What Is Play-to-Earn (P2E)?
The ‘play-to-earn’ (P2E) business model, known as GameFi, mainly refers to blockchain games that offer tokenised incentives to players while enabling frameworks for player-as-owner, rather than the standard player-as-consumer. These games incentivise players to play and progress by offering rewards that have measurable value outside the game. These usually come as in-game cryptocurrencies or non-fungible tokens (NFTs).
It is important to note that ‘play-to-earn’ is the popular nomenclature, but playing in GameFi doesn’t come without risk, including potentially high initial costs that a player might lose or fail to recoup.
How Does P2E Work?
Unlike traditional video games, where developers control all in-game economics, in P2E games, players are compensated for their efforts and time spent online with digital assets. They have ownership and control over these assets, which also have value outside the game and may appreciate over time.
Players have the opportunity to obtain NFTs upon accomplishing tasks and challenges in P2E games, and these NFTs can be exchanged for cryptocurrencies or even traditional currencies on third-party platforms. Possessing NFTs enables players to influence game decisions and mould the game’s future.
The first widely recognised blockchain game was CryptoKitties, launched by Ethereum in 2017. Several other decentralised blockchain games were launched shortly after; well-known P2E games include Axie Infinity, The Sandbox, and Decentraland.