Everyone wants to game after a stressful day. But what about gaming that allows you to earn money in real life? Play-to-earn is a modern revolution that everyone is talking about.
Blockchain games are not new. They have come a long way. They started by trading simple non-fungible tokens collectibles to nowadays earning money.
A World of Warcraft Nerf inspires one of the most popular cryptocurrencies. Ethereum co-creator Vitalik Buterin played this game for years until he quit because the game had centralized authority that weakened its character. Now, Ethereum is the backbone of GameFi. It allows players to make money while having fun through blockchain.
What is Play-to-Earn?
The name itself gives away the meaning of this technology. But in more technical terms, play-to-earn are online games that allow participants to earn rewards that can be transferred to valuable real-world assets.
You can earn rewards by completing tasks, battling one another, and increasing through game levels. The rewards come in any form of an in-game asset, such as cryptocurrencies, skins, virtual land, weapons, and other NFTs, and all of the assets can be transferred to valuable real-world resources.
P2E – short for play-to-earn, works on blockchain technology as a decentralized business plan. Due to its decentralized nature, players can buy, sell, and transfer their in-game assets in real money. Online games have been around for a long time, and usually, they are based on fiat money like arcade games or gold farmers’ secondary markets. Nowadays, P2E exists on the blockchain with proven ownership, rarity, and legitimacy.
Blockchain is an immutable digital ledger, meaning no one can edit, delete or duplicate its data. Hence, P2E games are created in a way that prevents fraud, manipulation, hacks, corruption, or other exploits. You cannot copy and paste into the blockchain. Unique items will always be special because they cannot be replicated. This way, P2E games create real value for their in-game assets.
The main selling phrase of P2E games is “Hey, by playing this game, you can earn cryptocurrency.” In the mind of gamers, this means they might become rich overnight if the value of this cryptocurrency rises. P2E games have different mechanisms, but usually, the rewards come from staking, generating NFT items, or farming a game’s currency.
Non-fungible tokens are closely related to P2E games. Virtual collectible assets come in different forms, such as images or music. In games, they are assets that players must collect in any way, including characters, skins, items, or virtual land.
NFTs are unique, irreplaceable, and each holds its value. They exist in the blockchain. Hence it is impossible to duplicate them. In gaming, they are the same as Mona Lisa in real life. For example, if two gamers have almost identical NFT characters in the game. But one has black shoes, while the other has red ones. If they decide to trade, one of the characters would be worth more than the other.
The NFT market has surpassed $2.5 billion in sales, which is growing every day. It might not take too long until it exceeds other major industries. Players in NFT P2E games have real ownership of their in-game assets. The developer does not have ownership of the assets. Once the player earns them, it is entirely up to them how they choose to spend them.
Players do everything in their hands to increase the value of their NFTs. Usually, they commit to the game for a long time until they decide it is time to sell them. It is up to the player to decide whether to sell or trade them, inside or outside of the game. But can everyone play these games? Yes, everyone can play these games, but sometimes they are not free. It depends on the developer.
Some games are free to play, and players can earn rewards simply for playing. All it requires is their time. At the same time, some other developers design their games to ask for more than time. Meaning players might be asked to make an upfront investment to start playing the game. These games are usually known as pay-to-earn games because you need to purchase NFTs from other players. Despite the differences, they still fall into the same category. Because in both cases, players generate some valuable assets that bring profit.
Developers use two approaches to create games:
Developers can create a native cryptocurrency for the game. This currency is in the form of tokens. To make this possible, they create a blockchain project, design tokens, and seal the deal in smart contracts. It acts as an in-game currency with real-world value. For example, Axie Infinity – the most popular blockchain game, uses two native cryptocurrencies, SLP and AXS. The value of these currencies goes up and down, and each time players sell them, they receive a payout.
Developers can take cryptocurrencies that already exist and create their games. They can use different currencies like Bitcoin, Ethereum, Cardano, Dogecoin, etc. Most games that use these currencies are named after them, such as Bitcoin Tycoon, Bitcoin Pop, etc. Many other games use the word crypto to let players know this game uses existing currencies, such as Crypto Dragons, CryptoKitties, etc. A drawback of this method is that it takes longer to accumulate a lot of money, the monetization process is longer, and payouts are stingy.
Traditional VS. Play-To-Earn Games
Usual games are a thing of the past because you need to pay to play the game, it takes a lot of time, and you have repetitive tasks to advance or win prizes. Olga Vorobyeva – a consultant for blockchain companies, described traditional games as a “closed-end model” because, in the end, the players cannot sell or transfer the prizes they won. Moreover, these games are centralized. Whenever the company wants to shut down the game, they can do so, and all your progress will be lost. Just like in the case of Vitalik Buterin that we mentioned earlier.
According to Vorobyeva, P2E games “bring value back to the players.” The hard work spent in these games is paid off with rewards and in-game assets that can be transferred outside the game. Furthermore, Vorobyeva talked about the decentralized nature of P2E, “Anything blockchain touches brings decentralization and autonomous governance [to] the industry.”
How Does P2E Work?
Players can hold their valuable in-game assets, and at any time, they can sell them for cryptocurrencies or money. The more players participate, the more assets they can collect and the more valuable they become. Players generate wealth for themselves, other players, and the developer by participating.
