Metaverse, play-to-earn, and a new game economic model

Author: EVAN LUTHRA

*Original Title: * 《The Metaverse, play-to-earn and the new economic model of gaming》

Translated by: Linqi, Chain Catcher

The gaming industry has always been synonymous with fun, and recently it has experienced tremendous growth. Now, when gaming is mentioned, many people talk about how to profit from it. Since the launch of Web 3.0, the industry has seen significant growth. Reports indicate that by the end of 2019, the global gaming market was valued at approximately $152 billion. This growth means that since the introduction of Web 3.0, Web 3.0 gaming has been growing steadily and gaining adoption from more and more major gaming companies. Undoubtedly, this has been quite profitable, which in turn has attracted many new developers into the field.

Even with the introduction of new gaming models, it is expected that over $120 billion will still be spent on mobile gaming in 2021. This represents a 20% increase compared to 2020.

Historically, gaming has been a one-sided relationship where only the developers or owners of the games reaped economic benefits, while players merely played, spent money, and enjoyed the fun. Now, a new economic model has been introduced, but in the years prior, players spent a lot of money on games. In 2020, customers in the mobile app industry spent a total of $143 billion, with the gaming app sector accounting for a massive $100 billion of that. This means that for every dollar spent in the Google Play and Apple App Store, gaming applications accounted for 70%. Even with the new gaming models being launched, it is estimated that over $120 billion will still be spent on mobile gaming in 2021, indicating a 20% increase from 2020.

The new gaming model I have mentioned twice is the play-to-earn model. The global COVID-19 pandemic has sparked interest in play-to-earn, and this is not a false claim. The same applies to the virtual worlds and "metaverse" that these games inhabit.

What is the Metaverse?

The prefix "Meta" (meaning "transformation and transcendence") combined with "Universe" creates the term "Metaverse." Thus, the metaverse is a world that transcends the universe. It can be described as an extraordinary place. In the metaverse, virtual land, avatars, and even buildings can be freely bought and sold. Such transactions are typically completed using cryptocurrencies. In this virtual environment, people can freely move around with friends, participate in events, purchase goods, and enjoy services. Essentially, people can do everything they do in the real world.

The lockdowns caused by the COVID-19 pandemic prompted people to explore and tap into the potential of the "online world," leading them to discover that they could still conduct business and engage in entertainment activities from anywhere in the world using their devices. Many of the metaverses that exist today are powered by blockchain technology, requiring users to use cryptocurrencies or NFTs to conduct transactions in these virtual worlds. Many current games have their own metaverse, featuring native cryptocurrencies used for transactions and for receiving in-game assets and rewards.

What is the Play-to-Earn Model?

The play-to-earn gaming model incorporates the concept of an open economy and provides economic rewards to every user who increases its value by playing games and spending time within the gaming ecosystem. In the past, people's perception of gaming was that it was merely a form of entertainment. With the emergence of new types of games, this perception is changing. These games are not only fun but also present attractive investment opportunities. Speaking of investment, in recent years, many large venture capital firms have poured significant funds into the industry. In the 18 months leading up to 2019, global investments in the gaming industry reached $9.6 billion, with 24 blockchain-based gaming companies raising $476 million in just the first half of 2021.

Recently, games like Axie Infinity and The Sandbox, which allow players to earn income through gaming, have become increasingly popular, sharing a commonality in their economic systems. Take the traditional game "The Sims" as an example; players can purchase in-game assets with in-game currency, but that currency and those assets have no value in the real world. This is because there is no liquidity infrastructure within the game. Another traditional game, "World of Warcraft," does have a market where players can buy in-game assets and trade characters, but it is very disorganized. The combination of blockchain technology and the play-to-earn model addresses all these issues.

How Does Play-to-Earn Work?

To explain how play-to-earn works, I will use Axie Infinity as an example. Axie Infinity is a blockchain game inspired by Pokémon, developed by the Vietnamese company Sky Mavis. It currently has over one million daily active users, attracted by the cute creatures in the game called Axies. Users can breed, buy, and train these Axies, which are also used to complete tasks and participate in battles. The goal of the game is to earn an in-game token called Smooth Love Potion (SLP). Through SLP, players can breed their Axies, giving them an advantage in earning more income.

