So here’s the thing with Play to Earn….
I initially invested in Play 2 Earn fairly early because frankly, early in crypto gives outsized rewards. There are riches in those hills.
BUT that’s not why I’m staying.
When I came across blockchain games I could see an intersection of crypto, gaming and real outcomes for real people. In the circles I frequent we could see a use case which if done right meant an asymmetric investment opportunity.
Now having been involved in the space from owning NFTs, tokens and now running a gaming guild I realised play-2-earn is doing something incredible. It was making an immediate and tangible difference for people. It was literally putting food on the table. It was generating additional income for people to pay towards rent, electricity bills, medicines, books … heck it was paying for people to go out and have a good time. I was awestruck and convinced that this was a future worth building.
Not to get too misty eyed but of course the economics of Play to Earn have to make sense. And they sure do for investors operators and importantly for players if done right. If they didn’t some of the savviest investors would not be piling into the space led by incredible player demand.
(For example, $4.6M raised by YGG from the likes of A16z or Avocado Guild raising $18m at a $200M valuation or recent announcement of Rainmaker games raising $6.4M).
So what’s going on here?
Well there are plenty of good write ups but in case it’s your first time, here are a few lines. Traditionally games are owned by companies. They own all the IP, characters/equipment (the assets) and data. It’s a big big industry — $200bn+. Blockchain games enabled asset ownership to be given to players. And the assets (Character/Equipment) have value to other players and could be sold in marketplaces OR if played with provide you income (aka yield). So for the investor it’s a simple equation — you have assets that provide yield. More the yield, more potentially valuable the underlying asset. Simple. But this means if yield is good, or demand for the game is high asset prices go up.
Enter the guilds.
Guilds buy assets and give them to players to play. Any income generated they split 50/50. The biggest and most vaunted game out there Axie Infinity has a limit on how much you can play — around 2 hours a day. If played regularly, a player takes home around $300 per month. Where nearly half the world lives on less than $5.50 dollars a day, we are talking material numbers. And that’s just from 2 hours in one game.
As for demand, we just need to take a peek at the Axie Infinity numbers. Perhaps one of the most incredible illustrations of growth. They went from $100,000 revenue in Jan 2021 to over $360M by August. They have done well over $2bn in total sales and have over 2M daily active players. Even these numbers could be out, considering the exponential nature of their growth. That’s one game and it’s just one year.
Now remember a portion of this is going directly to players. Maybe you can now begin to understand how important a movement this is.
It’s why I’m staying and building.