P2E is a mix of gaming and finance. Hence it falls under the GameFi category. The main drive for the players is decentralization, entertainment, and the craving to make money. Players collaborate to give feedback to the developer to improve the game. In addition, there are cases when dedicated players have formed decentralized autonomous organizations to build a community among the players. An excited Axie Infinity player said:
“I liked the white paper. I liked how the gameplay would work. I liked their plans for it, but, most importantly, I liked how the basic economy would work in Axie wherein there will always be high demand for the crypto but there will always be less supply.”
How Does the P2E Economy Work?
In the case of P2E games, the developers and players are something like business partners. The developers cannot think just about their profit, whereas the players should hold and trade valuable assets. In this form, as the collection of the players grows, so does the developer’s profit. Every time an NFT changes hands, it indefinitely creates money for the developer from the transaction fees.
Play-to-Earn VS. Move and Earn
P2E and M2E are much more than virtual gaming, but they differ. The key distinctions are the reward system and revenue model.
|Users earn money by gaming||Users earn money by moving the body|
|Rewards are given based on performance||Rewards are given based on effort|
P2E transforms trends into more mature concepts. It is exciting and has a decentralized community. Gamers care more about the features and graphics rather than the revenue model.
M2E is new to the industry, but is gaining popularity daily. It is an easy version for users who struggle to exercise. This model might be the motivation they need to continue forward. But this is a relatively new concept, and we should wait to see the future of M2E.
Examples of P2E Games
One of the oldest and most popular crypto games is Axie Infinity. This game is based on the Ethereum blockchain. Its elements are video gaming and blockchain gameplay. Axie lets players collect cute creatures which can be used for breeding or fights against each other. When the NFT marketplace was at its highest, the Axies were sold for thousands of dollars. It provided full-time job prospects to players from developing countries such as the Philippines and Venezuela.
Another P2E game is the Sandbox, developed by Animoca Games in November 2021. It is a voxel-based game inspired by Minecraft. It offers players a special experience that gives them a sneak peek at what the Metaverse probably looks like. Players can create, build and decide their future. And most importantly, they can monetize the game by investing, creating, and earning in-game assets.
Decentraland Foundation developed Decentraland in February 2020. It is a 3D virtual world where players can buy land and build on it. After, they can decide to rent or sell it to other players in exchange for cryptocurrency. The cryptocurrencies Decentraland uses are LAND NFTs to define real estate ownership and MANA to buy goods within the game. Today, 2.19 billion MANA tokens run on the Ethereum blockchain. At its highest, a parcel of land was sold for $100.000. In October 2021, Decentraland hosted a Metaverse Music Festival with celebrities like Paris Hilton, Deadmau5, and 3LAU.
Gods Unchained was released in March 2021. It is an immutable tactical card game that resembles Hearthstone and Slay the Spire. It has over 13 million NFTs released to date and over 65k unique asset holders. The goal is to outsmart the opponent’s strategies by building flexible decks. Gods Unchained implements valuable NFT cards to the game, allowing players to combine them with non-NFT cards via an in-game Forge. Since it launched, Gods Unchained has settled more than $2.5 million in trading volume.
The top ten P2E games of 2022, according to their daily average, are:
- Alien Worlds (188k)
- Farmers World (124k)
- Upland (45k)
- Axie Infinity (33k)
- Second Live (30k)
- Gameta (19k)
- MOBOX: NFT Farmer (19k)
- MiningNetwork (16k)
- Pegaxy (16k)
Future of P2E
The goal of GameFi is to allow gamers to transition between virtual worlds while navigating through the vast and limitless Metaverse using virtual avatars. Sometimes they would be in a rocket ship; the next, they would be in medieval pubs. On top of all, they will socialize, earn cryptocurrencies, and buy and sell NFTs in different forms, such as costumes, weapons, etc.
P2E games are still relatively new, and there is still time to reach this level. But Vorobyveva thinks this reality is close. She said:
“When someone figures it out, that effectively will bring us straight to the metaverse, not only alternative reality, but basically interconnectivity between all virtual ecosystems.”
P2E games do not have much creativity in them. Especially in the games involving the universe, this happened due to the lack of information we know about the universe. Its developers are afraid of the growing popularity of these games because now players are requesting more focus on playing than the value they intend. P2E and the traditional gaming industry have proven to coexist together. But moving forward at its rate, P2E might completely overtake this industry.
Businesses are afraid that P2E games in the future might become full-time jobs for their employees. P2E will become more than just a side hustle. Its players will make real money worth thousands a month, just like in the case of Axie Infinity.
- Play-to-earn is a modern revolution that allows players to earn rewards and transfer them to valuable real-life assets.
- P2E is a decentralized business plan that uses blockchain technology, allowing players to buy, sell and transfer their in-game assets.
- It is an immutable digital ledger, meaning no one can edit, delete, or duplicate its data.
- Players can earn cryptocurrencies through staking, generating NFT items, or farming a game’s currency.
- Depending on the developer, games can be free to play or pay-to-earn.
- Developers use two approaches to create games: Native Currency and Existing Currency.
- Traditional games are closed-end and centralized, whereas P2E games reward players with in-game assets and are decentralized.
- P2E is a mix of gaming and finance, with the main drive for players being entertainment and making money for themselves, other players, and the developer.
- It involves developers and players as business partners; each player’s collection growing and trading creates money for the developer.
- P2E games such as Axie Infinity, the Sandbox, Decentraland, and Gods Unchained are popular crypto games.