“Play-to-earn” has become a popular term since mid-2021. This trend has led to the emergence of various gaming projects, making the cryptocurrency market more lively than ever. In this article, CoinMinutes will provide a more detailed explanation of this play-to-earn trend.
What Is Play-to-earn?
Play-to-earn or P2E games, as the name suggests, are games that allow players to earn rewards such as NFTs, game tokens, money, etc. These rewards are determined by a player’s performance or their attained level within the game.
Even though the games are free to use, integrating blockchain technology and the creation of NFTs opens up revenue generation options. Players can either earn these rewards or buy them from the secondary marketplace. Players can earn in-game assets with PvP battles or complete game tasks. In addition, players can earn more in-game digital assets such as NFTs and tokens by staking them for a fixed duration.
Later, players can trade or sell them to other players for real-world money. All the game NFTs use smart contracts to ensure every time there is an NFT sale, the original creator will earn a royalty. In-game NFTs or tokens can also be traded on secondary marketplaces in exchange for real-world currency.
In this way, play-to-earn games generate revenue for the investors while giving equal opportunities for players to earn.
The Rise of the Play-to-Earn Trend
Picture playing a game like Pokémon, where instead of just having fun, you can earn money. That’s the idea behind play-to-earn games, and one of the big players in this trend is Axie Infinity. Launched in 2018, it’s a game where you collect cute creatures called Axies, each with its strengths and weaknesses. You can go on adventures, battle other players, and even breed your Axies. The cool part is that you earn special crypto tokens (like in-game money) by playing well.
Axie Infinity has become super popular, with 2.8 million people playing every day and a total trading volume of $3.8 billion. In countries like the Philippines and Indonesia, some people are even playing Axie to help support their families. There are also programs, like “Axie scholarships,” where players can loan their Axies to others.
This kind of gaming is introducing lots of people to cryptocurrencies. Aleksander Leonard Larsen, one of the founders of Axie Infinity, says that half of the players had never used any crypto before. But, here’s the catch – to get started, you need to buy three Axie NFTs, and each one can cost a couple of hundred dollars. Larsen knows it’s a bit tough for new players, so they’re planning to give away some starter Axies for free to help newcomers get into the game.
There are other games that mix NFTs with decentralized finance (DeFi). For example, Aavegotchi lets players stake tokens inside cute creatures represented by NFTs, earning rewards on the Aave platform.
Even big companies like Ubisoft, the folks behind popular games, are getting interested. They have a plan called Ubisoft Quartz, where players can earn and buy NFTs based on the Tezos blockchain. But not everyone is happy about it – some gamers don’t like the idea of real-world money and incentives in their games. Some even call it “investotainment,” saying it turns gaming into a money-focused industry.
Despite the debates, lots of money is pouring into play-to-earn games from big investors like FTX and Andreesen Horowitz. It looks like this trend is here to stay and will keep growing.
What Role Do NFTs Have in Play-to-earn Games?
NFTs, or cryptographically unique tokens, form a central element of play-to-earn games’ mechanics. These NFTs are born from smart contracts functioning on blockchains, dictating the operational rules for digital assets. Within blockchain games, NFTs craft exclusive in-game features and items – ranging from avatars, virtual pets, and attire to tools, weaponry, and parcels of virtual land.
Immutable NFTs empower game developers to establish the distinctiveness and rarity of each element, thereby defining their market worth. Once acquired, players enjoy sole ownership privileges, with the liberty to vend or exchange them across various games.
As the player community in a play-to-earn game expands, the value of these digital assets escalates due to heightened demand, forming a symbiotic relationship.
Main Pillars of The P2E
When delving into the realm of play-to-earn games, they rest upon three primary pillars. Intriguingly, these pillars mirror the foundations of earlier free-to-play games, forming the bedrock of their success within the market. As play-to-earn games continue to burgeon and assert dominance in the gaming industry, they do so by adhering to the core tenets that have driven the triumph of free-to-play games.
- Marketability: Among the pivotal factors dictating the triumph of a play-to-earn game lies its marketability. When a game exhibits a high level of marketability, it effectively mitigates the costs associated with user acquisition, thereby bolstering its potential market reach.
- Monetization: The monetization aspect directly shapes the revenue-generating potential of a play-to-earn game. This facet gauges the likelihood of a player making in-game purchases and the extent to which they are inclined to invest financially. A higher degree of monetization within a game correlates with elevated revenue generation, provided the game manages to sustain player engagement.
- Retention: Perhaps one of the most critical elements, retention gauges a player’s propensity to remain dedicated to a game, and continuously participate. A robust retention rate signifies not only prolonged player engagement but also augmented revenue, as players become habitual returnees.
In essence, the triumph of a play-to-earn game is contingent upon maintaining equilibrium across these three pillars. Considering that the play-to-earn gaming ecosystem is still in its early stages, there exists the possibility that an additional pillar might emerge as a contributing factor.
Key Components of P2E Ecosystems
Virtual Economies within P2E Games
- Earnable In-Game Items and Assets: In these games, you can collect cool things like special weapons, unique outfits, or even virtual properties like houses or lands. These items are like treasures you can find or earn while playing.
