5 Things You Didn't Know About Play to Earn

Play to earn is still a rising field in blockchain applications, with the potential to turn into one of the bigger trends for 2022 and beyond.

Play to earn looks like a niche side application of blockchain. Blockchain games have been attempted for a while, usually ending up with just a few users. This was true especially when using Ethereum to build a game, while relying on a relatively slow network powered by mining. Now, with technology available, play to earn has re-sparked the demand for economic activity with blockchain-based records and tokenized rewards.

Blockchain and gaming crossed over once again in the past year, this time with bigger success and more widespread adoption. Here are five things you need to know about this trend.

Play to Earn Can Expand to Any Game

There is no special type of game that is better fit for some forms of play to earn. When it comes to NFT creation, any item can be wrapped and offered for exclusive, transferable ownership. Perhaps the most iconic and successful crypto game this year turned out to be Axie Infinity (AXS), which showed mass adoption was achievable with an accessible environment and decent play to earn paybacks.

Recently, Ubisoft tested this notion by opening a limited series of game items, attached to Tezos-based NFTs. For now, the Ghost Recon Breakpoint game will have the NFTs available for Windows desktop beta users, and the Digits collection may also be geographically limited in availability.

Some game studios prefer to offer a free to play version, with only optional inclusion of token rewards or NFTs. Axie Infinity, for instance, can be test-played without buying, breeding or renting new characters. Other games hinge on linking a wallet first and can only be played after buying tokens or joining a specific blockchain.

The best approach is to look for a ready-made appealing game first. Because of its recent popularity, play to earn offerings or token sales happen almost daily. Not all projects have the same capabilities or value, and many may fail to produce a game.

Play to Earn is Boosts Lagging Blockchains

Play to earn may be the trend to reawaken blockchains with very few transactions and use cases. Cardano (ADA), which recently released its smart contract functionalities, has the potential to become one of the host networks due to its speed and widely available ADA token.

There are already hints ADA is being used as a play to earn reward token in some forms of NFT games. The expectation is that the network will produce appealing titles, while solving issues with its smart contracts if they arise.

The Tezos network has also seen an inflow of potential play to earn projects. In the initial stages, most startups open with an NFT collection of items or characters, often leaving the eventual game launch months in the future. But for those networks, the potential of play to earn and even a handful of successful games may arrive as a turning point after years of relatively low-level usage.

Stablecoins Build Play to Earn Liquidity

Because of the volatile nature of digital assets, stablecoins play an important role in driving play to earn adoption. Assets priced at exactly $1 have the advantage of being tokens based on Ethereum or Binance Smart Chain. Additionally, UST, the Terra stablecoin, has been added to the mix, with signs of adoption in decentralized finance (DeFi) and possibly play to earn.

BUSD, USDC, TUSD and a handful of similar assets make up about 50% of all stablecoins in circulation. Tether (USDT) alone supplies more than $78B in potential liquidity. Not all the funds flow into Bitcoin (BTC). Stablecoins can be wrapped and moved to multiple networks, potentially adding value to all startups on the platform, including play to earn games.

Play to Earn Moves Away from Ethereum

The first collectibles and games relied heavily on Ethereum and ETH, mostly because the asset was highly liquid, relatively accessible and popular. But using the Ethereum network could quickly become prohibitively expensive, making players give up if even the simplest game action requires hundreds of dollars in fees.

The rise in DeFi, the demand for accessible NFT mints and game-speed actions gave rise to multiple innovative networks. Binance Smart Chain (BSC) saw a significant inflow of projects, either hand-picked by the Binance team or created as open source. Other valuable platforms include Solana, Terra, DFinity (ICP), WAX, TRON, Polygon and other smaller platforms.

Most of those platforms attempted a bridge to Ethereum to increase versatility, but do the bulk of their decentralized computation on their native network.

Play to Earn Cuts a Piece of a Growing Industry

The gaming market in 2021 has estimated revenues above $180B, with speedy growth expected in the coming years. The idea of building a metaverse further extends the gaming experience, while making the case for ownership and digital influence.

In the coming years, the approach and viability of metaverse projects will be market-tested. The already well-established cryptocurrency industry has both the developer talent, the value and the public appeal to start building its own piece of the metaverse.

Currently, the share of play to earn assets compared to other cryptocurrencies is still small. While the size of the entire crypto market is in the trillions, only around $30B in value belong to play to earn tokens. But some of those tokens have shown significant growth achievements and wide adoption.

The most significant appeal for play to earn tokens remains in their longer-term appreciation and potential as investment vehicles. The game element means cryptocurrency usage may have a pathway to wider adoption.

Play to earn is still a relatively new field with inherent technological and financial risks. Earnings are not guaranteed and both NFTs and fungible reward tokens can lose a significant part of their value. It is advisable to do your own due diligence before investing in tokens or items related to a blockchain-based game. Game reviews are not investment advice.