Lawyer Shao Shiwei | Legal Review | How Compliant Is the Viral 'Carter World'?

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Special Declaration: This article is an original work by Lawyer Shao Shiwei. It represents only the personal views of the author and does not constitute legal consultation or legal advice on specific matters. For article reprints, legal consultations, or business exchanges, please add: sswls66. Risk Warning: All relevant materials and news information in this article are sourced from publicly available information on the internet. They do not represent the author’s specific legal opinions or investment recommendations and are provided solely for exchange, discussion, study, and reference by relevant industry practitioners. Introduction: Recently, I came across a blockchain game named 'Carter World.' The platform launched in late February 2024. Although it has been online for only about ten days, market enthusiasm appears to be quite strong. Having long been an observer in the blockchain gaming circle...

Special Declaration: This article is an original work by Lawyer Shao Shiwei. It represents only the personal views of the author and does not constitute legal consultation or legal advice on specific matters. For article reprints, legal consultations, or business exchanges, please add: sswls66

Risk Warning:

All relevant materials and news information in this article are sourced from publicly available information on the internet,and do not represent the author’s specific legal opinions or investment recommendations;they are provided solely for exchange, discussion, study, and reference by relevant industry practitioners.

Introduction:

Recently, I came across a blockchain game named 'Carter World.' The platform launched in late February 2024. Although it has been online for only about ten days, market enthusiasm appears to be quite strong. Lawyer Shao, who has long been an observer in the blockchain gaming circle, certainly could not miss this opportunity and promptly downloaded the app to experience it.

Author: Lawyer Shao Shiwei

01 Gameplay Overview

This is a simulation management game. Taking the introductory gameplay as an example, users initially need items such as chicks, rakes, and bread. Different production chains for these items yield outputs such as eggs, wheat, wood, and iron blocks. Selling these items yields 'Card Beans,' which can be used to purchase chicks, rakes, and bread, or exchanged for Card Bean points to play mini-games within the platform.

platform's mini-games.

The platform primarily features three types of gameplay.

The first is a passive approach for retail users:

For example, hens lay eggs, which can be sold to buyers seeking purchases in the marketplace or listed on the sales market. Additionally, the platform has a Card Bean market page where users can buy and sell Card Beans.

After March 1, initial items such as chicks, rakes, and bread can no longer be purchased directly on the platform. Users must contact in-platform material merchants privately for C2C purchases. For instance, the cost of 10 chicks is 110 yuan. Each chick lays one egg per day, and one egg equals one Card Bean. With the current price of Card Beans at 1.1 yuan, one month yields 30 Card Beans, equivalent to 33 yuan. Additionally, chicks

can be transferred out at any time for 80 Card Beans. The conclusion is that investing in 10 chicks allows for capital recovery within one month (including transfer), with all subsequent earnings being profit. If users wish to stop raising them, they can click 'Transfer' on the platform to exit.

The second is the staking model:

By staking 10,000 Card Beans, a user becomes a merchant. The transaction fee for user Card Bean trades is 5%, while the merchant fee is 2%. Merchants earn the difference of 3% (5% - 2%) on user Card Bean transactions, and there are no fees when merchants sell Card Beans. For example, if a merchant facilitates the circulation of 100 Card Beans, they can profit 3 Card Beans.

The third is becoming a platform agent:

Below is the description of the agent gameplay provided by the platform. Simply put, becoming an agent allows one to earn passive income from downstream referrals.

The economic internal cycle of the entire game is illustrated as follows:

02 Compliance Assessment

1. Corporate Entity

According to the platform's User Agreement, Carter World was developed by Hubei Yuanben Digital Technology Co., Ltd. However, a search of public information on Qichacha reveals no company with this exact name. Therefore, the reference to this company in the User Agreement is likely a clerical error.

Based on its filing information, it can be inferred that Carter World belongs to Hubei Yuanben Space Technology Co., Ltd.

According to the company's official introduction, it established Yuanben (Hong Kong) Limited. However, no company with this exact name was found. This likely refers to Yuanben Space (Hong Kong) Limited.

2、Game License

According to the content of the platform's 'User Agreement,' the project party describes the services provided to users throughout as 'digital collectibles.' However, it is evident that this is a simulation management game platform, not a digital collectibles platform.

Operating a game platform in China requires obtaining a game license. Upon search, Carter World has not obtained a game license.

3. Qualifications Related to Digital Collectibles

According to public reports, this is a metaverse farm application under Yuanben Space, featuring the platform's self-built underlying blockchain infrastructure, 'Yuanben Chain.' As a 'digital collectible game,' the platform not only needs to obtain a game license but also relevant qualifications for digital collectibles platforms, such as an ICP License, EDI License, and Network Culture Operation Permit, and must complete blockchain filing. Upon inquiry, Hubei Yuanben Space Technology Co., Ltd. has obtained an ICP License, an EDI License, and blockchain information service filing.

