Recently, I had dinner with a friend who works in blockchain gaming. He had previously worked in several projects as an operator and witnessed them fall from 'top-tier' to zero. I asked him what he thought was the common reason for these projects' failures. He thought for a moment and said that they all couldn't calculate the simplest account — whether the rewards given to players actually returned any profit.
He said this when I thought of a term that appears repeatedly in the Pixels white paper: RORS, which stands for Return on Reward Spend. The formula is simple: the actual revenue generated in the game divided by the value of rewards issued during the same period. If this number is greater than 1, it indicates that the ecosystem is self-sustaining; if less than 1, it indicates chronic bleeding.
This logic is not a big deal in traditional companies; which boss doesn’t look at ROI? But when applied to blockchain games, it becomes a rarity. Because blockchain games have never relied on endogenous income in the past few years, but rather on the expectation of token appreciation. You send out 1 million tokens, and when players sell them, the buyers believe they will be worth 2 million in the future, thus maintaining this cycle. Whether RORS is 0.5 or 0.8 is not important as long as the coin price is still rising; the hole becomes invisible.
The problem is that coin prices cannot rise forever.
When new funds cannot keep up with selling pressure, the cost of RORS falling below 1 will be instantly revealed. Players find that the tokens in their hands are becoming less valuable, accelerating their exit, leading to further income shrinkage, and RORS continues to decline, thus starting the death spiral. In the past three years, I have seen many blockchain game projects, and eight out of ten died in this cycle. The remaining two that survived either haven't reached that critical point or have genuinely worked on RORS.
Pixels belongs to the latter. They mentioned a figure externally - $25 million in revenue. Many people focus on the $25 million scale, but I care more about the detail that they also mentioned RORS has stabilized above 1 in recent months. This detail is much more valuable than the revenue figure itself.
Because it indicates that this $25 million did not come from an ICO or a wave of NFT blind boxes, but rather emerged naturally after the token economic model was validated, player behavior data was consolidated, and the reward mechanism was calibrated. In their own words, only after abandoning the old token model and switching to a new architecture was sustainability achieved.
What is meant by 'new architecture'? In simple terms, it involves two things. First, using data to identify who is here to play games and who is here to farm rewards, and then accurately allocating limited incentive resources to the former. Second, gradually switching the valuation unit of rewards from PIXEL to stablecoins like USDC, reducing token selling pressure while ensuring that players receive value without discounts. Only by taking these two steps can RORS gradually climb above 1.
Pixels spent nearly four years on this process. Four years in the internet industry is enough for a product to go through several cycles of life and death, and in the crypto world, that feels like a lifetime. But upon closer thought, this speed is actually not slow because they are doing something that almost no one in the industry is seriously doing - building a system of metrics to measure the economic health of blockchain games from scratch.
Traditional daily active users, trading volume, and coin price are not useless indicators, but they are too easily manipulated. Daily active users can be inflated with scripts, trading volume can be manipulated with bots, and coin prices can be influenced by large holders. They can only tell you how lively the scene is; they cannot tell you how long the scene can last. RORS measures another dimension: after the excitement fades, are there people willing to spend money on this game.
Of course, RORS is not a panacea. It can only reflect the input-output ratio at a specific point in time; it cannot predict the ceiling for user growth, nor can it solve the issue of whether the game content itself is fun. If a game is inherently unappealing, a high RORS is still zero multiplied by any number equals zero. For Pixels to reach today, it must at least have made some people feel that 'farming is quite interesting.'
But this is precisely the most honest aspect of RORS. A game that is not fun will not generate genuine consumer willingness from players, which means in-game revenue will not increase, and RORS will naturally stay submerged. Thus, it is not just a financial metric; to some extent, it is also a mirror that reveals which projects are seriously creating content and which are merely running a financial scheme.
Returning to what my friend said at the beginning. The biggest problem with blockchain games is not that the technology is inadequate, nor that the market is too small, but that too many teams have not planned to calculate that account from the very beginning. Because once you calculate it clearly, you will find that the false prosperity gained through subsidies cannot sustain a viable business.#BTC
Whether Pixels can ultimately succeed is too early to conclude now. But at least they are using the right yardstick to measure themselves. In a race where everyone is competing to see who can run faster, those who are willing to pause and calculate may be the most formidable opponents.$BTC