The rise of play-to-earn models in the gaming industry

Even an average Internet user/technologically literate person has heard of terms such as fintech, health tech, or DeFi (decentralized finance). But have you ever heard about GameFi – gamefied finance refers to a new approach to gaming and finance, based on play-to-earn (P2E) models. In this biz/game phenomenon, players don’t only play online games for fun’s sake. Their goal is to make real monetary gains from their gaming efforts. You develop a character, tool, weapon, or any other in-game asset and you can sell it, or buy someone else’s gaming assets.

This article goes into the development of the P2E community and its impact on the future of various forms of gaming.

How Do P2E Models Work?

The P2E model allows players and developers to share the profits generated from gaming.

Unlike the traditional gaming industry, where software engineers, game designers, and writers are employed by certain established companies, P2E gives power to the people.

That being said, it would be misleading to present P2E games as easy money-makers. Au contraire, programmers and gamers must learn a lot about the current technology and keep an eye on a volatile market to develop profit-bringing games or enjoy playing them, respectively.

Since most such games are based on blockchain technology and cryptocurrencies, it’s always wise to follow the best crypto options out there to make the right purchases.

To break things down to even simpler terms, in P2E games participants can become owners of potentially profitable assets. As the playing time increases, players can gather more and more in-game goods.

But how is that different from buying skins, weapons, vehicles, and other items in traditional video games, available on Steam or any other gaming platform? After all, you can buy elements in numerous traditional games and mobile apps using credit cards and other payment methods.

The key difference is that in the P2E surroundings, the valuables you gather during your gaming sessions have value outside the environment in question. In other words, those assets are called non-fungible tokens (NFTs).

The Correlation Between P2Es and NFTs

The main correlation between P2Es and NFTs is the fact they’re both built on blockchain technology. This means that each item purchased or built within the P2E universe is registered and signed on the blockchain.

What’s more, each such item is owned by the player who has created it. To be more precise, the same goes for any NFT, not only the ones created on P2E platforms: the NFT creator is also its possessor, who can do with it whatever they want – keep it, sell it, exchange it for another NFT, etc. While developers behind P2E games are typically game owners (until they decide to partly or completely sell their share and move on to building other platforms), players hold the NFTs. And if the developers decide to kill the platform in question, the NFTs you’ve earned on that platform stay alive, so to say, allowing you to sell them to potential buyers.

The practice has shown that players who have spent more time increasing the value of their NFTs have had better outputs, earning more and becoming more popular among other players.

One practical note: those players who decide to sell their in-game-collected NFTs might want to know how to access their funds, as explained in our guide on withdrawing from Coinbase Wallet.

The Crypto Side of Play-to-Earn Platforms

At the time of the production of this guide, the real-time value of Bitcoin is $64.24K. Everyone who has followed its fluctuations in the last few years knows that it has almost never been this stable for several months in a row. Even though we can always expect switches between bull and bear markets, from this perspective, Bitcoin seems like a legitimate investment option.

As building a diverse investment portfolio is suggested if you want to become a crypto millionaire by 2023, purchasing shares of Bitcoin or other cryptocurrencies is something to think about.

But what if you could play your way to crypto investments, instead of chipping in with your existing assets? Playing P2E games and earning assets calculated in cryptocurrencies qualify you for both of the above: you’re diversifying your investments, plus you’re getting closer to improving your economic status in the future.

As cryptocurrencies are becoming more widely accepted as a payment method, from eCommerce websites and digital stores to offshore casinos, you can always use the in-game earned coins to purchase various goods.

Non-Fungible Tokens vs. Tangible Tokens

Let’s now compare non-fungible tokens and their fungible counterparts.

In a nutshell, non-fungible tokens (NFTs) are digital assets that contain a piece of digital content, a work of art, or any other form of art or digital production tokenized on blockchain. An explainer video provided by the Simplilearn YouTube channel gives an example of a person who wants to organize an online exhibition of their paintings. Wishing to prevent potential duplication or forgery, this person decides to register all her works as NFTs. Now that these paintings have their corresponding blockchain tokens, the painter has protected them with this unique combination.

And if someone decides to manipulate her work without her authorization, she can easily intervene and prove the authenticity of her work through the NFTs.

NFTs can’t be replaced by another NFT, because each of them has a one-of-a-kind signature on the blockchain. However, they can be exchanged for fiat money or cryptocurrencies. For instance, if the painter above decides to sell her NFT-ized works, she’ll handle the token keys over to the happy buyer in return for the right amount of money.  

Cryptocurrencies themselves are also tokens, but they’re fungible, meaning that they can be replaced with other tokens.

Are P2E Games Free of Charge?

The monetary aspect of every play-to-earn game completely depends on the approach the developer(s) behind it support(s).

Some developers don’t ask their players to make an upfront payment. They think or have calculated that the sole participation of gamers will help them build their game and develop the platform in question.

