How to Make Passive Income with Crypto Games [5 Steps]
As with all of my articles, this is personal experience, not financial advice.
1. How I Find Quality Projects
There are tons of crypto projects out there. Easily thousands of Play-to-Earn crypto games alone. Most of them are scams. The ones that aren’t scams mostly suck.
The graphics stink. The dev team wants to make a quick buck. The tokenomics are lazy.
If you ape into them indiscriminately, you’ll lose your hat fast.
What does “Ape” mean?
Throw a bunch of money into a project without thinking.
I try to say “no” to projects often as possible. In fact, every project is a “no” until it proves otherwise.
[I’m about to tell you how I find projects and make money from them. If you want to know my 8-step process for how I choose projects, check out my article here.]
+Source from Twitter
Twitter is the frontline of crypto. Everything new going on in projects gets communicated on Twitter first.
To learn about new projects, I follow all kinds of random accounts in the space. But these 5 are the most helpful:
This is the Twitter account for my favorite decentralized exchange on the Avalanche blockchain (I only invest in Avalanche projects — great community, low gas fees, etc.). Trader Joe promotes new, high quality projects of all kinds, including P2E games. If you follow one account to learn about new projects, this is the one.
Avax Radar will post about all kinds of new Avalanche projects. This is a good “catch-all” account to follow. But they promote plenty of scams and rugpulls too. Not on purpose, they just promote everyfuckinthing.
I’ll put it this way: if Trader Joe mentions a project on their account, it’s more likely the real deal. If Avax Radar mentions a project on their account, there’s no telling if it’s legit or not. I just use it to learn about new shit going on in the space.
This account exposes scams and rug pulls. Obviously I don’t find new projects from them, but I have developed a sharper eye for which projects NOT to invest in.
Farid is in charge of ecosystem growth on Avalanche. In other words, his job is to find new projects and invest in them so they can come to life on the Avalanche blockchain.
He’s always at the front edge of projects. Plus he’s a solid dude who’s given us a lot of help on our project.
This account gives updates on top projects on Avalanche. It’s a good way to get an idea of the landscape, even though you’re not likely to find any diamonds in the rough here.
+Check the Mint Calendar
When I first started investing in P2E games, and before I found crypto Twitter, I had no effin’ clue how people found projects.
This isn’t the kinda thing you can’t Google search for. The industry moves too fast.
After I found a few good Twitter accounts, I found a page called the Avalanche Mint Calendar.
It’s a really useful calendar with (some) upcoming mints (i.e., NFT sales) on the Avalanche blockchain.
[Again, if you want advice for how to pick which projects to invest in, check out my 8-step framework here.]
2. How I Avoid Scams
People get fucked up in this space by investing in every project they see. FOMO kills in crypto.
You will miss opportunities. You will make mistakes. The key is to minimize losses and not follow the crowd.
At first, I saw that a project offered rewards for buying their NFTs (more on this in another post), and I bought hoping to make a quick buck.
Luckily those early mistakes worked out for me. But it had nothing to do with skill.
Here’s a perfect example:
A recent project called AVAX Pandas (if you follow that link, DO NOT BUY THESE THINGS. THEY ARE A SCAM).
Here’s what happened:
The developers created a bunch of cheap-looking cartoon Pandas, sold 3,333 of them, then took the money and ran. Sadly, this happens a lot.
But you don’t have to be a victim. The signs of a scam were all there with these fuckers:
NFT projects with this cheap cartoon style — no depth, just a few lines and autogenerated accessories — ARE ALMOST ALWAYS RUG PULLS.
What is a Rug Pull?
A crypto currency scam.
Other red flags to watch for:
-Reflectionary rewards — this means the project promises you $$ for every NFT sale they make. This is a bullshit reward that I’m biased against. It seems like every scam project promises this shit.
-Devs hold the game hostage — projects will have timelines where they say they only offer certain things when they’ve sold X% of their NFTs. Avax pandas, for example, said they’d release the game once all the pandas had been minted. Well, they minted 100% of their bullshit pandas and never released a game.
[From the Panda scam’s whitepaper.]
-Staking soon™️ — staking means you deposit your NFTs for rewards. This is basically like depositing money into a bank account and getting interest in return. Except instead of .05%, you get amounts of money that might be life-changing. Here’s what a good project will (usually) do: they’ll have an NFT mint where you buy their game’s NFT. Then, soon after mint, they’ll launch staking rewards.
Here’s what a scam will do: they’ll sell a bunch of NFTs, promise the moon with staking rewards, then disappear. I like projects that offer staking almost immediately after the NFT mint. But that’s just me.
-Weird linguistic errors on the project website — I mean, look at this excerpt from the Panda website. It’s such generic drivel that it’s hard to imagine any thought going into it. All scam projects have this kind of language in their collateral materials.
3. Go Big AND Diversify
Once I find a project I like, I make sure I don’t get FOMO and throw everything into it. I try to spread between 3–6 projects at a time, including projects that aren’t coming to fruition for a few months.
Here’s what I’m in right now:
I discovered this project before its mint date. I like the game mechanics. I like the tokenomics. Here’s how it works:
-You buy pizza chef NFTs.
-You stake the NFTs to get $PIZZA coin.
