I'm a dreamer...
It's easier to put thoughts into words if I speak with finality so please disassemble this and see if any of it can be useful.

Why this way?
To advance the meshing of trustless decentralized economical tools in the Metaverse.
To create awareness and interaction with OHM's redistribution mechanism.
To create an economically robust and player driven, in-game NFT manufacturing process.
To embed DeFi investment strategies within the game mechanics in a way which is equitable for the participants and that gives meaning to in-game activities.
To create a stage for meaningful politics between the cities and the factions within.

I'm using xOHM to signify whichever type of composable, LP or staked OHM/aOHM we end up with. My understanding of NFT's is still limited, please poke holes gently...

Basic premise:
Players who want to explore beyond the free to play area or partake in quests, need to stake xOHM as their ante to gain admission.
The main method of paying for playing the game is staking xOHM to the shared benefit of the player and the game. Players stake an ante of xOHM within the protocol and they can utilize it in a number of ways. The game takes a small tax on the accrued APY and the player can decide to direct part of their ante towards different in-game cities, causes, guilds and factions to gain different benefits in the game.
Admission to the Alpha and Omega cities require an ante from the player which is the foundation of the player's economical self. Depending on which causes or factions they direct their ante to, they gain status (voting rights) within the cities which in turn affect their world drops and access to faction specific quests.

The ante and governance
The governance structure for an AO DAO (AODAO?) is yet to be determined so I will be assuming some staked balance of sOHM and aOHM should grant the players voting rights in AODAO and also corresponding ante in either of the citie's DAO's. The ante could f ex consist of some amount of (s)OHM/aOHM LP tokens that would be staked in an AODAO smart contract. The smart contract would in turn LP and and also use it as collateral to borrow DAI and invest it outside the game for the purpose of growing the AODAO treasury.
Each city could effectively form a "DAO in a bottle" to govern in-game investment allocation of the collective ante staked by the members (city building, rewards, quests and expeditions). They are also be responsible creating faction sub groups such as merchant and artisan guilds and to elect players responsible social roles within them (after a challenging initiation). The players get a quick DAO 101 to be better prepared IRL. In addition to self-rule they would also be creating a modest amount of in-game content such as quests and NFT's that their members can pursue and if technology allows, build, improve and repair the city.

Quests
Quests are bounties that are decided upon by the governance of in-game factions who in turn pay the devs for implementing the NFT's. Players that embark upon major/God quests will be rewarded with access to the NFT liquidity pool of the faction which will enable the player to get that faction's unique world drops. In case of an economical surplus in the AODAO, guilds and factions receive an income based on their staked ante from the AODAO treasury and can distribute it to its members as rewards through questing. Once initiated by a player, quests are non-transferrable to prevent arbitrage.
A possible naming convention that illustrates the process:
[item type] [item name] from/of/the [quest/God] from/of/the [player/artisan]

Game-Fi
The Alpha & Omega cities could both have a local DAO or each have an extension of the AODAO.
Flash staking (lightning ante?): A player could gain in-game ante credits in excess of their initial ante (for a protocol fee) by time-locking part of their xOHM stake.
This could manifest as a P2P rental service where a player rents an NFT for a number of epochs (paying double APY on the underlying from their own stake) after which the NFT is returned automatically; as members of a clan lending out their NFT items to the clan so that they can be redistributed in preparation for a raid; players could pool their antes to buy land or other assets in the game; a blacksmith that breaks down an NFT to access the value within, flash stakes to gain added ante and dedicate the advance along with the item's inherent stake to create a more powerful item. An item created using flash staking cannot be broken down or transferred to another player until the time-lock is open.
Game-Fi benefits: Players get skin in the game; enable play to earn strategies; relevant distribution of voting rights; getting people familiar with crypto and gamification of savings technologies.
Game-Fi risks: Smart contract risk and numerous potential balancing exploits.

DAO-directed investment strategies
The members the AODAO would decide upon an investment strategy for the allocation of part of the DAO treasury into different strategies. The AODAO is also responsible for driving game development, marketing, support and everything to do with the technological infrastructure of the game.
The citie's DAO's should not have the power to alter investment strategies that reach outside the game such as where to allocate DAI borrowed against sOHM.

Some omissions:
Political and strategical activities between the cities.

Land
I heard there will be land... 😉
I also heard it might be dynamically created as the game progresses which sounds amazing. Stake and allocate ante to purchase land, sell land along with your stake embedded in an NFT. Maybe? Please?