- Tradable Tokens and Currencies: Imagine having unique coins or tokens that you can earn while playing. These can be used to buy in-game stuff, trade with others, or even turn into actual money!
Ownership and Monetization
- Owning and Trading NFTs: Imagine owning a unique digital badge that proves you’re the only one who has it. These badges are called NFTs. You can show them off, trade them with friends, or even sell them to others who want them.
- Converting In-Game Earnings to Real-world Value: What’s awesome is that the things you earn in the game can sometimes be turned into real money. So, those virtual treasures you collected while having fun can have value outside the game.
How Does Play-to-earn Work?
Traditional games follow a pay-to-play structure, where players purchase the game upfront to access it. Some games add extra costs for in-game items or levels.
Contrastingly, play-to-earn games allow players to earn real-world value while playing. Here’s how it functions:
- Players engage in P2E games, often utilizing blockchain tech and cryptocurrencies.
- By accomplishing tasks, challenges, or milestones, players gain in-game assets like NFTs, coins, tokens, or established cryptos like Ether (ETH). These digital rewards hold real-world worth and are tradeable or convertible.
- In-game assets can be directly sold or exchanged on internal/external markets.
- Earned cryptocurrencies can be transferred to exchanges, traded for others, or converted to regular currencies.
- Some P2E games let players stake assets or engage in DeFi for added rewards.
Each P2E game has unique mechanics, but the core idea remains consistent: players earn real value through in-game achievements. Blockchain tech ensures security and decentralized verification of ownership and value for these assets and cryptocurrencies.
Potential Benefits and Challenges of P2E
The Rise of the P2E Trend in the Gaming Industry
As of 2023, the global landscape of play-to-earn games has experienced notable expansion, signaling a growing acceptance of this innovative model. Recent statistical data illustrates this trend:
- In 2022, the valuation of the global play-to-earn NFT games market reached a substantial USD 3,292.73 million. Industry experts predict a robust trajectory for this sector, anticipating a Compound Annual Growth Rate (CAGR) of approximately 17.93%. This projection positions the market size to soar to USD 8,856.95 million by 2028. (Source: Yahoo Finance)
- The worldwide video game market is on track to breach the USD 200 billion threshold in 2023. (Source: Statista)
- The global blockchain in the gaming sector is primed to surge to an impressive USD 301.53 billion by 2030. This remarkable growth translates to a robust Compound Annual Growth Rate (CAGR) of 68.3% spanning from 2023 to 2030. (Source: BusinessWire)
- In 2022, the average revenue generated per user in the global gaming industry was USD 99.45. This starkly contrasts with the average revenue of USD 10.95 per user attributed to physical video game sales. (Source: Statista)
- The global gaming market yielded a substantial sum of approximately USD 347 billion in 2022. Notably, the standout performer within this landscape was mobile gaming, contributing a significant portion of USD 248 billion to this cumulative figure. (Source: Statista)
The Top Play-to-earn Games
Play-to-earn games (P2E) do what most traditional video games don’t – reward players for their time and effort spent in the game. Below are a few recommendations about the Best play-to-earn Games.
 | The Sandbox The Sandbox offers an interconnected realm of distinct gaming experiences. Landowners can craft their creations on plots of varying sizes using a visual game builder. Although currently in alpha testing, The Sandbox is a must-watch for play-to-earn enthusiasts. Explore our detailed review to kickstart your journey. |
 | Alien Worlds Alien Worlds is a play-to-earn game built on the WAX blockchain. It features a universe of six worlds, each with 500 land plots. Every plot is player-owned and represented by an NFT. Players can earn Trilium in-game, transfer it to Binance Smart Chain, and earn more Trilium through a staking system. |
 | Gods Unchained Gods Unchained, a fantasy trading card game, operates on the Ethereum network. Starting is simple, it’s free to play, and it immediately presents play-to-earn possibilities. |
 | Splinterlands Splinterlands, a browser-based play-to-earn trading card game, originated as Steemmonsters on the Steem blockchain but later transitioned to the Hive blockchain. Its cross-chain capability enables trading on Ethereum and Wax blockchains. Moreover, Splinterlands introduced a governance token named SPS. |
 | Axie Infinity Axie Infinity is a game where you collect, own, and breed axies, digital pets that can battle monsters or other players in strategic card battles. The game has a marketplace where you can trade or sell your axies with anyone, anywhere. |
Conclusion
The metaverse concept has surged in fame alongside the rise of play-to-earn games, given that numerous popular games revolve around delving into communal virtual realms. Within the metaverse, users engage through NFTs embodying avatars, land sections, and objects, participating in player-versus-player (PVP) games set in virtual domains.
However, it’s crucial to note that cryptocurrencies, often linked to P2E, can exhibit high volatility and susceptibility to market manipulation, coupled with regulatory uncertainties. Therefore, exercising due diligence when trading or investing in P2E coins is paramount, and it’s advisable to allocate investments cautiously, ensuring affordability even in the event of loss.
