Project & Development Update #8
March 16, 2022
Good afternoon, pilots. It's time for the next internal project update.
In this post, we'll be announcing a new, long-term partnership between The Citadel and Machinations, the provider of the world's leading software for predicting, simulating, and balancing game economies.
Additionally, we'll cover the details of the economic audit we've undergone with their team, in order to ensure the balance of The Citadel's economy on launch.
Let's dive in. 👇
🔸 Citadel DAO x Machinations
What is Machinations?
Machinations is a software tool that was designed from the ground up to prototype, model, and test game mechanics. Since its inception, it has gained a reputation for massively reducing the time needed to bring new titles and gameplay features to the market.
The power of Machinations' software lies in its Monte Carlo simulations. These simulations predict the probability of different outcomes when the intervention of random variables, such as player action or skill, is present. The resulting data can be used to assess the impact of risk and uncertainty in prediction and forecasting models for finance, engineering, and supply chain operations. The model setup and simulation is usually done by trained professionals with advanced statistical skills.
With Machinations' software, it's possible to model and perform tens of thousands of these simulations at once, over any period of time, with just a few button clicks. These simulations are incredibly powerful in that they paint a full picture of the game's economy under several sets of circumstances.
You can view their website here.
What does the partnership entail for The Citadel?
This is the first-ever economic health monitoring service for blockchain games. It provides a means of verifying game economies based on large-scale simulations prior to launch, and continuously monitoring and predicting trends based on live data after launch.
We're proud to say that The Citadel is one of the first projects to explore this new frontier, and as well is the first project to receive their economic seal of approval.
The Citadel's long-term partnership with Machinations comes with multiple benefits and services for the project and community, such as:
- A full economic audit of the game to ensure that the game is well balanced at launch, and that the economy is healthy and stable
- Once the game is launched, the Machinations team will combine real player analytics from the blockchain with market data to identify growth impacts and any potential inflation.
- The core team will be alerted to potential economic issues before they happen. Additionally, the Machinations team will provide data-driven suggestions for averting the issues before they get out of control. As a means of preparation for economic emergencies, The Citadel team will set up a multisig between itself, Machinations, and key members of the community, with a full consensus required for transactions. This address will retain relinquishable upgrade privileges, allowing for quick balance changes in the event that they are needed. S/O to PhyzixTeacher for inspiring this idea.
- The Machinations team will pull new data weekly and use it to run multiple forward-looking projections, in order to ensure that no economic problems are likely to develop. All findings will be summarized and released in public reports.
- The Machinations team will meet with the core team weekly to discuss the testing results and ensure that the model is testing the correct metrics. (These meetings will be recorded, documented and shared with the community.)
- The Machinations team will model and test any changes to the game and economy before the updates updates go into production. We believe this will be invaluable in ensuring that healthy growth through the DAO.
An economic audit?
Yes, an economic audit.
Behind the software, Machinations consists of a team of experts who specialize in the economic design and balance of games. As a part of their new service, they have professionally modeled the entire Citadel economy within their software, as well as the individual paths that players will take to acquire and use ore and ships. In their current states, Machinations' models can effectively simulate the game as if it were live, while collecting data on the wealth of each simulated player.
The process started with a smaller model of the individual player journey. Under their guidance, we provided and adjusted the input data, which consists of the key variables that influence player decisions, such as:
- Playtime and frequency personas
- Token source and drain mechanics
- Initial configurations for Automated Market Makers
Once the single-player model was completed and its accuracy was verified, the Machinations team was able to use it as the basis for a complete multi-player model. This model allowed them to:
- Perform brute-force Monte Carlo simulations for all possible game and launch scenarios
- Test for inflation and deflation triggers
- Clearly identify any assumptions made during the modeling process
As the final step of the pre-launch process, Machinations uses their findings to determine whether the game's economic design is healthy and deserving of the Machinations seal of approval, or whether it has failed the audit. To receive the seal of approval, the game:
- Must have a well balanced, sustainable economy ✅
- Must match the white paper and yellow paper documentation ✅
- Must not have any potential economic exploits ✅
- Must match the Machinations simulation ✅
We're excited to share that Citadel has passed their economic audit, thanks to the incredible work of the Machinations team. We're ecstatic to have received the Machinations seal of approval. 
Why it was worth it
We've made every effort to design the game economy with balance and sustainability in mind, but, as with security, this is not our field of expertise. At the end of the day, we are builders and not economists. As such, we believe that the responsible choice is to work with economic professionals in verifying, balancing, and improving our work.
It is our responsibility to ensure the game is balanced before launch so that the community doesn't pay for the consequences. This audit has allowed us to sleep at night, knowing that the game economy has been independently tested, and that it will provide a sustainable platform for the community and DAO to expand.
This report will be a testament from the best in the industry that The Citadel is well-balanced, and that its economy is sustainable.
Example of the models
For those curious about what these models look like, here are some zoomed-out images that provide a generalized view. As soon as the models are fine-tuned and the reports are finalized, we will make more information public. Before then, we will join the Machinations team to present the models live, in an upcoming Citadel x Machinations Economy AMA.
Citadel Single Player Model
Citadel Full Macro Economy Model
What are the associated expenses?
To cover the economic audit and the initial project screening, The Citadel team has contributed $50,000.
To be clear, this payment did not constitute nor guarantee a partnership with the Machinations team, and was non-refundable, regardless of the result of the audit. Thankfully, we passed.
For the long-term partnership, including all of the services outlined in this announcement, the ongoing costs will be covered by the DAO's treasury. We believe that this is fair, given that it receives the majority of all mint funds, collects half of all of the royalties, and retains ownership of all of the contracts. The fee structure is as follows:
- A monthly subscription fee for the Machinations platform. This covers the Machinations software licensing fee and sufficient computing resources to run the required simulations. In total, this will cost $5,875 USD per month.
- A 0.5-1.0% share of the total royalties from secondary marketplace transactions. As an example, if 1,000 ETH of ships were traded with a 10% collection fee, 100 ETH of royalties would be collected, and the Machinations team would receive between 0.50 and 1.00 ETH (0.5-1.0%). This portion of the royalties covers the model maintenance, the weekly reports, and the audits of all future community proposals.
In all, these costs cover the expenses of partnering fully with Machinations. As a result, the Machinations core team will be able to work directly with the community to verify economic additions, and to ensure the successful future of The Citadel within the blockchain gaming space.
🔹 Citadel x Machinations Economy AMA
Alongside the Machinations team, we'll be hosting a public Citadel x Machinations Economy AMA next week, on Friday, March 25, 2022 9:00 AM PT. Everyone is encouraged to join, participate, and ask any questions they may have.
We'll start with a live presentation, where we'll run through the economic models, explain how they work, and summarize the results that we have achieved with them. After the presentation, both teams will open up the floor for a Q&A, where we'll accept questions related to The Citadel's economy, Machinations, our partnership, and anything in between.
TL;DR We've partnered with Machinations and their team of economic experts. They have modeled The Citadel's economy, audited its stability, and granted us their seal of approval. Machinations will continue to monitor the economy after launch, audit new game mechanics, and help predict and avert economic issues. The Citadel team has covered the initial costs, and the DAO will cover ongoing fees. We believe this partnership will be invaluable in solidifying the future of The Citadel. 💯