Another reason players want to earn as much SLP as possible is that SLP is a cryptocurrency that can be traded on cryptocurrency exchanges. It is said that skilled players can produce up to 1,500 SLP per day. The Axie creatures themselves can be sold as NFTs on the open market. Players can also sell in-game assets like real estate and flowers as NFTs. Therefore, in the Axie Infinity economy, players are rewarded by acquiring SLP that can be sold on cryptocurrency exchanges and by purchasing Axies and other in-game assets that can be sold on the open market.

Other Play-to-Earn Games

In addition to Axie Infinity, other games and platforms are set to launch or have already launched similar games, and I see their potential.

Bloktopia, supported by Polygon, is a decentralized metaverse that will provide the crypto community with an unprecedented virtual reality experience. In a decentralized and open-source world, the bridge between the virtual and physical worlds is the metaverse. Protocols for managing digital real estate and digital art value will emerge, and NFTs on the Polygon network will become facilitators in this field due to their affordability and rapid transaction capabilities.

OneTo11 is a fantasy sports mobile application designed to provide users with a new way to leverage their sports knowledge for entertainment and profit. OneTo11 aims to create a bright future where sports fans, bettors, and gamers can do what they love on a revolutionary platform. They can not only interact socially but also compete with each other in a transparent and decentralized manner. It is a gaming profit platform that allows users to earn by participating in fantasy sports and other games on its platform.

OneTo11 offers every player the opportunity and means to prove themselves and showcase their skills, rewarding customer loyalty in the process. Players on the OneTo11 platform can earn even without participating in paid competitions. The game differs from other games in its profit-making methods, which include three ways:

1. Competition Prizes: Players create their fantasy teams to participate in competitions, and they only need to finish in the top 75% to win prizes.

2. Network Commissions: Players can refer other smartphone users to the OneTo11 platform using a unique code. When their referrals participate in paid competitions, players will earn 1.5% of the competition fees.

3. Referral Income: Users of the OneTo11 platform can earn income from subsequent referrals of users they have referred. The OneTo11 network rewards its users with 11 levels of referral bonuses.

Nakamoto Games aims to give anyone with a crypto wallet access to a wide range of games on the platform. With this power, they can earn substantial and sustainable income. The company will also launch a suite of internal games that allow players from around the world to compete for weekly prize pools and earn super lucrative rewards from these games.

Developers can also build and deploy their play-to-earn games on the platform, which will control the monetization aspect of their games. This is similar to launching self-built applications on the Google Play Store or Apple App Store.

Immortal Games is a platform built by a group of talented game developers dedicated to creating outstanding gaming projects. They have developed a trading card game (TCG) and a collectible card game engine. Currently, they are developing AmericanGothic (a presentation of classic TCG). In this game, players can choose from four races based on an American Gothic background and are offered several unique game modes such as "Arena," "Tournament," "Land," and "Multiplayer." Fantasy Defense is an interpretation of the classic tower defense genre, featuring a larger multiplayer aspect, and is another game developed by this platform.

Immortal Games believes that the gaming industry is undergoing a revolution regarding the true ownership of gaming assets, and they are working towards this direction.

TryHards is a shooting game based on NFTs and powered by the Polygon blockchain. In TryHards, players can stake, battle, craft, and upgrade their characters and weapons simply by playing. These characters, known as "Fanatics," and their weapons are NFT-based. Players must collect as many "Fanatics" as possible to enhance their gaming abilities, and since this is a play-to-earn game model, there are financial incentives to stake the platform's native $TRY token and continue playing. This means there are monetary incentives to inject the platform's native $TRY token and keep gaming.

In the Future

Although the play-to-earn gaming model has just emerged, it seems likely to exist and remain popular for a long time. Players can create new digital assets, trade using the game's infrastructure, and earn virtual in-game currencies that can be easily sold for other cryptocurrencies and fiat currencies.

In the past, many games supported the dynamic development of online communities, but the play-to-earn model, which generates financial income through increased capabilities, is making communities more active. The niche market is still young, so keeping an eye on these profitable projects may be beneficial, as they are likely to be advantageous in the long run.