You can then:
-Stake the $PIZZA for more $PIZZA (it’s complicated lol)
-Sell the $PIZZA for US Dollars (or anything else)
-Combine the $PIZZA with $AVAX to get the other, more valuable in-game token, $SODA (again, it’s complicated)
Playing this goofy pizza game has been life-changing. The game mechanics are indeed complicated at first, but as you put skin in the game, you learn fast — trust me.
[More on my exact profit strategy in the next section.]
This game is gonna be huge. In fact, it won’t be out for a few months and it’s already huge. In a world where most of the “games” are just a digital picture of your NFT and a counter with your reward token going up (such as Pizza Game), this will be a true AAA video game. That means means it’s high quality graphics and gameplay.
This game’s mechanics and tokenomics are so complicated I don’t fully understand them yet. All I know is that the gameplay is risky — you join guilds with other players and enter battles that damage and potentially destroy your NFTs.
Sounds fucking sick.
Here’s how I know I like this one:
I got a few ships just because I want to play the game. I barely care about the P2E rewards.
This one is risky. The project is made up 3,333 unique dragon NFTs that you can stake for rewards. Nothing unusual here. But what drew me to it was the breeding mechanism: you can “breed” two NFTs to get another (less valuable) NFT. I like that.
Plus it’s all leading to a more in-depth game later in the year. That is, if the dev team follows through on their roadmap. And in this space, that’s a big IF.
My only worry is that the dev team has delayed multiple times on staking. Although I trust them, I’m starting to get a bit worried.
I’ll keep ya posted.
This is a fun tiny project.
You mint a miner NFT who mines gold. You then can sell the $GOLD, or deposit it in the bank to earn $CREDITS, which are less valuable.
I have three miners. I’ve been reinvesting in this game for about a month. I haven’t taken any profits yet, just reinvesting.
The dev team is great for rewarding early adopters and they’re good with locking up liquidity. I don’t want to stay in here forever. The project has too few players to last for a long period of time. I only have about $1250 invested.
I’ll stick with it for a few months. Keep ya posted.
This one has major potential. First of all, the design is amazing.
Secondly, it has a huge team that’s fully Doxxed, which is a rare green flag.
The whitepaper is by far the best I’ve ever seen in the space.
They have a clear mission and amazing game mechanics.
Not to mention some of the NFTs will be based on real wrestlers and I want a Kurt Angle NFT so fucking bad.
They had a mint earlier and I bought one. The actual wrestler I bought will be revealed in March. I’m fucking stoked to see what this project turns into.
At the moment, though, there’s no profit.
4. 50% Reinvest, 50% Profit
For projects that do profit, though, here’s what I do:
-I get an NFT (or 10) for a project.
-I stake (or deposit) the NFT(s) into the game.
-I earn the rewards coin in exchange for staking my NFT(s).
-I stake the coin to get other rewards.
Now, at this point I could take my rewards every day or every week, and put them into my bank account. But that method doesn’t allow as much time to compound.
I prefer to let the rewards compound for 1 month, then liquidate and start over.
Here’s an example to illustrate.
I own a pizzeria in Pizza Game.
I stake 10 chefs plus some tools that earn me about 20 $PIZZA per minute.
$PIZZA is selling for about $0.01 right now. This works out to a few hundred dollars a day. Not bad.
I could take those daily profits, put them in my bank account, and experience minimal risk with low-end reward. Alternatively, I could stake those profits long-term for higher rewards and maximum risk (in case the project goes to zero at some point).
I choose something in-between:
-Every day, I take half of my $PIZZA earnings and buy $AVAX.
-I then pool my $PIZZA and $AVAX together (more on this in another post).
-I then stake that pooled coin in Pizza Game to earn the second game token called $SODA, which has been fluctuating around $13. [This is what’s known as the “Soda Fountain” in the above image.]
-I then take 50% of my $SODA rewards and sell them for that $PIZZA/$AVAX combo and reinvest.
-I take the other 50% of my $SODA rewards and set it aside for in-game upgrades like more chefs and pizza tools, which get me more $PIZZA per minute.
-I do this for one month and let the rewards compound. Then, at the end of the month, I liquidate all of my rewards coins and transfer a predetermined amount into my bank account.
-Anything over that amount I put into something called a stablecoin farm, which I’ll explain in a later post.
So now it’s the end of the month. I’ve taken my month of compounded profit and have to start over. But becuase I was reinvesting 50% of my earnings into improvements for my pizzeria, I still have residual in-game benefits on top of the cash in my bank account.
Win-win, with medium risk and high rewards.
Now, at some point, this project will die.
I’m fine with that. I’ve made back my initial investment many times over already. And whenever it does die, this strategy ensures that the worst thing that happens is I lose part of that month’s compounding rewards.
Which leads me to the next point…
5. Short Timeframe per Project, Long Timeframe Overall
I’m not trying to stick to Pizza Game forever. Or any of these other projects. This entire P2E crypto space is really new — a project that’s been around for 10 months is an eternity.
So, quite frankly, I don’t know exactly how to exit yet. This is just a mindset thing right now.
I don’t want to stay with every project until it goes to zero. I want to get in, make my ROI, make a few extra bucks, and get out.
But the thing that most people get wrong in this space:
They worry about projects going to zero.
Thing is, any project can go to 0…
and you can still make money.
As long as you shave profits the whole way through.
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Thanks for reading!
Greg “The Crypto Kid” Larson