Others decide to request that players pay a certain amount in advance so that a game fund is created. This fund can later be turned into in-game coins or simply used by developers for the further development of the game.

How Do Native Cryptocurrencies Work?

P2E game developers sometimes start minting their native cryptocurrency – a completely new crypto in the shape of new tokens, which are basically currencies restricted to this particular game. They don’t have real-time value but are a handy asset for the participants in that very game. If/When the developers working on that game decide to open this native cryptocurrency to the world, the value of the in-game tokens can become tangible. From that point, the players holding the tokens and NFTs within the game can exchange them for other cryptocurrencies or NFTs.

Such an approach is riskier for developers but if their effort is recognized by a significant number of players and the game starts to grow, including the value of the tokens within it, all the stakeholders can eventually make much more money.

Traditional Crypto in P2E Games

Game developers might use the traditional, existing cryptocurrencies, to build their novelty platform in a completely new manner. For developers, this is a safer road because their players can rely on something that has been around for a while. Some players also prefer taking part in P2E games that accept only Bitcoin, Dogecoin, Ethereum, etc.

The positive side of this approach is simply a lack of risk – you can know and feel the value of your gaming efforts from day one. As the cryptocurrencies in question go up and down, so does the value of the in-game assets and tokens.

The potential negative side, when compared to native crypto platforms, is the same: a lack of risk, in the sense that what you do in the game doesn’t make a huge difference. The worth of your gaming effort depends on the movements of global crypto markets, which depend on dozens of factors. The process of monetization on such platforms is typically slower.

Takeaway: If possible, choose one native crypto P2E game, and one traditional platform. Keep playing for both sides for a certain period and see what happens. The one that starts bringing more assets is the one that you should stick to in the following interval. After a while, you can repeat the process and check out whether something has changed.

The Top P2E Games in 2024

We’ll take this guide to an end with a short overview of the three most popular play-to-earn games in 2024. The platforms below have attracted a large number of players, so that their developers can keep implementing new fancy features that will, in turn, bring in even more gamers.

Splinterlands

Splinterlands is a Web-based game in which players collect different cards. Unlike some other similar games, where players’ cards are only stored on game servers, each collected card here is an NFT, registered and stored on blockchain. The players can sell or buy cards using cryptocurrencies on a specific marketplace. Even though all this sounds innovative, it wouldn’t differ from similar NFT-based collectible card games. The X-factor in Splinterlands is the existence of the native in-game cryptocurrency: dark energy crystals (DEC). With the right deck of cards, you get a fair amount of localized dec crypto, which you can then spend in the Splinterlands tournament, exchanges, etc.

As for the gameplay, Splinterlands count on players aiming for the right combination of strategic thinking and amusing elements.

Suppose we add the element of nostalgia tailored for long-term card game players and the explained P2E monetization. In that case, it’s no wonder that Splinterlands is one of the most exciting phenomena this year.

Decentraland

Decentraland is a game that has tapped into the subject of owning a patch of virtual land in the digital realm, as one of numerous games relying on the evolution of the metaverse concept. In this game, players buy real estate and land lots with the game’s native cryptocurrency called MANA. Again, each of these patches is reserved and registered on the blockchain through NFTs. Hence, players are granted ownership over their digital land, letting them keep it, sell it, expand it, etc.

While the afore-explained Splinterlands is a card game, mostly trying to attract that profile of players, Decentraland is a creative playhouse. Players have a great chance to express their creative side by building entire villages and towns on their land and enriching them with stores, cafes, art galleries, and any other features a real town would have.

Players who start playing Decentraland quickly start communicating with other virtual dwellers. They spend time in group chats, conceptualizing their orchards, gardens, towns, etc. This kind of networking is practical for the game itself but it can also lead to some more lucrative in-game and offline endeavors.

Finally, the monetization options are plentiful, from charging others to let them see your village or interact with the items you’ve built to selling NFTs.

Axie Infinity

Axie Infinity is the first play-to-earn game that rose to prominence (and stayed there). The backbone of the gameplay are certain creatures called Axies, which players can collect and grow, only to use them for fights or trades. Yes, you’ve made the right guess: each Axie is contained within an NFT. Owning an Axie means you can swap it for other Axies or simply sell it on the market.

The earning potential is instilled in the game through the smooth love potion (SLP), the in-game native cryptocurrency. As players keep working on their Axies, they get more SLP, which they can use to cultivate new Axies or simply exchange them for cryptocurrencies.

P2E games sometimes borrow elements from one another; hence, in Axie Infinity, you can now buy a patch of land where you can host your pack of Axies and let them rest, live, and grow.

While Axies are adorable and the gameplay is alluring, the itchy part is that getting your first Axie can be a bit expensive and more time-consuming than one would think. Hence, count the pros and cons of spending time on this game and learn more about other people’s experiences beforehand.  

Disclaimer: This is a paid post and should not be treated as news/advice.