Upon inquiry, the specific status of qualification applications for Hubei Yuanben Space Technology Co., Ltd. is as follows:

Blockchain information service filing for the Yuanben Space digital collectibles platform.

EDI License and ICP filing.

4. Economic Model

Blockchain games predominantly feature 'play-to-earn' mechanics, which leads to a relatively impulsive mindset among entering players, who aim to enter quickly, acquire equipment, and sell for cash realization. Therefore, designing a scientific economic model to delay player churn is a significant concern for every blockchain gaming platform.

The figure below is an introduction to the game mechanics from the 'Carter World Official Website' (the overall appearance of the webpage does not resemble an official site and is likely a page developed by game agents). It mentions that Carter World isthe only blockchain game featuring alock-upmechanism.。

(Image source: Carter World Gameplay Mode Introduction - Carter World Official Website wyfxwa.com)

Typically, the lifecycle of a blockchain game from inception to demise proceeds as follows: Over time, the number of entering users increases, driving token prices higher. Later stages face greater pressure to sustain prices, requiring more users and incoming capital to participate in the game to prevent token price declines. Once early players sell off tokens, causing market panic, the growth rate of new entrants

slows down, demand for tokens decreases, and prices fall. Ultimately, the game enters a 'death spiral,' ending its lifespan.

How should this issue be addressed? The analysis in the figure suggests that the 'lock-up mechanism' in the Carter World platform can keep bubbles controllable, which seems somewhat reasonable. However, the flaw lies in the question: 'If there is a lock-up mechanism, why sell if there is no need to absorb supply?' What is the purpose of playing the game? What is the purpose of locking up tokens? It is to acquire more tokens. Lock-up itself

serves the purpose of earning interest on held coins. In the later stages of the game, players will still sell tokens to realize profits, commonly referred to as 'mine, withdraw, sell.' Therefore, the lock-up mechanism cannot extend the game's lifecycle and may instead increase the magnitude of risks accumulated in the later stages.

5. Reverse Conversion of Game Currency

On the platform's marketplace interface, game tokens such as Card Beans can be exchanged for other items. In the Carter Market, players can post requests to buy Card Beans or list them for consignment sale.

Whether digital collectibles platforms can operate secondary markets remains a gray area. Although there are no explicit regulations in China regarding whether blockchain gaming platforms can operate secondary consignment markets, relevant laws and regulations concerning online games are clearly stipulated and can similarly apply to blockchain gaming platforms.

Multiple regulations, including the 'Notice on Strengthening the Management of Online Game Virtual Currency,' the 'Interim Measures for the Administration of Online Games,' and the 'Guidelines for Supervision and Law Enforcement of Online Game Virtual Currency,' contain provisions prohibiting the reverse conversion of online game virtual currency into RMB. Game currency can only be used to consume virtual services operated by the issuer and cannot be used for payment,

purchasing physical goods, or exchanging for products and services of other enterprises. Except in cases of termination of game operations, game currency cannot be converted into legal tender.

6. Gambling Risks

By consuming Card Bean points, users can participate in probability-based gameplay within the game, such as the 'Hostage Rescue' mini-game. When a user opens a door, there is a probability of obtaining varying amounts of Card Bean points or receiving nothing.

The inclusion of probability-based gameplay in games is not inherently illegal. However, according to platform rules, Card Beans and Card Bean points are mutually convertible, and Card Beans can be directly sold for cash realization. This satisfies the three elements of gambling: paid entry, random gameplay, and cash output (for related articles on gambling risks in games, see ➡️'Play-to-Earn Blockchain Games: How to Avoid Becoming Gambling')。

03 Conclusion

Against the backdrop of the lukewarm development of blockchain games in China, it is remarkable that Carter World, as one of the first blockchain gaming platforms launched domestically in early 2024, garnered significant attention shortly after its launch in February 2024.

Additionally, according to public information, Carter World is part of the Yuanben Chain ecosystem, which also includes Star Moon Island, Blue Box, Red Box, and Card Cat. As a previously popular digital collectibles platform, Yuanben Space's launch of Carter World represents its transition from digital collectibles to blockchain gaming.

It is evident that domestic entrepreneurs continue to explore how blockchain games can be implemented and developed in China, as well as how digital collectibles can transform. Undeniably, from a compliance perspective, the platform currently faces numerous issues. However, this is not solely due to the entrepreneurs themselves; national laws and regulations also urgently require improvement.

As Wang Jiangping, Vice Minister of the Ministry of Industry and Information Technology, pointed out while attending the Boao Forum for Asia Annual Conference 2023 in Hainan, the development of the digital economy should adopt a prudent and inclusive attitude in its initial stages. When uncertainties remain, it is better to 'let the bullets fly for a while.'

This indicates the state's tolerant attitude toward new technologies and fields. We shall wait and see how far blockchain games can develop in China in the future.