Imagine an entire paradigm shift for video games as their capabilities are enhanced through blockchain technology, creating a positive-sum for all parties involved with game ecosystems: users, creators, and developers.
In 2021, 2.9 billion gamers actively played video games. These games generated 193.4 billion dollars in revenue. Not so bad, is it?
Play-to-earn is not a completely new phenomenon innate to blockchains. Esports is already a well-established entertainment industry paid 151.3 million dollars by tournament pools in 2021 alone.
There are numerous reasons to get excited about blockchain games for cryptocurrency users and investors, and some of them are:
- VCs and retailers can invest in blockchain-native games that will capture substantial value from the traditional video game industry in upcoming years, where they can reap the rewards of being early in a promising sector.
- Users can be a part of blockchain-native games by being creators, contributing to the content of the games by creating NFTs, and selling them on open marketplaces.
- Players can be earners of Blockchain games by participating in a virtual economic environment.
Explained by Short Examples: How are the most successful play-to-earn models designed?
The Sandbox – Metaverse with Built-in Decentralized Creator Economy
The Sandbox metaverse is a customizable gaming environment where players are allowed to create gaming experiences just like the game’s developers, making the ecosystem owned and constructed by all community members.
The economy’s primary driver in The Sandbox is the virtual cosmetic items created and sold in the marketplace.
Most known example: Snoop Dogs’ Party house and his character:
Axie Infinity – Strategy-Based Incomplete Information Play-to-Earn Game
Axie Infinity is a strategy-turn-based battle game. Players are required own animal-like in-game characters to play the game. These characters are NFTs with a marketplace that makes elements of the play-to-earn mechanics of Axie Infinity.
Axie Infinity used Ethereum as its main chain for its NFTs and marketplace. Ethereum’s scalability didn’t keep up with its load. Consequently, developers created a side chain that is more scalable but less secure. This trade-off has been made to improve user experience, hinting that current general-purpose blockchains are not yet ready until scalability is optimized.
Cronos Chain is highly inclined towards scalability as it is an EVM-compatible chain, hinting that the network can be positioned well for a play-to-earn gaming environment.
Ponzinomics: Why successful play-to-earn games crashed and burned?
The problem with current play-to-earn games is that they don’t have a sustainable economic model. Games are not productive assets, which means they can only generate value by entertaining gamers by encouraging them to spend money in exchange for enjoyment.
The core value proposition of video games is providing fun and a bit of escapism for people where they can have a good time. If every player in a play-to-earn ecosystem is there to make money, no person on the other end of the stick is paying money to play the game to extract entertainment.
Building a game on a blockchain doesn’t make it a good game which is also creating money out of thin air to distribute to its users. It only makes an already good game which can also reward players.
Rewarding players can sustainably come from other players who enjoy the game by paying money for the content, perks, or gears. Therefore the main goal of making a blockchain game is to decentralize its control, revenues, and creations to the community of those players, creators, and developers. This way game becomes the design of all ecosystem participants rather than a centralized game studio that dictates what the game is and will be that also captures all value with full control of every virtual in-game asset.
If we want a long-term solution to play-to-earn games that provides capital to gamers, making it entertaining for those willing to spend money on it is the first goal. If not, the play-to-earn mechanics of a hyped game will only come from a constant flow of new players. The structure will crash when speculators cannot drive attention anymore, making the system feeble and unsustainable.
It is an excellent idea to build blockchain games IF you get it right: We count on you Cronos
There are numerous advantages to building a game on a blockchain. It is not only beneficial to the participants outside of those developers, such as players and creators but creates a positive-sum value for each party. Blockchain games mean decentralizing control of the game by blockchains does not take away weight from developers towards the community; it becomes more beneficial for developers too.
Let’s unpack what building a play-to-earn game on blockchain benefits the ecosystem as a whole and why Cronos Chain is and should be a part of it:
1) NFTs, like in-game items produced by independent creators or game developers, can be programmed to get perpetual commissions. For example, an NFT produced by an independent creator can have a 5% commission whenever it is being sold. It can also have a 2.5% commission for the developers because they made the environment possible for a creator to sell their NFTs. These rates work wonderfully at OpenSea for all NFTs, which means it is a proven concept that works well in free-market conditions. As a result of these, benefits are:
- Developers can capture some value in exchange for their efforts, perpetually, as long as the game is live.
- Creators can capture some value in exchange for their contribution to the efforts of developers, perpetually, as long as the game is live.
- Making it possible for creators to create and monetize in-game items adds value to the developers’ game.
- Players can have various options because any ingenious artist can create content for the game, which they are monetarily incentivized to have passive income-generating assets as their creations.
So basically, this is wonderful.
2) More than 2.5 billion people play mobile games. These games are mostly monetized through Appstore and Google Play Marketplaces. As daunting as it is, the revenues from players are cut by 30% through these marketplaces as they are intermediaries. Building a game on a blockchain erases this problem and opens an opportunity for this 30% to be distributed to developers, creators, and players alike.
Simply making an already highly played game blockchain native brings back the 30% lost efficiency into the game ecosystem. Making a game with high potential game blockchain native from the start is even better, enabling capturing all value from the get-go by averting predatory fees centralized systems enforce.
Nothing too much to say about this new solution, just wonderful economics.
3) A blockchain-native game has an inherent authority distribution by design. A governing token of a game gives voting powers to anybody to have a say in the game’s current and future matters. Distributing power to players and independent creators of a game is a good practice because the centralization of a game, like anybody entity, only looks out for itself and can easily make arbitrary decisions that can even be detrimental to the game’s benefit. A centralized developer base of a game can bring harmful updates to the game that players don’t inherently like, which can result in losing players.
There is a funny story about Ethereum creator Vitalik Buterin. It is rumored that he decided to create Ethereum because his beloved World of Warcraft character was hobbled by the developers, awakening him to the ‘horrors centralized services can bring.’ This rumor points out literally that the entire half of the blockchain ecosystem is kickstarted because of a centrally controlled game developer’s bad decision for a genius kid’s favorite in-game character.
4) Initial Game Offerings(IGO) is a good way to fundraise money and drive capital to an ecosystem(which would benefit Cronos Chain). Additionally, funding a game from its start opens an opportunity for talented developers who lack funding can get a chance to develop their games with the initial support of a wide variety of individuals who may participate in IGOs. In exchange for taking the risk of investing capital in an undeveloped game, early investors of a good blockchain game can capture a substantial amount of value in the future. We can summarize this as follows:
- Developers who don’t have a shot at building a game can get an opportunity.
- People who are enthusiastic about games and can invest can fund their favorite developers in exchange for tokens that will be used in the future game.
- The platform the game is being developed pulls developers and investors alike, benefiting the entire network.
Cronos.org/Play is Already Here – Cronos Chain is incentivizing game developers to build
Cronos Chain announced its support for game developers on Twitter on April 6th this year. Their backing includes integrating Crypto.com Pay, Crypto.com Auth, and Crypto.com NFT into the games being developed in the ecosystem. Furthermore, Cronos Play supports Unreal Engine Plugin, which is a highly used game development engine that most AAA games are using in their core.
Cronos Chain developers and Game Developers can capture much value of the potentiality of video games, an almost $200 billion market.
This magazine article’s piece is written for the community of #CROFAM; we are responsible for nudging our ecosystem towards high standards by doing our research, asking for and building a sustainable gaming ecosystem, and showing our support to developers and creators alike. Collective improvement is the only way to succeed in the blockchain paradigm because every network participant is the owner, builder, and promoter of what it is.