What happened to Gaia Online?

Gaia Online is a social networking and forum-based website with an anime theme.

The site was launched in February 2003 and was founded by Derek Liu, Long Vo, and Josh Gainsborough.

Members of the community are called Gaians, and each is represented by a custom avatar that can be used to communicate with others.

Users also receive the currency Gaia Platinum as they post in the forum or participate in various other activities and contests.

The currency is used to personalize individual avatars, homes, and cars, with members able to exchange real cash for Gaia Platinum if they want access to these perks more quickly.

Just four years after launch, Gaia Online boasted 2 million monthly unique visitors and was one of the most popular social media websites on the internet.

However, success would be relatively short-lived, as the platform started to neglect its core user base.

Hyperinflation

Gaia Online operated an early iteration of a virtual economy.

During the initial years of the platform, the Gaia Platinum in-game currency was called Gaia Gold.

The company was cognizant of introducing features that rewarded users with excessive amounts of gold may cause inflation.

It even promised members that it would never allow anyone to purchase the gold with cash since it would cause inflation and give members with greater financial means an advantage on a mostly free platform.

When a new CEO and COO was appointed in 2013, Gaia Online reneged on its promise and introduced a gold generator to increase site revenue.

For the small sum of 99 cents, users received a supposedly random amount of gold as a reward – though the amount received was almost always significant.

Within just a few days, inflation and hyperinflation set in, with prices in the marketplace increasing many times.

To keep up with rising inflation, the Gold Generator continued to run to allow members to afford marketplace items.

Gamification

In a few short years, items in the marketplace that once sold for thousands of gold were now available for billions.

Gaia Platinum was introduced to curb inflation, with 1 Platinum worth 10 million of the original Gaia Gold currency.

Many long-term members left the site in disgust, while others complained to site management, who said that they would look into the matter with the standard response.

Some then began looking into COO Jason Loia, discovering that he was an advocate of gamification and had made a presentation on how to get people addicted to online games.

The COO, later dubbed “Goldemort”, left the company in December 2016, and the CEO followed suit after that.

The return of the co-founder

Gaia Online co-founder Derek Liu then returned to his former position at the company.

He immediately removed the gold generator and promised to return the platform to some semblance of normality.

In hindsight, the damage had already been done.

As noted earlier, hyperinflation had caused much of the user base to migrate to other sites such as Facebook, as forums as a form of social communication also started to wane in popularity.

Moreover, the previous management had left Liu with almost no money to keep the site operational.

Gaia Online continues to operate despite several failed attempts to increase the user base with new games and features.

Key takeaways:

Gaia Online is a social networking and forum-based website with an anime theme. The site was launched in February 2003 and was founded by Derek Liu, Long Vo, and Josh Gainsbrugh.
Gaia Online operated an early version of a virtual economy, where in-game currency could be exchanged to customize avatars, homes, and vehicles. The company carefully managed the economy to keep inflation in check, but a change in management saw hyperinflation.
Gaia Online co-founder Derek Liu returned to his original role in late 2016, with the former CEO and COO leaving the company. While Liu made efforts to reduce inflation and attract users, the platform would never recapture the popularity it enjoyed in the early 2000s.

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Gennaro Cuofano