While cryptocurrency struggles daily to gain acceptance among merchants and consumers, one corner of the blockchain space is enjoying sevenfold annual growth: play-to-earn. When something is expanding that fast – especially from a low baseline – it can’t be assumed that everyone who ought to know about it by now actually does. So let’s start with the obvious question: What exactly is play-to-earn?

P2E for short, it’s the gaming model where “a platform provides its players with a chance to earn any form of in-game assets that can be transferred to the real world as a valuable resource,” according to CoinMarketCap. “It effectively gives players a chance to generate revenue by participating in games.”

This model could have been developed without blockchain technology, but it wasn’t. As long as in-game rewards were simply given for completing missions or leveling up and could only be spent on new skins or weaponry, then there was no need to put them on the blockchain. But P2E further incentivizes players to make other contributions to the in-game ecosystem. This involves creative work developing new accessories. Some of these might be one-of-a-kind, which makes them the perfect use case for non-fungible tokens. That’s why blockchain-native games have the long-term edge over games built on legacy technology.

Worldwide Asset eXchange, or WAX, which is now rolling out Blockchain Brawlers through its WAX Games Studio unit, is at the forefront of the P2E movement and has some lessons to teach those rolling out other distributed-ledger projects.

Drop ‘til you drop

“Five years down the road from now we just won’t live in a world where there’s not a player-to-player economy in every game that comes out,” according to Michael Rubinelli, head of WAX Games Studio and the executive in charge of developing Blockchain Brawlers, a pro wrestling-themed game.

That’s not to say EA, Riot Games, Zynga and other major game producers are going out of business. Rubinelli concedes they have the scale and staying power to adapt to P2E, but he “believe[s] with every fiber of my being” that P2E is the direction they’ll be forced to follow.

It’s hard to pinpoint how much revenue P2E is going to generate in 2022, but CoinMarketCap reports there are currently 267 distinct P2E tokens traded with a combined $18 billion market cap. WAX is consistently ranked among the top five. But there’s no doubt P2E is exhibiting geometric growth.

“This is going to grow faster than any industry before because there’s way more upside for the player,” Rubinelli says. “It removes a lot of the barriers for players to actually engage in content. It removes a lot of the reasons why you stop playing a game.”

Is P2E a misnomer?

It’s one thing to keep a game from getting too repetitive, but it’s quite another to make playing it all day worthwhile. It’s not play-to-earn without that “earn” part.

So are people actually making an income now via P2E? Will they make an income – or make a better one – in the future? There are no guarantees, but hopeful signs have been shooting up.

First, an oft-cited CNBC report from May 2021 told of how people in the Philippines, whose jobs were disrupted by the COVID-19 pandemic, took to earning in-game currency on a P2E game called Axie Infinity, converting that into crypto and then into fiat currency. CNBC’s source was a YouTube mini-documentary produced by CoinDesk columnist Leah Callon-Butler. According to Callon-Butler, these players made as much as $400 in a matter of a few weeks – that is, not much lower than a typical blue-collar job in the archipelago nation.

If Medium and Reddit are to be believed – we said “if” – there are lots of people around the world who are also making money. It’s not a living for most P2E participants, but at least some are coming out ahead.

“Not everything [within P2E] is play-to-profit. The challenge that this space has is that sometimes the entry point is really high,” Rubinelli clarified. “Like any investment, you have to try to time it. You have to ask yourself, ‘Is this game post-market peak?’ When you get in, you could be riding a serious downward spiral from which you can never recover.”

He notes that the Filipinos interviewed for the documentary were able to get into Axie Infinity when it cost only pennies to enter and they had the free time – as unwelcome as it may have been – to dedicate themselves to the craft.

Of course, the longer someone plays the more likely they would be to recoup their investment, after which it’s all profit. For all this to work, WAX Games Studio and its competitors need to create games that will have a long shelf life, and gamers need to stay engaged in the same game year over year. It’s a symbiotic relationship.

Building an economy

So what is WAX doing to ensure that Blockchain Brawlers – which features the likeness of legendary pro wrestler Ric “Nature Boy” Flair – succeeds in confluence with its players?

“We’re trying to build a game that grows steadily over a really long period of time,” Rubinelli says. “When people leave [P2E] games today, it’s not because they were losing money necessarily. It’s that they believe that they could make more money somewhere else” playing a different game with a higher payout. Which may or may not be true.

But there’s more to making an in-game economy that can seep out into the real world. One key element is having – or creating – a secondary market for the assets created by the players.

Most developers are of the mindset, “‘Let’s go out and get a million players on Day One,’” Rubinelli says. “But what we’re saying is, ‘Let’s go out and get maybe a thousand,’ then say to the community, ‘The more you craft things that allow players to start, the better you will perform and the better we’ll perform, so we’re aligned in our interests.’”

In other words, the economy has to balance the players’ ability to create content with value and appeal with the growth of that secondary market consisting entirely of inventory created by the players.

The first step in developing the secondary market is to incentivize players to put their creations out there rather than hoard these artifacts for their own use. There have to be counterparties willing to spend enough money to make it worth the players’ while. Those counterparties are typically prospective players who want to get in the game. That only works if the game is entertaining and the market is growing.

All in the game

Ultimately, though, a P2E game is a game, not a business.

“It’s not a case of, ‘Oh, in two weeks I made my money back,’” Rubinelli says. “That’s not a game. That’s a DeFi experience.”

Decentralized finance (DeFi), though, can learn from the gaming experience.

“The way we think of things at WAX Games Studio is, ‘How do we validate people’s use of their free time, which is a super-valuable commodity?’” Rubinelli says. “Because that’s the rarest thing in the world.”

This might not hold for privacy coins, but perhaps it’s a lesson that every team behind a utility coin, stablecoin or security coin could learn: The people pouring their fiat money into your project have a wide swath of options from which they can choose. They will very often choose the one that they will most enjoy spending their time with – whether that’s actual participation or, more likely, just thinking about it. An active, engaged community is key.

That goes a long way to explaining Dogecoin, doesn’t it?


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