Cryptocurrency-based play-to-win games are reshaping the industry: An explanation of how and where value is created for investors
- It’s not just one feature that adds value to play-to-win crypto games.
- Transaction costs and the popularity of a game’s underlying cryptocurrency are further factors in the equation.
- This economic model’s success depends on the ongoing influx of new participants into the ecosystem, each of whom contributes value from which others might profit.
Popular play-to-earn games in the crypto community seem to be reinventing the game business with a new, wildly entertaining model that has a tremendous amount of popularity.
Where does the money come from?
All play-to-earn games’ value is derived from the money that users accumulate on the site. This isn’t true of every game; some lesser-known developers are just interested in capitalizing on the metaverse hype.
For in-game purchases and trade, most games feature their tokens. According to James Bachini, a blockchain engineer, their tickets are valuable since they are used by consumers and cryptocurrency dealers.
Axie Infinity, for example, relies on participants making a significant upfront investment in game-specific NFTs to make money (or Axis, in this case). Gamers may then sell their in-game digital assets, which they acquired while playing, to other gamers at a price they value, boosting the gaming economy.
“The token value will collapse” if everyone chooses to quit and trade their Axie tokens for other digital currencies, according to Bachini. “Demand for the token will remain as long as the game is successful.”
The game’s owners and investors are confident that players will keep spending money on it. This is due to the general public’s increasing acceptability of digital asset ownership.
As it turns out, the popularity of play-to-win games and the metaverse has pushed Axie’s axs coin up an eye-watering 18,000 percent throughout 2021, while Decentraland’s mana token increased by 4,000 percent, placing them among the most outstanding performers from the crypto field last year.
What Happens If a Cryptocurrency Exchange Files for Bankruptcy?
Exchanges play a crucial part in the cryptocurrency ecosystem on a Beginning to End site, but what no one has given much thought to the scenario that occurs when an exchange which offers custodial services to its clients is forced to file for bankruptcy. There has never been an event in the United States, Mt. Gox is an example was filed in Japan, but it’s definitely a possibility. The exchanges aren’t banks, and therefore can be suitable to apply for Chapter 11 if they have any US assets or incorporation. In addition, they are at risk from hacking as well as their own private trading in highly volatile assets.
What happens to customers who has an exchange that files for bankruptcy?
I would say it goes negatively for the customer as described below the break. I don’t think that consumers are aware of the legality of custodial arrangements, and exchanges do not have any incentive in making the proper responsibilities evident to the customers. In reality, exchanges are trying to entice customers by claiming that the customer “owns” the coins, however, the legal procedure is likely to differ in bankruptcy. In bankruptcy, it’s more likely to be considered an unsecured debtor-creditor relationship and not one of custodial (bailment) relationship. This means that the customers take on real credit risk through exchanges and this is a major issue because of the invisibility of exchanges and the inability to regulate.
How much money can I expect to make plays?
No. In-game assets and underlying token demand, and how much time you contribute all have a role in how much you may earn from a game.
To paraphrase Diego Di Tommaso, cofounder of open-source AR platform OVR, “Play-to-earn” isn’t a magic pill that will make any game lucrative for players. Still, it provides a precedent and a canvas for such a value-distributing game.
Does the company’s business model work?
Although this is conceivable, there are a lot of issues with this approach, including that the allure of making money from gaming might dilute the experience. The capacity of a game to maintain and expand the economy it seeks to develop is a significant risk.
According to Adrian Kolody, founder of DeFi firm Domination Finance, a play-to-earn model can only be sustained if the game’s players are of high quality.
Using bot-farmers as a technique to get the most out of the game for residual money might diminish the game’s enjoyment, he added.
‘Bot behavior also incentivizes the auto-dumping of token prizes earned from these games,’ he said. Some initiatives relying only on their token’s value to sustain themselves may be doomed to failure if the token’s value declines.
As a result, new players are always needed to sustain the business model and establish new income sources, requiring a steady influx of new players.
What kind of revenue does the game generate on its own?
This is a piece of cake. What a waste of money! In-game currency purchases by new players cost money, which is a significant source of income for the game. The value of native tokens increases with time, which is one of the game’s most exciting aspects.
Games with a strong sense of identity and a loyal fan base have an advantage over their competitors.
“Axie’s viability will be determined on how quickly it can develop its player community and generate extra usefulness to its in-game assets,” said Koh Kim, head of the ecosystem at blockchain infrastructure firm Mystery Labs. “Its competitive edge is that Axie has improved the lives of their customers. No other play-to-earn game can boast such a high degree of fanaticism.”