Until recently, video games could only reward players inside the game and its ecosystem. But now developers are exploring new ways to monetize digital value created within the gaming universe.
Thanks to cryptocurrency and non-fungible tokens (NFTs), some new monetary models have emerged in the gaming space. Some of these models allow gamers to potentially make a profit just by playing their favorite games. These are referred to as play-to-earn games.
Related: What is tokenization?
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What are play-to-earn games?
Play-to-earn crypto games offer players the potential to acquire certain digital items that could have real monetary value. These usually come in the form of NFTs or a cryptocurrency token. The tokens can then either be sold to other players in the game or sold in an outside marketplace.
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How do play-to-earn games work?
Play-to-earn games use a business model that rewards users with cryptocurrency in exchange for playing the game.
Gamers are given virtual items within the game, along with the ability to increase their value through actively playing. Thanks to the advent of non-fungible tokens (NFTs), in-game assets can be defined by a unique blockchain marker. This allows for digital items that have value in the gaming universe (for example: weapons, spells, skins, virtual property, etc.) to have a single owner and even to be assigned a monetary value.
By participating in the digital economy that exists within the game, players can create value for themselves, other players and the game’s developers. In return, they can be rewarded with various digital assets. These could include additional in-game items, new characters with variable scarcity or some kind of cryptocurrency token.
The main concept at work in play-to-earn NFT games is that players can be rewarded for the time and energy they put into the game.
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Most popular play-to-earn games
Play-to-earn crypto games provide some kind of financial incentive for players. There could be ways to make money inside the game by either acquiring items that come in the form of NFTs that have resale value on a dedicated marketplace, or by earning different types of crypto by performing certain actions.
Here are a few popular play-to-earn crypto games of 2021, as reported on Crypto Potato.
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1. Axie Infinity
Axie Infinity was partially inspired by the Tamagotchi craze of the late 1990s. Tamagotchis were small, keychain-sized digital “pets,” devices that users could take care of as they matured.
In Axie Infinity, players can raise, collect, breed and battle token-based creatures called Axies. The digital creatures can take many different forms — there are over 500 available body parts grouped into different categories according to how rare they are. Categories include:
- Common
- Rare
- Ultra-rare
- Legendary
Each Axie is a non-fungible token (NFT) with its own unique attributes. Users can upgrade their Axies and trade them for cryptocurrency.
The native token of the Axie network is called Axie Infinity Shards (AXS). AXS can be staked or used to participate in the game’s governance.
In addition, there’s another cryptocurrency called Small Love Potion (SLP), which can be earned by playing Axie Infinity. This crypto is an ERC-20 token hosted on Ethereum. SLP can be used to breed new Axies. The cost to breed a new Axie begins at 100 SLP but goes up with each subsequent generation. Axies can be bred up to seven times.
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2. Decentraland
Crypto investors and enthusiasts may have heard of the Decentraland MANA coin before. This project was among the first of its kind, created in 2017 through an ICO that raised $24 million.
Decentraland is a virtual world that runs on Ethereum where players can create and monetize different content and applications, like plots of land. The land can then be moderated with features that make it unique and attractive, potentially allowing it to be sold to other players for a higher price.
In June 2021, it was reported that a plot of virtual land sold for more than $900,000.
Like Axie Infinity, Decentraland also has another token in addition to its native MANA. MANA is an ERC-20 token that can be burned in exchange for non-fungible ERC-721 LAND tokens. MANA can also be exchanged for various avatars, wearables, names and other digital items available on the Decentraland marketplace.
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3. The Sandbox
The Sandbox combines NFTs and decentralized autonomous organizations (DAOs) to create a digital world with a large gaming community. In a virtual world somewhat similar to Decentraland, players can create and exchange different digital assets inside the game.
There are two different tokens in The Sandbox. The native token, SAND, is an ERC-20 token with a limited supply of 3 billion. The other token, LAND, is an NFT with a supply of 166,464 and can be used for hosting games, building housing, creating multiplayer experiences and more.
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Pros of play-to-earn games
- It’s fun. Video games are made for entertainment, and players who enjoy a particular game will likely welcome the chance to make some real money in the process.
- It’s new. Pay-to-earn games represent a new frontier in technology and gaming. Current players get to be the first to experience what may become a standard model for many more games in the future.
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Cons of play-to-earn games
- There are fees. These platforms take fees when players sell digital items. For example, Axie Infinity takes a 4.25% marketplace fee when players sell characters to other players.
- Potential for volatility. Most of these tokens are still relatively small, so their prices can rise or fall quickly. This could pose problems for those looking to profit from play-to-earn games.
- There is a learning curve. Those unfamiliar with how crypto works, how to use digital wallets, or how NFTs work will want to educate themselves before getting involved. Users have to interact with the existing crypto ecosystem outside of the game if they want to participate and have a shot at making money.
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How much income to people make from play-to-earn games?
The amount of income from play-to-earn games can vary, but for most players, it’s unlikely to allow them to quit their day jobs. Income potential depends upon variables like the game in question and its current popularity, demand for any NFTs or tokens offered, and the current state of the crypto market in general.
While some NFTs earned in games have sold for hundreds of dollars, so far this isn’t the norm. Players who spend more time in the game may have better odds of earning more, but there’s no guarantee due to the other variables mentioned.
That said, some people in developing countries (where the U.S. dollar is more valuable than the local fiat currency) have managed to make enough of a regular income with play-to-earn games to replace their unemployment benefits.
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Which games can you play to earn NFTs or cryptocurrency?
There are many play-to-earn games, including Axie Infinity, Decentraland and The Sandbox.
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Are play-to-earn games lucrative for the player?
It can be hard to say for certain since this is a relatively new phenomenon. In general, only the most dedicated players are likely to amass any significant funds. There’s also a factor of luck involved in how in-demand the earned items happen to be in a given moment.
One important factor in how lucrative pay-to-earn can be is the value of the token or NFTs in question. If the tokens rise in value relative to Bitcoin or a user’s local fiat currency, then even a small amount of cryptocurrency could lead to large payouts for players. On the other hand, if demand is low, users could spend a lot of time playing these games without earning much.
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11. Are there free blockchain games?
Some blockchain games will require an initial investment. This can vary depending on the game. Axie Infinity requires new players to purchase three Axies, which costs around $600.
There are a variety of different blockchain games that can be played for free, but most of them are less popular.
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The Takeaway
In the past, the only way to monetize anything video game-related was to sell an account. In games like World of Warcraft, for example, some new players might be willing to pay for an account that has established characters that are already at high levels and have advanced items.
Today, newer pay-to-earn games are part of the growing metaverse, a term used to collectively refer to all aspects of a burgeoning virtual reality universe.
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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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