What Is Play-2-Earn (And X-to-Earn) - Part 1: Play-2-Earn Explained
As increasing innovations in technology continue to disrupt the established modus operandi of various industries, one undeniable example is the gaming industry. With the introduction of computers and mobile devices on a large scale, gaming has moved from the days of arcade machines to gaming consoles like Xbox, PlayStation, and others.
The blockchain revolution has further widened the scope of technological realities in gaming. One such reality is a new gaming model known as "play2earn," which has not only been trending worldwide since the pandemic but has actually begun to disrupt the labour economies of certain developing and industrialized nations. Before P2E, businesses utilized two major models – the pay-to-play and free-to-play or freemium models—to engage potential and existing clients.
So what exactly is play2Earn?
Play2Earn Explained
Play2Earn (P2E) or Play To Earn is simply what it is – playing blockchain games to earn digital in-game assets such as NFTs, crypto coins, virtual land, skins, weapons, and more. These virtual assets can easily be monetized for real-life purposes. It is a relatively new concept that is based on the creation of autonomous virtual economies that are guided by tokenomics. That is, P2E communities operate their own formal blockchain-backed digital assets, whether cryptocurrencies or non-fungible tokens (NFTs)
The Play2Earn model got a big popularity boost with the release of Axie Infinity, a blockchain game developed by Sky Mavis. The success of the game not only established the Play2Earn concept but has also encouraged the emergence of other “To-Earn” models such as
- Move To Earn
- Learn To Earn
- Participate To Earn
- Watch To Earn
Together with Play2Earn, all the concepts listed above are known as X2Earn. Here, X denotes any viable web 3.0 tokenomic model that promises users the possibility of earning convertible digital assets after they take certain actions.
History of Play2Earn
Though Play2Earn is not an entirely new concept, the history of the model with respect to blockchain and earning crypto coins dates back to February 2014. It was that year that Huntercoin, the first blockchain and decentralized strategy MMO game in the world, was launched. Huntercoin, which was created in 2013, was more or less an experiment to observe the impact that thousands of mapped gamers would have on a decentralized blockchain network. The experiment was a success.
Unlike Bitcoin where mining is based on solving complex mathematical problems, Huntercoin was based on ‘human mining.’ In Huntercoin, players aim to claim the crypto coins on the map and also eliminate other players. Those that succeed in earning crypto coins deposit them in randomly located “banks” within the map. Any banked coins are reflected in the gamer’s wallet. Miners are entitled to ten percent of banked coins, while the death of a gamer yields them four percent of dropped coins.
Another notable chapter in the Play2Earn book was written in November 2017 with the launch of CryptoKitties, the world’s first Ethereum-based game. About one week after its launch, CryptoKitties transactions amounted to more than 5 million USD–or roughly a quarter–of all traffic in the Ethereum ecosystem. The game’s popularity meant increased network congestion for the Ethereum platform, a situation that showed the scalability concerns facing both Ethereum and other blockchain networks.
Play2Earn – Current State Of Affairs
Play2Earn has made a significant impact over the last few years, particularly in 2021. This success is linked to its convergence with blockchain technology, especially NFTs which continue to rise in value. The revolutionary effects of blockchain on gaming include:
- Integration of NFTs into games by game developers
- More rewards for players
- Gamers now enjoy in-game asset enhancements
- New economic opportunities provided by in-game assets
- Market share shrinkage of centralized gaming platforms
It should come as no surprise–and indeed it is no secret–that major centralized gaming platforms such as Microsoft (XBOX) and Sony (PlayStation) have been making large and concerted leaps–and major acquisitions–into the crypto gaming and metaverse spaces.
Moreover, Play2Earn has not been popular only in the West but in other areas of the world as well. Take the Philippines, for instance, where Axie Infinity has had a massive impact when it comes to providing income to those who need it. There, the emergence of guilds and scholarships has helped provide more game access to people who could not afford to purchase the minimum three Axies required to commence gameplay.
Under the guild system, rather than worry about the cost of buying Axies, new players called ‘scholars’ rent in-game assets from guilds or individuals (including Western investors). The guild takes 10% of the gaming revenues, the guild manager keeps 20%, and the scholar gets the major share of 70%. (In many instances, experienced players in the Philippines earned more from Axie Infinity than stocking shelves at the local grocer or delivering food.)
