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Are Play to Earn Crypto games always profitable?

Play-to-Earn games are a broad category that brings together variations of digital farming, MMORPGs, fighting games, tower defenses, and other models. The goal is to play the game and earn crypto assets, with the potential to extract their value in the open market. Most games also use non-fungible tokens, or NFTs, to award game items that also have value and can be resold.

NFTs were first designed as a blockchain standard for assigning real items to a token, keeping a record on the blockchain. One of the initial ideas was to allocate NFT tokens to real estate. But NFTs are mainly used for digital creations, game elements, images, video and more rarely music. In games, NFTs typically include playable characters, armor, upgrades, or craftable items.

The new collection of games worked in several ways: first, they reached out to end users and taught some how to use a crypto wallet and how to trade for the first time. And second, the games promised the utility of the blockchain, leading to new rounds of investment. Games have become a promising element to build new projects and test the capacity of new blockchains.

Earning in-game worked by issuing crypto tokens for in-game actions. Axie Infinity was the first to introduce the two-token model, creating Smooth Love Potion (SLP). Players could earn SLP as they played, and choose to sell SLP for cash, or use it to raise more Axies, the game’s playable characters. This model was viable as the number of players increased and that SLP could achieve a favorable exchange rate. The hype also boosted the price of Axie characters to $100,000 or more, and the game even sold digital plots for millions in value.

How Projects Run Out

The Axie Infinity model, which was copied by other play-to-earn games, was based on two unsustainable factors: a bull market for crypto-assets and a constant influx of new players and Axie buyers. These conditions only existed for a few months.

Over time, the Axie Infinity model could no longer be sustained. Player counts and net earnings have fallen off a cliff. But in the seasons where Axie Infinity was successful, other games started popping up almost daily, hoping to copy the pattern.

Some games like Pegaxy and Crabada have been hugely successful in terms of player numbers and overall popularity. But games have also had to beef up their defenses against bots, which they’ve both been doing successfully so far.

Crabada adapted, adding more human-centric gameplay with battles and decision-making, in place of idle resource gameplay. Pegaxy has banned wallets from accounts identified for bot activity.

Axie Infinity wasn’t done with its evolution either, returning to the drawing board, working on its Origin update and a more durable P2E model. Axie has also shown signs that its future lies in integrating free registrations, reaching 600,000 registered users to test its new version.

How Organic Growth Works for Games

Games on the blockchain were launched in several genres and offered varied game mechanics. Game action only occurred off-chain, with limited records of token transactions and NFT usage and sales.

Farming-style games rely on a slower, more sustainable model for creating in-game assets. For example, Sunflower Land, Every Farm, and others try to keep players in the long run by providing farming challenges and d almost constant objects. The revenue model allows the items to be exchanged for a token, which can then hypothetically be sold for fiat.

For example, Sunflower Land encourages farming, but not immediate conversion into tradable SFL tokens. The extra layer of resource gathering can help avoid the fate of Axie Infinity, where each game produced more and more Smooth Love Potion (SLP) tokens, driving the price down by 99%.

Simulated crypto mining game Mining Network also added a gap between in-game resources and in-game token. Instead of directly receiving tokens, Miner Network players first had to generate and accumulate ” hashes”. Earning the BTK token in the game depends on the resource supply of the game, which prevents a rush of players to cash in.

Slow organic growth is also used as a way to retain players. Mines of Dalarnia uses an upfront fee to join mining missions, and players are only profitable after they upgrade. This gives the project some leeway to gather and redistribute tokens for rewards. Internal markets and item exchanges also help create an in-game economy based on real player activity.

Other games like Sunflower Land have a fixed entry fee to create a much-needed farm as an NFT. Later, rare or hard-to-craft items can also be sold in the market or held as game trophies.

There is also a third approach where already developed web2 games try to add a play-to-win or NFT element in an easy and intuitive way for their players. Castle Crush is currently working on adding an Avalanche-based NFT and token element to a game already downloaded by millions of accounts worldwide.

Games on the WAX ​​blockchain can also be linked to a Web2 account on Google or Facebook, while seamlessly creating a wallet to minimize clicks and make the experience smoother.

Can games exist without forced purchase of items

The NFT market peaked in late 2021, driven by the popularity of marketplaces like OpenSea. But play-to-earn games are trying to reactivate this market while giving new utility to NFT.

More P2E games choosing to launch in 2022 offer an option to start for free. NFT purchases can be optional or occur once the player is happy with the game.

Players may also wish to wait for better conditions in the crypto markets. But many fringe players just want to connect in the usual way, using Web2 resources, while accessing a Web3 ecosystem.

Each game tries to strike its own balance, somewhere between extremely aggressive pay-to-win and optional in-game items that provide perks and faster upgrade opportunities.

The future of gambling with an earnings model may be to reach players who have almost no knowledge of crypto assets or wallets. A free integration reduces a substantial portion of the risk and worry of overinvesting in a game.

About the Author:

Konstantin Dinev is the co-founder and leader of his own group of development companies. He motivated and managed a growing team of experts across an ever-expanding technology stack. Over 15 years, Konstantin has overseen hundreds of projects to completion, reaching millions of customers across web, mobile and gaming ecosystems. Over the past two years, Konstantin has moved to Web3 and self-managed products. Konstantin is currently working on TimeShuffle, an NFT game that introduces the play-and-earn model where the enjoyment of the game is at the core and earnings follow player engagement.

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