The Complete Guide to Play-to-Earn (P2E) Games in Crypto (2024)

Blockchain Today

Published in

Coinmonks

11 min read

Sep 17, 2023

The Complete Guide to Play-to-Earn (P2E) Games in Crypto (3)

Play-to-earn (P2E) games are taking the crypto world by storm. In these games, players can earn real cryptocurrency rewards just by playing. The concept turns traditional gaming economics on its head — instead of players paying to play, they get paid.

P2E games are still in their early stages, but they have exploded in popularity recently. The total value locked in P2E games surpassed $3 billion in 2021, up from just $260 million at the start of the year. Some analysts predict the P2E gaming market could grow to over $50 billion by 2025.

So how exactly does play-to-earn work? Why are crypto gaming projects attracting so much interest and investment? Is this just a passing trend or something with real staying power? This in-depth guide will explain everything you need to know about the emerging world of play-to-earn crypto games.

What is Play-to-Earn?

Play-to-earn describes a model where players are rewarded with crypto tokens or other digital assets for their time and effort in a game.

P2E games usually incorporate blockchain technology and non-fungible tokens (NFTs). Game assets like characters, items, or land exist as unique digital collectibles tracked on a blockchain. Players who acquire these assets can use them in-game to progress and earn rewards. The assets can also be traded on open markets outside the game.

Some key advantages of the play-to-earn model:

Players have true ownership of in-game assets as NFTs, verified on the blockchain
Assets can appreciate in value if demand rises — providing an incentive to play early
Players can monetize their time spent in-game by earning crypto rewards
P2E creates new tokenomic models between players, developers, and community

Advocates argue that P2E provides a better value proposition and sense of ownership for players compared to traditional free-to-play games. It also allows open-ended digital economies to form around games.

However, critics say P2E games feel more like jobs than entertainment. They also raise concerns about excessive monetization and speculation overwhelming gameplay.

How Play-to-Earn Games Work

P2E games blend conventions of traditional gaming with blockchain mechanics and token economics. Here’s an outline of how most play-to-earn game designs work:

In-Game Assets as NFTs

All key assets in a P2E game, like characters, equipment, or virtual land, exist as non-fungible tokens (NFTs) on a blockchain. This gives players transparent ownership and verification of scarce digital assets.

Earning Tokens for Gameplay

Players can earn native utility tokens and sometimes additional rewards like NFT items by performing actions in the game — such as battling enemies, completing quests, selling items on markets, etc.

Native Tokens and Progression

Native utility tokens are needed for progression in the game, like improving characters, but they also have value outside the game on exchanges. Popular P2E games have highly valued native tokens.

In-Game Economies and Trading

In-game marketplaces let players trade NFT items directly for cryptocurrency or native tokens. Strong in-game economies with active trading develop in the top P2E games.

Competitions and Tournaments

P2E games usually incorporate competitive rankings and tournaments with prize pools paid in native tokens and NFTs. High-skill play gets rewarded.

Governance and Revenue Sharing

Some P2E games let holders of native tokens participate in governance of the game and share in revenues. This helps align incentives between developers and players.

Onboarding and Costs

There is usually some initial cost, either money or time, for getting started in a P2E game to acquire a starter character NFT. Top P2E games try to minimize this cost to increase accessibility.

That covers the key characteristics and mechanics of most play-to-earn game designs. Let’s look at some examples to illustrate further how these dynamics work in action.

Case Studies: Axie Infinity and The Sandbox

Axie Infinity and The Sandbox are the two breakout hits of the P2E gaming world so far. Their designs showcase many core elements of play-to-earn games.

Axie Infinity

Turn-based battle game inspired by Pokémon and Tamagotchi virtual pets
Players collect, breed, raise, and battle creatures called Axies (NFTs on the Ethereum blockchain)
Earn tokens called Smooth Love Potions (SLPs) by playing and completing daily quests
SLPs have value and utility — can be used to breed new Axies or sold for money
Highly active marketplace for players to buy, sell, and trade Axies and in-game items
Top players compete on ranked ladder and tournaments for prizes
Launched in 2018 and saw exponential growth in 2021, reaching over 2.5 million daily active players at peak

Axie Infinity perfectly demonstrates the appeal and potential of P2E gaming. Players are financially rewarded for their time playing due to SLP token earnings. The best Axies can sell for thousands of dollars due to strong demand. And the core gameplay itself is engaging and strategic.

However, the high cost of entry has been a barrier for many new players. To start playing Axie Infinity, you either need to buy 3 starter Axies from the marketplace (which can cost $200-$400 total) or get a scholarship where someone else lends you their Axies.