Play-to-Earn Model Ushers in New Age for Gaming and Tokenomics

Big Story 2021: This article is part of our Year in Review series.

You know the meme: A dad stands in the doorway of his kid’s bedroom and says “Are you winning, son?” It’s a joke about parental cluelessness about their children, video games, and the parental fear of wasted lives.

But crypto is flipping the script. If the kid had been hunting for Smooth Love Potion rather than playing gamified Hentai, he could have told his dad, “Yes, call the accountant.”

Crypto’s first big win was supposed to have been upending finance. Yet this year another force reshaped the narrative — play-to-earn blockchain gaming. Few would have anticipated that normal folks would pay living expenses with crypto tokens earned by playing video games. Technology likes to surprise us.

Rabbit Hole

When just playing a kind-of-OK game proved to be a reliable way for some to pay their bills, that’s when we really started seeing normies come in the door of crypto. They came because it is useful to them right now, not because they had gone down a rabbit hole and made some bet on the future.

The behemoth in this space is Axie Infinity, a game that’s sort of like Pokémon. In July, we reported that Axie was actually earning more than the Ethereum network itself. That’s no longer true, particularly since Ethereum upgraded with EIP-1559 and started burning ETH.

Nevertheless, Axie’s treasury has clocked $148M in protocol revenue from mid-November to mid-December, roughly equal to the earnings of the next three most lucrative projects combined (dYdX, OpenSea and PancakeSwap). It’s also been building a strong decentralized finance ecosystem, such as its own sidechain, an automated market maker and a staking program for its governance token, AXS.

DappRadar Exclusive Report: Play-to-Earn Revolution Leaps Beyond Axie Infinity with New Games and Tokens

DappRadar Exclusive Report: Play-to-Earn Revolution Leaps Beyond Axie Infinity with New Games and Tokens

The play-to-earn model isn't just driving the explosive growth of blockchain games like Axie Infinity: it's also changing socieconomics.

The Defiant

And look, there’s something a little dystopian about grandmas in the Philippines playing games about cartoon piggy-things all day to pay for the groceries (there’s a William Gibson novel in there for sure), but it’s created a new avenue for people to keep their head above water.

Meanwhile the market is clearly looking for the next play-to-earn giant. One contender hasn’t launched its game yet, Illuvium, a role playing game expected in 2022, but its token has already jumped to $1,100 from a low of $47 in the spring. There are others we often hear about, such as the multiplayer Ember Sword, the tradable card game Parallel, the star-faring game Cometh and another card game, Gods Unchained. Other blockchains want to use play-to-earn to leapfrog to relevance, as well. So there are lots of crypto games coming out now, and no doubt the next big hit will be something no one sees coming now.

When more do, we might see some really surprising real world variations on the meme:

“Are ya winning, son?”

“Yeah dad, and by the way the house is paid for.”