Current State of Play-to-Earn Category

The play-to-earn category created a lot of excitement among crypto enthusiasts last bull season. Web3 games reached the peak of their popularity at the end of 2021, and the category is currently in its first bear season. The price of play-to-earn coins has dropped to one-twentieth of what they reached in the fall of 2021. There were even coins that fell to one percent of their value. A similar situation applies to gaming NFTs.

Player numbers dwindle rapidly when financial incentives vanish. For example, Splinterlands reached 500k users in the first quarter of 2022. The number of players is now down to one-tenth of that number. Bots operated some of the accounts. The number of accounts managed by bots has decreased due to bans and reduced rewards. As the development of Splinterlands continues uninterrupted, approximately 50k players are still playing the game. On the other hand, many popular games of the bull season have turned into abandoned cowboy towns.

The gaming industry is competitive, and producing quality games requires a lot of effort. Generative AI contributed to the visuality of the games. However, games must have a distinctive feature to stand out from hundreds of alternatives. First-generation play-to-earn games became popular because they made money for players. Pleasure and excitement were secondary. Many players stopped playing the games when monetary incentives weakened.

Play-to-Earn Friendly Blockchains

Transaction fees were a significant problem in the first play-to-earn games on Ethereum. It is necessary to either move the games to a low transaction fee network or produce Level 2 blockchains to overcome this problem.

Most games are played on delegated proof of stake (DPoS) networks such as Wax, Hive, and EOS. Combining low transaction fees and security, these networks have yet to face a scaling problem. Moreover, it is possible to produce Level 2 blockchains on these networks. Blockchains like BNB and Polygon are preferred because they create lower transaction costs than Ethereum. It should be noted that transaction fees in these networks remain high compared to DPoS networks.

Digital Asset's Price Action

Bitcoin and Ethereum prices have increased significantly since the start of the year. In terms of play-to-earn tokens and NFTs, there is no similar situation. Prices were generally flat. Since play-to-earn tokens are inflationary, we can talk about modest money inflows.

Wagmi Games, Nakamoto Games, and Yield Guild Games have gained over 100 percent this year. Yield Guild Games' collaboration with Coinbase led to the price increase. Wagmi Games, on the other hand, emphasizes that it is a mobile-oriented platform. Playing a game on mobile dramatically increases the player potential of dAPPs.

Investors' renewed interest in play-to-earn coins and NFTs will likely be during the next bull market. Increasing financial incentives will increase the number of players.

Play-to-Earn Economies

Game developers (and gamers) are more knowledgeable than 2-3 years ago about how play-to-earn economies would develop balanced. It is impossible to sustain the economies when the earnings the game provides reach extreme levels. In addition, mechanisms organized in successive investment cycles are used instead of mechanisms that are processed and completed in one go. Thus, it is possible to keep the expectation alive all the time. On the other hand, games need to be constantly improved in this case.

Web3 games are essentially DEFI applications. Players are trying to get a return on their investment by benefiting from the prize pool. Meanwhile, the audience earning small amounts without investing in the game increases the number of players. Mechanisms that keep investor funds in for a long time help sustain the economy. Soulbound NFTs are an example of this. In addition, the diversification of tokens also contributes to sustainability.

Hardcore Gamers

A group continues to play web3 games regularly despite the bear market. This group, including myself, believes in the potential of web3 games. The chart below from Dappradar shows that this group is around 800 thousand people. This number has remained the same in the last year.

TL;DR

Web3 games flourished and diversified during the bear market. The number of mobile games has increased because games that can be played on mobile can reach large audiences more efficiently. DPoS networks that provide low transaction fees, such as Hive, Wax, and EOS, are frequently used in the play-to-earn category.

We can list the most played game types as card games, idle games, metaverse games, and move-to-earn games. The play-to-earn category has a loyal player base of close to one million. The players in question are playing the games steadily despite the bear market.

Player interest in play-to-earn games increases prices. Increasing asset prices increase earnings. Earnings are attracting new players. Therefore, positive cycles come into play quickly when things accelerate in web3 game ecosystems. When the crypto market revives, the prices of the digital assets of the games can provide returns such as 5x-10x. With more options, investors will give more importance to quality this time.

There is a saying in the software industry, "If you build it, they will come." For players, we can adopt this saying "If you play it consistently, they will come." Hardcore play-to-earn players like me are taking that action these days.

Thank you for reading.

Cover Image: Midjourney App