Increased adoption of blockchain technology has led to breakthroughs in numerous fields, including healthcare, finance, insurance, and supply chain technology. But one of the most exciting areas to benefit from emerging blockchain use cases is the gaming industry.
Although the emergence of blockchain-based play-to-earn crypto games started as a niche part of the industry, it has now filtered over to the mainstream.
In fact, the industry is currently worth $135B and is on track to become a $600B juggernaut by 2025. Now, there are thousands of play-to-earn (P2E) crypto games on the market for gamers to try.
But not all games are created equal, and not all is rosy in the world of crypto gaming. Some of the biggest names in the space have recently been rocked with scandal, leaving some to question whether certain platforms are rewarding players for their gaming prowess or sucking them into a Ponzi scheme that will leave them bankrupt.
This article will cover the current state of the P2E industry, what’s being done to address the problems, and what the future looks like for crypto gaming.
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The Early Foundations Of P2E Crypto Gaming
The first experimental blockchain game was Huntercoin, launched by the Xaya team in 2014. Although the game didn’t garner widespread interest, it did show that there were exciting future possibilities in P2E blockchain gaming.
The launch of CryptoKitties in 2017 is widely considered the first successful blockchain game, and the first crypto game to use NFTs as a base.
What Went Wrong
The first major blow to the P2E crypto industry came in 2021, when video game developer, publisher, and distributor Valve banned all blockchain-based games from its market-leading platform Steam.
Citing concerns about bad actors, the Steam ban was largely praised by gamers and journalists, who felt crypto-based games were rife with scams and exploitative systems.
This point of view was backed by Microsoft Games CEO Phil Spencer, who echoed the sentiments of exploitation in blockchain gaming platforms. Discord gamers were also quick to jump on board, criticizing a potential platform expansion into Ethereum-based gaming until the platform was forced to abandon its plans.
By early 2022, mainstream sentiment about P2E crypto games was at an all-time low. Then things got even worse.
In April 2022, North Korean hackers compromised the Ronin blockchain used by Axie Infinity. They got away with an astonishing $625M in funds, causing the Axie token to plummet and players to abandon the platform in droves.
Rumblings about Axie and other P2E games based on a two-token economy being Ponzi schemes began in 2021 and reached a head in Summer 2022. Crypto journalists and gaming enthusiasts alike took to social media to explain in detail why the Axie model was unsustainable.
Within a month, major news outlets like Forbes and Time were jumping on the “Is Axie Infinity a pyramid scheme” bandwagon.
Although Axie retains a relatively large user base, the damage was done: from a high of 2.7 million players in November 2021, the platform had crashed 86% to 368K active players by July 2022.
Other two-token economy games followed suit, reporting significant drops in active users over the summer and into the autumn, alongside the well-documented challenges in the wider crypto market.
The Rise and Fall of Axie Infinity’s $AXS token
What’s Being Done To Fix It
In short, not much is being done by games with two-token economies to address the problem. Sure, there have been official commentaries and actions promised, but nothing is being done to address the root causes of the problem.
Axie, for example, has chosen to focus more on the security breach from April rather than the accusations of having an unsustainable economy. They announced they’re shifting to a zero-trust model to reduce the risk of future security breaches.
But so far they’ve said nothing to address the valid criticism of the two-token economy and its effect on players, which has further damaged gamer confidence in both the brand and two-token economy models in general.
What Are the Alternatives?
With two-token economy platforms in shambles and unwilling to address valid criticism, what are gamers to do?
Wizardia recently hosted a Discord-based community discussion on the current events in the P2E gaming space as well as what an ideal direction for the future would look like for gamers.
The overwhelming consensus was that gamers want to see a shift to more stable economic models, forgoing the unsustainable two-token system in favor of single-token economies. They also want more engaging games, stating that they prefer to see developers take inspiration from Web2 games.
Emerging platforms are taking heed. Both Wizardia and fellow NFT game Mars4 have opted for single-token economies, and Wizardia has invested in AAA-quality graphics and in-depth storylines to provide a better gameplay experience. Wizardia’s game-first development plan also includes free-to-play game modes so that gamers can get a first taste of the battle mechanics without having to first invest in tokens or NFTs.
Final Thoughts: What Does The Future Hold?
Setting recent scandals aside, the funds pouring into the crypto gaming space show that it’s no one-off. Adjustments need to be made, and gaming platforms need to come clean about what is and isn’t working for their users.
With increasing demands for more stable platforms, better graphics, and more captivating gameplay, P2E game developers have their work cut out for them. But new strategies, models and economic concepts are slowly but surely emerging.
In the future, developers will have to put additional thought into their tokenomics before presenting a project to the general public. They’ll also have to eschew the mentality that the first to market will always hold the greatest share.
Instead, they need to focus on creating high-quality games with long-term appeal without resorting to a constant influx of new players supporting the existing user base. It’s a universal truth that a game needs to be, first and foremost, fun to play.
