Tuesday, August 16, 2022

Can the P2E Gaming Model Remain Sustainable?

One of the most interesting aspects of blockchain technology is its facilitation of a new generation of games, as well as gaming communities. In its earliest form, Can the P2E Gaming Model Remain Sustainable? blockchain gaming felt a bit rudimentary, but it has evolved into something much more sophisticated. Many complex and popular games have been developed on blockchain networks like Polygon, Ethereum, Solana, Can the P2E Gaming Model Remain Sustainable? and Hive. But while we can debate as to whether these games challenge premium console titles in terms of quality and gameplay, there is something that they can offer to entice players in – play-to-earn models. 

Play-to-earn, sometimes called P2E, does exactly what the name suggests: Players will earn money (usually in the form of cryptocurrency) by playing the titles. But while that concept is quite simple, the execution of the concept is not. And it prompts us to wonder whether P2E is sustainable and, indeed, if it represents a risk to the millions of people who play these games?

The basic model of business has been upended 

To better explain, we need to strip back and look at the model of these P2E games. There is a basic acceptance in commerce that a business must take in more from customers (let’s assume that gamers are customers) than what it pays out. If you look at the casino model, for example. Even if you research the best payout online casino on the internet, there is an understanding that the casino will have a house edge. Sure, players can win more than they put in, but, overall, the casino should make a profit. With the play-to-earn gaming model, it conceptually says that everybody wins. Surely, this can’t be sustainable?

There are two main issues that experts cite as a problem with this idea that everyone can earn money through gaming. The first is that earning money is not the same as earning a profit. It is often the case that players must start by “staking” real cash through actions like buying NFTs or other in-game items. Secondly, the real-world value of those earnings is tethered to the fate of the native cryptocurrency. We saw with the recent collapse of tokens like Terra Luna that real-world value is not always guaranteed. 

Axie Infinity players can treat it like a job By Gaming

Indeed, if you take a game like Axie Infinity, which has become notable as a P2E game because some people actually play it to earn a living, particularly in the Philippines. It follows the classic model of P2E gaming, as players must buy-in with the purchase of an “Axie”, which is one of the in-game controllable characters. Axies have been sold for as much as 300 ETH (over $1 million at the time of purchase), but the decline in value of the in-game cryptocurrency (AXS) has been stark over the last year. At one point, AXS was trading at $165, but it has fallen to as low as $2.87 in the last 12 months. The game’s other cryptocurrency, SLP (Smooth Love Potion), has also seen huge declines. That volatility is a huge pain point for anyone staking a significant amount of money to enter the game.

Critics have claimed that the risk involved in playing these games means they should be judged as gambling activities. Worse, some have called them pyramid schemes. The intrinsic problem is that the models can only be supported as long as more people are buying in. When that buying stops, the native cryptocurrencies slide. They can even end up being worth nothing.

So, is there any hope for the P2E model? Perhaps. But we argue that the games themselves must not have the ability to earn money at the forefront of the model. Many of the current P2E titles are, quite frankly, dull and repetitive. But if new titles offer a true gaming experience, with the benefit of earning some crypto on the side, then we could see a more sustainable business model being built. For the moment, you should not be thinking about quitting your job to earn money from gaming.

Latest news

Related news

LEAVE A REPLY

Please enter your comment!
Please enter your name here