The popularity of the guild model has led to the emergence of several gaming guilds in the Philippines in a short span (over 500 as of the first quarter of 2022). These guilds have become crucial because they help provide many Filipinos (especially those in rural areas and smaller towns) with access to financial services, including GameFi and blockchain.
Without these guilds, many would have been denied access to these life-changing Play2Earn crypto games (and their adjacent financial services overlapping Game-Fi and DeFi). At some point, one of the more popular guilds known as Yield Guild Games (YGG) had 8,000 scholars and about 60,000 yet-to-be-approved applicants aspiring to be part of its program. (The YGG periodically trains and mentors a specific number of players.)
In a nutshell, the infusion of blockchain technology into gaming in the form of “play to earn” has been an economic success. A large number of gamers not only get to enjoy their passion (or job) but earn significant income from it.
Types of Play2Earn
Like traditional gaming, P2E blockchain games can be classified under a number of typologies. Below are some of them.
Metaverse Games
A metaverse is a virtual world through which a gamer can play with other gamers in any part of the world as well as create, and monetize ideas in virtual space. Metaverse gaming is the hosting of games on the metaverse, ideally, a 3D environment where players are avatars. Other features include VR hardware and in-game assets. Alien Worlds and Decentraland are examples of metaverse games.
Role-Playing Games (RPG)
In role-playing games, players are able to control the game’s characters and actions, usually to advance further in the game and attract more rewards. In-game assets in crypto RPG games are mostly in the form of NFTs.
Trading Cards
Digital trading cards include NFTs. They are often limited in supply and their value is determined by a number of factors such as ownership, scarcity, and utility.
Below are a few of the more popular P2E games.
Axie Infinity
Axie Infinity is an Ethereum-based metaverse/card game that is inspired by Pokemon. As noted earlier, you need to purchase at least three Axies to play this very popular game from a Vietnamese developer. Gameplay involves breeding Axies with other Axies and engaging in battles to earn SLP (Smooth Love Portion), one of the two native tokens in the game.
Players can also earn income by staking the game’s other native token known as AXS (Axie Infinity Shards). The game has recorded a trading volume in excess of 3.6 billion USD and over 2.8 million daily active players. It is very popular in Asian countries such as the Philippines, Vietnam and China. Axie Infinity is compatible with Android, iOS, and Windows devices.
Alien Worlds
Alien Worlds is a crypto game that was released in December 2020. It is based on the Ethereum, WAX, and BSC blockchains. The game is a decentralized metaverse that adopts Trillium (TLM) as its native crypto token. In terms of gameplay, Alien Worlds is made up of six planets that are organized as Decentralized Autonomous Organizations (DAO). Players can mine TLM, engage in quests, own land, and adventure on various planets, among other things.
The game can be described as revolutionary because it's the first time in history that a game has been designed to have DAOs compete against one another as teams and also have their individual NFTs. It was reported that the trading volume of Alien World NFTs had reached 42.7 million USD as of October 2022. (Learn more here.)
CryptoKitties
As highlighted above, CryptoKitties is one of the pioneers when it comes to Play To Earn gaming. It is based on five Ethereum smart contracts and has WCK (Wrapped Basic CryptoKitties) as its token. The major way players can earn from this game is through the breeding and sale of the CryptoKitties via auction.
In 2017, the year it was introduced, Cryptokitties transactions constituted eleven percent of all transactions on Ethereum. In 2019, over two million CryptoKitties transactions were processed on the Ethereum platform, an achievement no other decentralized app could match.
The Sandbox
Sandbox is a voxel-based game inspired by another very popular game–Minecraft. But unlike Sandbox, the developers of Minecraft have yet to allow any modification of the game to incorporate blockchain technology, including NFTs. The game’s native currency is SAND.
The value of NFTs in the Sandbox marketplace varies from less than one dollar to close to five thousand dollars. Players can earn money by creating and trading NFTs. They can also earn by purchasing land and selling or renting it to other gamers at a higher price.
Decentraland
Decentraland is a user-created decentralized 3D metaverse that operates two native tokens–Land NFTs and MANA (its in-game currency). Gamers can purchase land (and other digital assets) for MANA which landowners can then rent or sell to other gamers for MANA. They can also build on their land and/or use it for business, e.g., by setting up a digital art gallery to promote and trade their collections–or real world business &/ products (...like HSBC–a notoriously anti-crypto retail bank.)
Stay tuned for Part 2 where we discuss the role of decentralized networks in the world of Play2Earn.
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