Axie Infinity – a non-fungible token-based online video game that has generated over $4 billion in secondary NFT sales – is credited with starting the so-called “play-to-earn” (P2E) craze, enabling players to earn money during gameplay. While Axie’s hype has died down somewhat, it has also spawned a series of copycat projects that pay users for performing daily activities.
These projects have become an industry in their own right; a sort of “X-activity-to-earn” (X2E) model, now including ties to brands ranging from Asics to European football clubs, paying users in cryptocurrency to run, eat or even sleep.
It is perhaps unsurprising that questions are being raised about the economic principles upon which many of these projects are based.
“The problem with some of these X2E models is that it seems like a very good innovation, but then it’s just a pure Ponzi [scheme]said Anndy Lian, author of the new book “NFT: From Zero to Hero,” in an interview with Forkast, though he did not mention any by name. “And it’s actually very disturbing, to be really honest.”
Without ongoing revenue to support what gets paid, Lian said, the X2E model risks becoming an unsustainable compensation structure, built on the expectation that more people will come to “pay” for tokens that were previously dropped.
Similar accusations have been leveled against Axie Infinity after a period of explosive growth failed to generate prior returns for its users, as its native SLP token is now trading at $0.004 at press time after hitting $0.41 in May 2021.
Execution of tokenomics
One of the most popular variants of this new industry model is the “Move-to-Earn” (M2E) project StepN, which pays users in cryptocurrency for walking, jogging or cycling by tracking their movements via GPS on their phone.
To participate in the project, users buy NFT sneakers and keep them in their wallet on their phone while they walk around and are then compensated for the exercise in the project’s native currency, Green Satoshi Tokens (GST).
Users then cash in the GST for profit or reinvest it into the project to create additional NFTs for other users to purchase.
Brian Lu, founding partner of Infinity Ventures Crypto investment fund, is more optimistic about the prospects for these projects than Lian, however, saying Forkast in an interview, there are ways such projects can succeed.
” There will always be [need to] be people to support the token or the token must have some type of utility [for the project to work],” he said.
StepN does this by allowing users to cash in their TPS for profit or by reinvesting it into the ecosystem to create more sneaker NFTs. This was the tokenomics model originally adopted by Axie Infinity, which allowed users to cash out their SLP or reinvest it to create more “Axies” – Pokemon-like creatures that players raised and battled to win. more SLPs.
After launching in December, GST hit a high of $9.03 in late April before crashing with the rest of the crypto market in May. Despite links to sports brand Asics and Spanish soccer club Atlético de Madrid, GST had fallen below US$1 in early June and has been trading below US$0.10 since early July.
sleep at work
Positioning itself in direct response to Move-to-Earn projects, Gang Azit Social Club (GASC) has taken a different approach, and wants to remind users of the importance of taking a break and relaxing time for their mental health. time, and encourages this practice by paying them to do just that.
Calling itself a “Relax-to-Earn” project, GASC detects when users are in a predetermined area using GPS and pays them with the project’s HIPS token if they press a “relax” button on their phone when in space.
If anyone needs an incentive to eat, Esca – an online marketplace for food consumers and sellers – promises to pay customers, restaurants and home chefs in Bitcoin and USDC. According to its website, Esca thinks the commissions charged by most food delivery platforms are too high and is using cryptocurrency to balance the equation.
So many projects have popped up promising to pay users to sleep that there’s even its own funding category for the industry – SleepFi.
The Sleepee app pays users based on their sleep quality score in its native currency, which can be converted to purchase products or services from their store. Even the MetaGym Move-to-Earn app offers a SleepFi feature that pays users in its native token which can be spent in-app or cashed out for USDC.
The future of Web3 and games
Gauging the success of these projects over the past few months has been difficult amid the broader crypto downturn, which has seen even well-established crypto funds and businesses file for bankruptcy or need a bailout.
If the situation does not improve soon, Lu says there are other options available for such projects.
“These X2E projects that are coming [are] will start learning how to advertise their users and user behavior [and] user data to marketing companies who are willing to pay for it,” Lu said, explaining that this process will become more common as the brand connection continues to gain traction.
Selling user data may seem contrary to the ethos of Web3, which is often touted as offering a new incentive model to break away from the business method of data mining that has led to a massive concentration of wealth by a few giant tech companies. .
But Lu says this only uses publicly available data on the blockchain anyway.
Returning to the genre that started it all, Lu says the industry has learned its lesson from Axie Infinity’s short-lived success and is moving on from Play-at-Win to Play-and-Win, or Web 2.5.
These projects put the gameplay back at the center of the game, with the possibility of winning money – sometimes even fiat – a bonus element rather than making a game whose main card is the winner.
Lian hopes these types of games can still survive in the meantime, but says it will be a long time before the mainstream gaming industry embraces Web3 in a meaningful way.
“I don’t think the super app is coming anytime soon,” said Lian, who explained that the technology is there, but the $300 billion-a-year gaming industry has little incentive to do so. to change. “[Game studios] might disagree on how this is actually going to help them, because they really earn millions of dollars in income every year.