack randomized drawing has a long history and has been shown to be wildly successful for engaging collectors. NFT projects that tap into this card game collectible mechanism could have a distinct advantage over traditional minting projects.

Lotteries

At its core, loot boxes are perceived as gambling mechanisms for distributing rare loot. A lottery then is just another form of loot box—a player purchases tickets and may roll the rare prize.

The market leader in decentralized lotteries is PoolTogether, the no-loss prize game protocol. For a detailed review of PoolTogether, no-loss savings accounts, and the history of lotteries, check out this early issue on the topic.

In short, PoolTogether enables a form of on-chain no-loss lottery prize games. While this model is exciting solely for its ability to distribute monetary prizes to winners randomly without any cost to the user, it also has what is currently an under-used feature for distributing loot—the PoolTogether Loot Box.

The PoolTogether Loot Box is a permissionless container for ERC-20 and ERC-721 tokens. Anyone can deposit tokens to the contract address, and during each weekly drawing the first-place winner receives both the monetary rewards and the items in the loot box.

Some of the most interesting Loot Box awards thus far have included the first tokenized essay, Axies from the Play-to-Earn game Axie Infinity, a Genesis shirt from Saint Fame, and social tokens from Alex Masmej (the first individual to ever tokenize their future personal income stream).

PoolTogether’s Loot Box container could be a perfect vehicle for generating interest in new projects. Imagine if in addition to the potential cash prizes, you could randomly roll a loot box stuffed with 1/1 artworks, profile picture NFTs, meme tokens, an encrypted file with physical swag redemption codes, and more.

Virtual Treasure Boxes

But beyond just the gambling aspects of loot boxes, there is another mechanism for distributing loot that can be ported to web3: raiding dungeon bosses together in a party. As mentioned in the introduction, DAOs are like raiding parties that together seek out rewards for accomplishing quests. Slaying Moloch could earn you cryptocurrencies and NFTs.

One possible extension of the raid into the world of DAOs are POAPs.

POAPs are digital collectible badge NFTs that are typically given out at events as verification of attendance (POAP stands for Proof of Attendance Protocol). The badge images can be customized by the issuer, and the end-user can view a gallery of their badges on the POAP site.

POAPs have grown in popularity as many web3 events and creators have begun using them to incentivize their communities. POAPs can be distributed via Merkle tree airdrops to participants in an event (e.g., $DOG did a POAP airdrop to everyone that participated in the MISO auction) or they can be minted directly at the event.

After distribution, POAPs can be used to create raffles for prizes, unlock access to special events by verifying you have a badge, or even be used in governance systems for proof of personhood voting.

So could POAPs be a kind of virtual treasure box that is dropped upon defeating a boss or completing a quest? In a way, it can be perceived as such.

Take, for example, the act of coordinating together as a guild to slay Moloch by participating in governance. DAOs could use POAPs to incentivize community action in hopes of receiving rare loot via regular lottery distributions. Community members earn POAPs (read: virtual treasure chests) in exchange for attending community calls, voting in governance, completing bounties, onboarding new players into the DAO, and more. These POAPs could then be used to distribute community rewards to holders, opening up a new form of incentives.

IV. Let’s Go Raiding, Anon 👾

For the web3 native, loot are rare digital goods ranging from NFT profile pictures and collectible badges to 1/1 artworks and unique digital gaming assets. These collectibles enable us to express ourselves digitally while forming vibrant communities coalesced around memes and art.

Loot taps into our primal psychology and follows us into our future. Loot distribution mechanisms that most closely align with the in-game experience will likely be more successful in our increasingly gamified environment.

V. Further Down the Rabbit Hole 🕳️


Accelerated Capital is a weekly publication exploring how cryptoassets, DeFi, virtual reality, and other exponential technologies are transforming our economy, society, and culture.

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