It may be lauded as the hallmark of financial inclusion, but a bank account represents very little for those that don’t have one yet. Even for the privileged ones who have access, an account alone does not necessarily qualify its holder to access a competitive interest-bearing savings account, a loan or insurance coverage – that is, all the types of products and services that could actually help someone improve his or her financial position and economic status in this world.
I am from the Philippines, born and raised, and over here just 23% of adults have a bank account. According to a 2017 study on financial inclusion by our central bank, the main reason cited by respondents was they just didn’t have enough money to need one. For the vast majority of people here, who earn little more than US$300 a month, a bank account is just seen as a thing with expensive fees that eats away at your balance for no good reason.
I have always believed there should be opportunities for people to invest and create wealth by contributing other valuable economic resources such as time and skill, even where they have zero money to begin with. Thinking in purely monetary terms is such an archaic way to look at the value that people can bring to an economy, especially as digital infrastructure is lowering accessibility barriers and making inclusion goals more attainable than ever before.
During my time as Entrepreneur in Residence in the very earliest days at Coins.ph, a Philippine crypto exchange and mobile wallet founded in 2014 that serves over 10 million customers today, we did a lot to establish the necessary payment rails that would allow Filipinos to get in and out of crypto. For example, an unbanked person could deposit pesos into their e-wallet at their local 7-Eleven, and from there the user could buy mobile data or pay bills electronically. The person also enjoyed improved efficiency for local and international remittances, with crypto-asset backed transfers costing far less in time and money than the traditional options. At the time this was revolutionary, and the metric of impact measurement that we displayed at our website was the number of hours we’d saved people from waiting in line to make in-person payments.
Of course, users could also buy and sell crypto via our mobile app, and still today there are many who say their first-ever experience with investing was thanks to Coins.ph. While this has allowed Filipinos to take significant steps toward their financial freedom, there is still more to do. Because for all these aforementioned opportunities presented by crypto-based economies, users must have upfront capital in order to participate. And in a place where roughly a fifth of the population lives below the poverty line, that’s going to be an insurmountable hurdle for many.
This is why the play-to-earn phenomenon in non-fungible token (NFT) gaming is so powerful, because users don’t need to put money in – they can earn it through active participation in a video game. This is providing unprecedented access to wealth creation opportunities in crypto, especially in developing countries where we’ve seen a huge influx of people wanting to get in on the craze. But rising demand has dramatically increased the cost of the NFTs needed to play the game. Which places us right back where we started, with expensive admission fees putting play-to-earn games out of reach for those who could benefit from them the most.
This exact problem is what inspired my co-founders and me to establish Yield Guild Games (YGG). With the vision to onboard millions of players to the metaverse, we began investing in yield-bearing NFTs in the most promising play-to-earn games, for the purpose of lending those assets to our guild members as an uncollateralized loan. The players are entitled to 70% of what they earn in-game, while 20% goes to the Community Manager who is responsible for recruiting and onboarding players to be competitive. The remaining 10% goes back to YGG to cover the costs associated with acquiring the assets, including gas fees, and ensuring their safe custody.
The model is not only popular, it is successful. To date, our guild has onboarded 3,300 new players and collectively earned over 27 million SLP (that’s the reward token earned by players of Axie Infinity). At today’s prices, those tokens are worth around US$7.29 million. And at this point, it’s important to note that these are not your average startup growth metrics. These numbers represent thousands of lives that have significantly improved because of the guild’s efforts in countries such as the Philippines, Indonesia, India, Venezuela and Brazil.
This is redefining what it means to “spend time” in-game. In the past, a game account was something that gobbled up hours of time for little return. But now with NFT games, a player’s time and skill has real-world ROI, generating income and contributing to wealth creation, breaking the curse of poverty and the cycle of debt. It then becomes a vehicle to provide other relevant financial services as well as financial education. Ultimately, play-to-earn games represent a chance for people to become more than the financial situation they were born into.
Yield Guild is already making yield-generating NFTs accessible for its members. Next could be more accessible crypto borrowing, particularly to individuals and businesses in developing countries with fewer tangible assets to address typical collateral requirements and provide access to capital that is not being served in these markets. Data from their wallet activity, such as hours spent playing and in-game rewards earned, could be used to inform alternative credit scoring models, making players eligible to apply for other forms of non-collateralized loans.
This new intersection between gaming and finance is completely subverting the way we think about financial participation and wealth creation. More than banking the unbanked, play-to-earn is a system that rewards and propels time and skill as opposed to privilege. Through the gamified experience, communities can generate an income, reinvest their earnings and elevate their economic status. What’s more, these NFT games can be a gateway to accessing alternative financial services and a module for improving financial literacy. Also, they make learning, earning and investing fun. That’s more than anyone ever said about a bank account.