Sunday, November 14, 2021

Play to Earn Blockchain, Crypto, NFT Games

In this article we will discuss the Play-to-Earn Economy, aka P2E.  Perhaps the most famous play to earn game is Axie Infinity, which amassed 1 million Daily Active Users (DAU). Its protocol revenue is only second to Ethereum, wow. 

Too busy to read? Watch this youtube documentary about Axie Infinity:
The video explaining play to earn went somewhat viral. People in struggling communities are playing Axie Infinity to change their life. 

The concept play-2-earn is also connected with the idea of Metaverse, real estate NFT, in-game purchase, in-game economy etc.

How does Axie Infinity make money? | How does Axie Infinity earn fees

"The Axie Infinity economy consists of a governance token (AXS) and a second token called Smooth Love Potion (SLP) that serves as an in-game currency, along with NFTs that represent both game characters and virtual real estate." - coinbase

"Every time an Axie is traded, a plot of real estate is sold, or two Axies are bred, the protocol takes a fee priced in a combination of AXS and SLP. Rather than go to the developers, this revenue is placed in the Axie treasury, which has ballooned to nearly $600 million."

Axie Infinity is not actually available in the United States. Its enormous success was based on emerging markets alone: Vietnam, Philippines, Brazil, India, Indonesia, Venezuela  etc.

Games of web2, pre blockchain games, employs the free-to-play, or freemium model. It's to get started. Axie Infinity requires 3 to get started. You will have to do buy, rent, or obtain an AxieInfinityScholarship in order to get started. When the game first started, Axies average $10 per creature, now it is estimated to be north of $500 per creature.

Of course $1500 is not affordable at all for people in the Philippines. There are now systems of lending: when lending axies to others, the loan originator also gets a cut of the winning. You can think of this as a credit, borrowing / banking system build on top of the game. However, it is also smelling of pyramid when gamers have to pay to join and thus by recruiting new members, the game becomes more profitable for those at the top of the pyramid. 

Yield Guild Games (YGG) "YGG is essentially a holding company for play-to-earn gaming assets. Starting in 2020, they’ve been buying up yield producing NFTs, governance tokens, and ownership stakes in promising gaming projects and protocols." - coinbase "Similar to how Uber pairs people who want to earn money driving with people who need rides, YGG pairs people who want to make money gaming with the NFTs they need to earn in play-to-earn games." YGG even has its own asset report (July) " By the end of July, the YGG treasury had amassed 19,460 NFTs valued at over $10M across 12 play-to-earn games. Axie Infinity NFTs comprised close to 90% of that value."

With Sandbox's huge raise recently, we wonder if YGG has increased again, significantly in value. YGG also has a token. If you are interested in NFTs and games, it might be good to look at YGG's portfolio for brainstorming ideas. "YGG has also made early stage investments across 8 play-to-earn games via SAFT (Simple Agreement for Future Tokens)". May be this name is inspired by YCombinator SAFE? 

Seriously best article about GameFi by coinbase blog

Federal regulator in the gaming world? Product managers of games long know that in-game economy can be regulated. Players can be incentivised or disincentivised to certain activities. In Axie Infinity, the Fed is called the Sky Mavis.

"If Axie Infinity is its own digital nation, game developer Sky Mavis serves as its Federal Reserve. Where the Fed has various tools it uses to influence the economy, Sky Mavis can adjust the SLP issuance rate and breeding fees with the aim of keeping the Axie economy healthy. Just like a real economy, digital economies have to consider the effects of inflation."

For those already overwhelmed by the amount of information out there, a simple rule to keep in mind is axies are bought using Ethereum. If you want a part of the Axie Infinity earn but don't have time to learn one more thing. Consider Ethereum as your asset. Not financial advice, not qualified to give financial advice. WARNING Read our full disclaimer.  WARNING

People have been using the analogy Ready Player One over and over again: where people living in dystopia can have their lives changed by their in-game performance in the metaverse where they play to earn. It's an exciting time and it is a sad time. Fortune rarely honors those who gamble or try to make-rich-quick-scheme. But for now, it's an exciting time to be a gamer. 

Read more about Axie Infinity on coinbase, source 2 below


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