All Games Pay - Play To Earn

Why the Play-To-Earn Ecosystem Is Rapidly Growing

Outside of e-sport tournaments and video game testing, earning money while playing video games has always been out of reach for most people. At the same time, the history of gaming is rich with complex economies. From grand strategies to MMORPGs, they mimic resource gathering, farming, crafting, mining, trading, and shopkeeping.

The problem is, all of those economic systems are sealed off. There is no bridge from in-game money to real fiat currencies. Even modern games are limited this way. Case in point, both Fortnite's V-Bucks and Roblox's Robux in-game currencies only serve to buy virtual assets from their own marketplaces.

While one can purchase in-game currencies with fiat money, virtual assets, from weapons to character customization items, cannot be sold outside of their respective marketplaces. In turn, one cannot play those games to earn money. That is, until now.

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Tokenizing In-Game Resources

For a game to become play-to-earn (P2E), its in-game resources have to be linked to a blockchain network. More precisely, to a smart contract platform. If anything can be put to paper in legal or conditional form, smart contracts can automate its execution. In return, this execution doesn't require any external institution or third party to intercede in the contract or transaction.

In other words, smart contracts can create a dynamic, self-sustaining digital system that becomes a perfect match for gaming.

Thanks to the monetary revolution of smart contracts, it is then possible to export in-game economics to real money as it crosses the blockchain bridge. Correspondingly, this process creates tokenomics, the foundation for blockchain P2E gaming. This can easily be seen in the example of the industry’s most notable P2E game, Axie Infinity.

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Axie Infinity Sets the Standard for P2E Gaming

Created by Vietnamese studio Sky Mavis, Axie Infinity has become a sensation in the second half of 2021. With only 60 employees, they have managed to grow the wealth of the company from $1.8 million in January to nearly $1.2 billion cumulative revenue in December, a 66,600% gain in less than a year.

However, we are more interested in how players are making their money. The revenue categories above already provide a clue. Interestingly, about 40% of Axie fans are stationed in the Philippines, many of them using Axie Infinity as their main source of income. How is this possible?

Axie Infinity is a complex virtual creature metaverse, consisting of many elements that draw players into its gameplay. At its core level, Axie is an ability based, 2D tactical battle game in which your fantasy creatures called Axies combat other teams of Axies.

Axies themselves are NFTs (non-fungible tokens) which can be purchased on Axie Infinity marketplace in exchange for WETH (wrapped ETH, which is pegged to the value of ETH). One has to buy at least three Axies to start playing the game. Beyond the core battle mechanic, there is the management aspect, consisting of resources and land plots. The latter are also NFTs, often reaching enormous prices due to their scarcity.

Land plots (nfts) make it possible to build up resource hubs that can be upgraded, just as Axies themselves can evolve thanks to those resources.

With these elements in place, P2E happens:

After each battle, players earn Smooth Love Potions (SLP), which are needed to breed Axies to get new Axies with better attributes and abilities. The rarer the Axie is, the better its performance in battle, which yields more SLP tokens in a shorter time frame.

Smooth Love Potion is a tokenized resource (designed as ERC-20 tokens) that can be sold on a number of major crypto exchanges for fiat currency.

But selling SLP tokens is only the beginning. One can exchange them for AXS tokens, which are Axie Infinity's native governance tokens.

AXS tokens not only allow voting for the game's development, but you can earn them by breeding Axies. Furthermore, AXS tokens can even be staked – locked in for a period of time to gain passive income (about 140% APR) – with the AXS Staking Dashboard.

As you can see, all resources of a blockchain P2E game are interconnected, providing a flexible way to earn money. Axies and land plots as NFTs, with SLP and AXS as fungible tokens, all of which can be exchanged for fiat currency. This system provides several off-ramps from the game itself to real-world money. One can focus on breeding Axies to sell them as speculative NFTs, or one can focus on earning tokens, which can either be immediately traded or staked for passive gains.

However, players can't just play all day long. They are limited with an Energy Pool that drains every time a battle commences. To circumvent that, veteran Axie P2E players have a maximum number of Axies because they both regenerate the Energy Pool faster and provide a wider pool. For instance, over 20 Axies yields 60 Energy, granting five battles per two hours, while 3–9 Axies yield only 20 Energy, granting five battles per six hours.

This is how the equilibrium is maintained and so that the tokenomics system and the NFT marketplace is not strained. When all is said and done, it is possible to earn about $13–15 dollars per day playing the game even as a novice player.

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Other P2E Games

While Axie set the trend with its Plants vs. Zombies aesthetic, there are games that are much closer to modern games. One of them is a class-based MMORPG called MIR4 with its DRACO coin.

The game's resource is Darksteel which has to be mined in-game or from doing missions and managing territory with your clan. Darksteel can then be used for upgrading weapons or armor or exchanged for DRACO coins after reaching level 40.

Likewise, playable characters themselves can be minted as NFTs, and DRACO coins can be staked. Interestingly, MIR4 was first developed as a non-blockchain game 20 years ago, with blockchain integration happening only recently. This just goes to show that the allure of P2E can reinvigorate any game. After all, if given a choice, most players would spend time on games that can yield some real monetary benefits instead of simply passing the time.

Other notable mentions of Play-to-Earn blockchain games are Farmers World, Thetan Arena, Bomb Crypto, Crypto Battles, CryptoMines, and CryptoCars. Each caters to different tastes, but all, more or less, follow the tokenomics standard set by Axie Infinity.

Lastly, when a new ecosystem is born, scammers tend to jump in on early adopters, as demonstrated by SolChicks, a purported P2E game hosted on the Solana blockchain that has been revealed as a likely fraud. Thankfully, it is easy to avoid such projects. If the game doesn't have a thriving community across social media platforms, it's most likely not worth the effort.

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The New Gaming Paradigm

With P2E gaming there has been a shift in the industry. No longer are players satisfied with earning in-game money that isn’t usable in the real-world. Thanks to the new P2E model, gamers can now be compensated for their gameplay ability and monetize off of what they know and love. This is the perfect combination of fun and economics that will bring the gaming industry into its next evolution.

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P.s... We've covered (or uncovered?) over 100 tokens and topics this year, and all of which can be emailed to you nice and neatly. Welcome aboard.

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P.p.s.... Wallet connection coming soon..

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