Last year, a hot new category in gaming became the subject of great interest in tech, crypto and investor circles. The thesis behind play-to-earn (P2E) is clear and well known: Players earn income or assets through gameplay, thanks partly to blockchain-based rewards, including tokens and non-fungible tokens (NFT).
Investment poured in with early entrants Axie Infinity (Sky Mavis), Blankos Block Party (Mythical Games) and others raising hundreds of millions at unicorn valuations. Many developers, from startups to large studios (Zynga, Ubisoft, even Amazon) signaled plans to move in. Crypto maxis swooned about a future in which anyone could earn a living by “grinding” away on such games.
Jason White is founder and CEO of TallyUP, a new, free play-to-earn game and has spent more than two decades exploring how game mechanics can be a force for economic good.
The premise of game players being paid real financial rewards for their time and attention is profound. P2E can be a powerful force for good, offsetting inequality, introducing millions to crypto risk free, and potentially emerging as an aspect of universal basic income.
Fun and games, until someone loses a house
The reality of modern P2E is that earning has less to do with playing than investing. Players must first spend considerably, up to thousands of dollars, buying NFTs or paying a third-party guild to rent them. And to earn any return, some group of future players must spend more to keep it all going. And so on, in perpetuity.
The greater fool theory tells us this dynamic won’t end well. Fluctuations in market sentiment can decimate capital. For example, as of this writing, crypto markets are sharply down, and with them, the two primary tokens (AXS and SLP) used in popular P2E game Axie Infinity.
When ‘‘earning‘’ is based on appreciation, market downturns mean players can lose everything. That’s some game!
That such a thing can happen in the play-to-earn model is counterintuitive. And that developers of such games (even if they are good people with the best intentions) can bank billions in revenue despite the risk and potential loss incurred by players is troubling.
We have all heard the narrative that Web 3, blockchain and decentralization are the great financial equalizers of our time – something I truly believe. Amid growing concern about automation, global inequality and centralized power structures, P2E asks whether there is a way ordinary people can earn and share in the value they’ve helped create with their time and attention.
But the reality is that most P2E games benefit a central operator at the expense of their many individual players. This is the antithesis of Web 3.
A declaration of P2E gamer rights
Web 3 is fundamentally about dividing spoils equitably in multi-party systems. True Web 3 apps must ensure all stakeholders (end users, players, partners, team members, suppliers, whoever) are fairly valued and rewarded, but this will not happen by accident, or as an afterthought, if the singular goal is profit.
This does not mean P2E has to be charity work. And for the record, a game must, above all, be incredibly fun and exciting to play (and, ideally, to watch). Otherwise, no amount of rewards will keep players around. But taking steps to honestly value the contributions and wellbeing of end users is what will make Web 3 games so much better than their Web 2 counterparts.
These four player-first design principles will ensure a more sustainable, impactful P2E ecosystem, one that lives up to the ideals of Web 3:
- 100% free: Playing must be decoupled from spending or investing as a condition to earning. There is nothing wrong with games in which players can spend or invest, but there should be no in-game advantage for doing so. Pay-to-win mechanics suck. They make games less fun and sustainable, and they exclude many people who aren’t able to risk capital.
- Extremely fair: A P2E game is an economic system with multiple actors, competing interests and finite resources. Mechanics that decide who gets how much of the pie must be fair, and place all participants on an even playing field. For real economic impact, games should be learnable, playable and reasonably winnable by anyone regardless of age, gender, tech savvy or culture. And not cheatable.
- Fully transparent: All key financial data should be shared openly. How money is generated by the system and how it is distributed/earned should be clear. So long as rewards are shared equitably with players, this will increase trust, engagement and revenue opportunities.
- Purposefully decentralized: Blockchain should be used to benefit players and developers alike. For example, game outcomes and transactions can be made openly verifiable on chain, and players can be meaningfully involved in ownership and governance.
A bright future for P2E
A barrage of investment schemes posing as fun games is a recipe for disaster. Players and even economies can pay dearly, especially in fragile communities and developing nations where early adoption is greatest. Businesses, meanwhile, risk inviting further skepticism and regulatory intervention to an industry already viewed with distrust. But now there is a chance to learn from early efforts and correct course.
People talk a big game about Web 3. Decentralization is a profoundly important cause worth the fighting. It will become a reality when industry unites to build systems that fairly and honestly balance the spoils for everyone. Everybody can win. And they must.