August 15, 2022

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A quick guide on how play-to-earn (P2E) works

The gaming industry has been steadily growing in the past two decades, bringing in billions of dollars in revenue. Yet it was only in 2017 that the gaming market collided with the blockchain and gave rise to a lucrative intersection: Play-To-Earn (P2E)

These days, Play-to-Earn has become a familiar concept associated with countless projects in the crypto space. However, many people still don’t know how P2E works, and even fewer know about the history of this market.

This article will give a general overview of P2E, exploring this exciting sector’s journey and explaining its fundamentals.

The history of Play-to-Earn

In February of 2017, the first-ever P2E NFT game was released to the public. It’s called CryptoBots and combines the gameplay of collectible RPG games and grand space strategy titles. It was also simultaneously launched with 10,000 unique CryptoBots NFTs usable in-game.

The game was a huge success: it made waves on the market and marked a period of progress for the entire industry. Yet this growth would soon come to an end. In the aftermath of the December 2017 crash, the P2E market fell together with Bitcoin prices.

Next, we fast forward to 2018: in March, the Vietnamese game developer Sky Mavis created Axie Infinity, which would become the next big hit that revived the industry. Indeed, Axie Infinity paved the way for various P2E projects, some of which also achieved commercial success. These titles include Decentraland and The Sandbox, among others.

It was most likely due to Covid-19 that the Play-to-earn movement gained such traction: as people as forced to isolate themselves and stay inside during lockdown, they started to turn to video gaming — more specifically, gaming to earn an income through the use of P2E games.

In 2021, Axie Infinity achieved monthly revenue of $103,000; this figure then rose to an astounding $364M in August. Likewise, other P2E projects enjoyed a period of success, with token prices steadily rising right below Axie’s.

How does it work?

As the name suggests, Play-to-Earn allows gamers to earn real-life profits from playing video games. Embracing the principles of Bitcoin — decentralization, autonomy, and privacy, these games have an open economy, where players who add value to the game world receive the corresponding financial benefits.

While each game has its own mechanics, developers often give out rewards through completing quests, victory in battle, and trading NFTs. Some games might even feature miscellaneous prizes from referring a friend or staking their native token.

The digital assets you own can be converted into real-world value. Using your game’s Marketplace (or any equivalent), you can trade or sell these assets to gain profit from video gaming.

Toward the end of 2021, there were 220 million cryptocurrency users globally, with around 10 million players within the P2E ecosystem. This number steadily grew as the number of P2E games steadily grew and offered gamers a broader selection of projects to go for.

Although this surge in interest has been beneficial, the P2E can still be considered in its early stages, as significant gaps remain in the market. P2E will start to take more hold in the broader blockchain market as it develops. The signs are hopeful, though, as P2E has now become part of some countries’ GDP.

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