Amidst another wave of crypto gaming euphoria, the right moment has come to explore the design of a typical game with NFTs.
As per the estimations of DappRadar, there are almost 600 blockchain-based games up and running across various networks, in April 2022. They utilize various engines, belong to different genres and, of course, are focused on different target groups of audience.
At least three of them - The Sandbox, Decentraland, and Axie Infinity - joined the elite club of unicorns in 2021.
By the way, the vast majority of these games are built around the same economical designs. As such, the GetBlock team is going to shed some light on how they benefit from the unmatched hype GameFi segment is surrounded by.
What are Play-to-Earn games?
Play-to-Earn games (on-chain games, blockchain-based games, GameFi protocols) should be referred to as a class of gamified protocols that somehow utilize blockchains for in-app payments or data transfers.
Also, it is a separate category of decentralized (on-chain) software applications based on gamified decentralized finances (DeFi) concepts.
However, largely, Play-to-Earn games include non-fungible tokens (NFTs) as the specific form of ownership. In Web2 games, players store their in-game riches or equipment in their accounts: team of this or that game or hackers can easily steal them.
In Play-to-Earn ecosystems, all virtual belongings (in-game land, equipment, virtual currency) are associated with a player’s cryptocurrency address (wallet). This makes the economical interactions in the game more inclusive, democratic, transparent, and censorship-resistant.
Why are Play-to-Earn games popular?
First, not unlike Web2 games, they provide the players with the opportunity to monetize their hobby. No special education is required to complete missions or compete with peers in tournaments and challenges. This ‘job’ has a very low entry threshold: that’s why it is usually very popular in emerging economies with high unemployment rates.
At the same time, the earnings in Play-to-Earn games are way more impressive than in classic MMORPGs. Also, all prizes and in-game goods can be easily converted into Ethers, Binance Coins or other mainstream cryptos. It allows you to cash out your virtual loot in seconds while in Web2 games you need to find a peer to sell what you’ve earned in game.
Last but not least, Play-to-Earn euphoria should be attributed to solid hype around the crypto segment triggered by 2020’s DeFi summer and 2021’s Bitcoin rally.
Play-to-Earn Economy 101: Basic by GetBlock
As the inflow of new players in the P2E segment shows no signs of exhaustion, it’s interesting to look at the core elements of every successful on-chain game in terms of economics.
The majority of Play-to-Earn projects include several revenue streams into their plots. For instance, you need to buy some tokenized cars to join a racing championship or purchase weapons to fight in a battle arena.
On-chain MMORPGs often organize ‘land sales’: players are able to purchase elements of virtual land terrain. In ERTHA metaverse, you can even buy ‘real-world’ countries like Sweden and Japan.
The core revenue stream for GameFi products is associated with NFT sales. Initially, the game team is the only owner of all characters, all in-game assets and goods. As such, they tokenize all elements of their world and sell them to enthusiasts.
Some games also charge NFT traders with the commission: the earliest owners get secondary sales royalties. Sophisticated games allow NFT holders to collateralize them: the game team acts as a lender and enjoys interest.
Almost every cryptocurrency game issues its own core utility and governance cryptocurrency. Axie Infinity’s SLP and AXS, The Sandbox’s SAND are textbook examples of such tokens. Team members and early contributors hold massive amounts of these tokens and can sell them to get additional revenue.