Games that let players win money look set to thrive further in the metaverse. With improvements in 3D graphics, virtual reality, augmented reality and blockchain technology, these games are gaining followers who see it as a platform for them to interact, socialise, make transactions and invest for future earnings.
In play-to-earn (P2E) games, players have to spend money to purchase characters or items before they can play. In turn, these players are paid with digital tokens like cryptocurrencies and non-fungible tokens (NFTs) in decentralised marketplaces. This serves as their in-game assets which also have real use cases outside of the game. Some well known P2E game titles include Axie Infinity, God Unchained and Splinterlands.
Unlike traditional gaming where all activities exist only within a centralised ecosystem, P2E games operate on blockchain technology, meaning that a player has to complete the game or battle other players in order to earn tokens that can later be transferred and cashed out at a crypto exchange.
Tin Nguyen, founder of Sipher — a blockchain gaming company based in Vietnam — shares the concept of a ‘living economy’ in the P2E game World of Sipheria. He tells The Edge Singapore that the game allows players to trade and interact with one another more dynamically. “Different players have different ‘meta’ — individualised characters, weapons and items — that players can customise or accumulate to their liking to go through the game. It becomes a living economy because players can start trading aspects of their ‘meta’, be it characters, gears or resources with one another in the game.”
From these exchanges, Sipher collects a platform fee from players to facilitate these trades. Still, being a P2E game player, investor or developer is not easy. Nguyen says the term ‘play-to-earn’ can be misleading: “Since we founded our company, we know that purely ‘playing-to-earn’ is not sustainable and cannot work in the long run… fundamentally, not all players in the game can just play to extract financial value.”
Players that wish to play Sipher’s games such as World of Sipheria must buy one or more characters as an ERC-721 token — an open standard that describes how to build Non-Fungible tokens on EVM (Ethereum Virtual Machine) compatible blockchains — through the company’s ‘smart contract’ on their website. The game’s payment currency is the Sipher token, which is trading at US$0.53 ($0.72) apiece as of Feb 25.
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To play a game like Axie Infinity — one of the biggest and most popular P2E games — players must purchase a minimum of three Axies, where one — depending on its abilities and statistics — could cost anywhere between 0.035 ETH (US$91) and 300 ETH (US$817000).
Nguyen says that there still remains a focus on “fun-first compelling gameplay with great stories”, so that the earning aspects can come naturally thereafter. “Blockchain games, like traditional games, in many ways remain zero-sum financial games. However, it should provide positive-sum interim utility overall, where players are deriving fun and enjoyment from the game, or achieving some kind of social recognition in the game via ranking points, for example.”
This means that even though some players may not earn income from their playthrough, they would still be entertained and get social benefits from the time and money spent, he adds.
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Partnerships with guilds
With all the hype surrounding P2E games, gaming guilds or organised groups of players also play an important role in the ever-expanding ecosystem. Typically, a gaming guild provides players with the necessities to participate in P2E games in exchange for a cut of their earnings.
“To me, guilds act like venture capital firms to P2E games and players,” says Nguyen. He adds that Sipher has partnered with 14 guilds and has existing investment partnerships in 12, some of which include Merit Circle, YGG and GuildFi.
Brendan Wong, CEO and co-founder of Avocado Guild — a P2E blockchain gaming guild — seeks to use his business to broaden opportunities in the P2E and wider DeFi space. Most notably, Avocado Guild has a scholarship programme that supports P2E gamers with education and digital instruments to play P2E games.
“Initially, all we did was to do up one post saying that we are offering scholarships, and people will ask for it organically,” Wong adds. “We acquire the necessary NFTs and lend it back to them with a revenue sharing model, and we will even teach [new] players how to play the game [if necessary].”
Wong claims that Avocado Guild is currently one of the largest with 11,000 scholars. Its programme has recruited members mainly from the Philippines and Indonesia. Wong hopes to expand the guild’s reach further through the rest of Southeast Asia.
He adds that the aspect of ‘community’ is a core feature of Avocado Guild as well. “We're actually building a huge community around our guild. This means that not only are we giving them the [scholarship] opportunity, or to just to play a game and earn a bit of money, but we hope to align them with the future direction [of this space] and make it very clear that as the industry develops, we need future leaders on the ground.”.
Last November, Avocado Guild raised US$18 million in a Series A funding round, bringing the company’s valuation to US$200 million, according to a KrASIA report. This investment was led by Animoca Brands and QCP Soteria Node, with participation from Three Arrows Capital, Solana Ventures, Polygon Studios, Binance Smart Chain and the executives of GoldenTree Asset Management.
Apart from being channeled towards Avocado Guild’s own business expansion and tech capabilities, the newly-raised funds will also be used to invest in other P2E games. “At Avocado Guild, we have the opportunity to help P2E games develop and we can play our part in shaping the future of P2E and the wider blockchain gaming landscape, which is very exciting,” says Wong.
“We want to help build up the ecosystem of blockchain games because without blockchain games, this opportunity doesn't exist,” he adds. “For all of these scholars and players, we have become kind of like an online digital agency HR [for P2E gamers] that can't exist without the whole industry. So I think it goes in full circle.”
The future
With Avocado Guild’s recent successful funding round, the company has used the capital to transition to become AvocadoDAO, a so-called decentralised autonomous organisation (DAO). A DAO is an entity where a project’s community — usually individuals that hold a token issued by a project — is able to vote on governance matters and determine its developmental trajectory. This will allow the community to be in control of how the DAO’s investments and activities are run and the future direction of the Avocado metaverse, says Wong.
Attitudes towards gaming are also likely to change as more people adopt the metaverse: The traction for blockchain-related P2E games and gaming guilds is growing. Currently, there are around 1,200 blockchain games, according to crypto market tracker DappRadar. That market is growing, and so are the players. Estimates indicate that nearly 50% of active crypto wallets connected to decentralised applications last month were for playing games.
Nguyen acknowledges that the increased prominence of the metaverse has been helpful to shed light on related P2E games that can be played in the metaverse. But the pressure to create is on. He says: “It always definitely helps, getting the awareness of this space out there. However, one still has to deliver the product.”
“The hype alone (around the metaverse) isn’t going to be how we survive. We must deliver products that live up to the hype.”
Photo: Bloomberg
