How does the Play and Earn business model

Recently, we took a deep dive into “Tokenomics” and the most important factors that influence a project’s success in the cryptocurrency space. Today, we’ll continue this quest to analyze how the GameFi space has contrasted with the controversial “pay-to-win” (Pay-to-Earn) used in the traditional game industry through the recently popular “Play-to-Earn” (P2E) model. -to-Win, P2W) mode competition. To gain a deeper understanding of the topic, we will use one of the most popular GameFi projects — “Axie Infinity” as a case study to explore how it motivates users to actively participate in its platform activities through the “play and earn” model. What is earn while playing? How does it differ from other games’ business models? According to Statista, the global esports gaming industry is expected to grow from $155.89 billion in 2020 to $268.81 billion in 2025, a compound annual growth rate (CAGR) of 11.51%. Based on the rapid development of the industry and the base of over 3.2 billion gamers worldwide, we can draw a conclusion that the gaming industry is a lucrative market. In addition, game makers are taking advantage of this great opportunity to boost their revenue through the controversial Pay to Win (Pay to Win) and Free to Play (F2P) business models. Unlike a more traditional business model where a company sells a full game and all of its content at launch, sometimes with paid downloadable extensions at a later date, free-to-play games offer players Free intellectual property (IP), but often not all gaming experiences. Therefore, those players who want the full experience must purchase in-game items from the game publisher’s official store. Of course, this can be done in a more consumer-friendly way, including game developers offering players small deals like avatars (e.g. skins, skins) that don’t affect game performance. In other cases, publishers expand the scope of small deals to include game-enhancing items such as weapons, characters, skills, and XP boosts. Since people who buy these assets gain an unequal advantage over players who don’t spend money, this “pay to win” model is very unpopular with players in the gaming industry. Unlike F2P, P2W, and more traditional methods, “Earning While Playing” (P2E) is a model widely used in the GameFi space and within the cryptocurrency community to reward players for active participation and interaction. Most “play and earn” games convert all or part of the items in the game into NFTs (Non-Fungible Tokens), which users can buy or trade through official or partner brands’ marketplaces (similar to small transactions, but more Decentralization), or earn NFTs by actively playing games, participating in events and sweepstakes, and completing challenges. Players can use the NFT tokens they earn in-game, or sell these tokens for profit through the cryptocurrency market. In addition to NFTs, P2E games often feature native tokens or in-game token rewards. GameFi project by combining activities in the field of decentralized finance with blockchain gaming solutions, users can play games of their choice, collect rewards, and use the tokens and NFTs they earn to boost their income, such as staking Assets such as NFTs, offering tokens and in-game items are combined into liquidity pools. Due to the earn-as-you-play business model and the abundance of monetization opportunities in GameFi, many people utilize blockchain-powered gaming to earn extra income or completely replace the wages of their full-time jobs. For example, breeding, raising, fighting, and trading cute creatures in Axie Infinity enables citizens of developed countries to earn more than the average local wage, including a small community in the Philippines that utilizes Axie Infinity’s P2E model, Generate income even during global pandemic lockdowns. How does Earn while Playing work on GameFi? Take Axie Infinity as an example Some readers may be completely new to GameFi and the blockchain gaming world, but what we discussed earlier should also provide you with basic information about P2E solutions. The next question we need to ask is: how does making money playing games work in the real world? To answer that question, we’re going to introduce you to the fun world of Axie Infinity, one of the most popular GameFis that allow users to earn money through gaming. Similar to the Pokemon universe, Axie Infinity centers around cute and charming creatures called Axis creatures for players to collect. These pets have many abilities and functions in the Axie Metaverse, including: Collect game characters by trading, breeding or otherwise; Breed them to create brand new Axis creatures; Raise Axial creatures and cultivate eggs into adult creatures; Participate in mini-games and tournaments and battle other players’ Axis creatures for token rewards; Trade Axis creatures on the market to earn cryptocurrency or expand your user’s collection with more creatures. As discussed in the previous section, in the game-money ecosystem, in-game items exist in the form of blockchain-based NFTs, which is what Axie Infinity features. In addition to Axis characters, players can earn, own and trade virtual parcels and land-related items through the project’s marketplace and co-vendor services. Although Axie Infinity is a P2E game, users must purchase three reels to start the game. To get more, players can use the Market or spend in-game Smooth Love Potion (SLP) tokens (along with some AXS) to breed new creatures. Each Axie character has unique abilities based on their body parts, and is divided into one of three tiers (Beast, Aquatic, or Bird). These variables affect data such as health points, morale, skills, and speed, as well as how these creatures perform in combat. In one of Axie Infinity’s turn-based combat systems, players must eliminate all three Axis creatures from the enemy team to win. This is why the user needs three creatures to start playing the game, because the user needs a fighting mechanic of one defender and two attackers. Interestingly, players can fight not only other users, but also non-player characters (NPCs), allowing them to earn AXS and SLP. Unlike traditional games, Axie Infinity is based on the Ethereum blockchain as the protocol (integrated with the Ronin sidechain to achieve lower transaction fees). Blockchain games are also owned and managed by their users rather than companies. However, it’s worth mentioning that developer Sky Mavis holds about 20% of the project’s native token, AXS, and has a majority vote until October 2023 to prevent malicious parties from disrupting the GameFi solution’s ecosystem. In addition to governance, Axie Infinity’s AXS token has the following features: Stake AXS and earn passive income with your tokens; Earn AXS rewards for voting on management decisions, playing games, and participating in various events such as tournaments; Breed Axis creatures by paying a combination of AXS and SLP; Settle various payments in the Axie Infinity universe (even though the average user in the market would use WETH as a medium of exchange instead of AXS). As you can see, AXS plays an important role in Axie Infinity’s ecosystem. The cryptocurrency has recorded excellent gains so far due to its wide range of features and high demand for games. In addition to having a historical ROI of nearly 50,000% (as of January 20, 2022), AXS surged from $0.59 on January 1, 2021 to $93.3 by the end of the year, a 158x increase in value over the last year. How does the GameFi project make money through P2E? As mentioned in the previous section, Axie Infinity players can not only enjoy a Pokemon-like gaming experience, but also have multiple opportunities to earn cryptocurrency. Now, the next question is: how does GameFi Solutions make money with the Play-to-Earn model? While Play-to-Earn offers players the opportunity to make money, it is also a lucrative business model that can generate good revenue for GameFi projects through various methods and channels, such as transaction fees from buy and sell markets, land sales and Collect NFTs for brand collaborations. For example, between January 26, 2021, and January 20, 2022, Axie Infinity generated $1.3 billion in transaction market fees and reproduction costs alone. According to Token Terminal, Axie’s 365-day performance puts the blockchain gaming project in second place among the most profitable dApps (even blockchains), behind Ethereum’s $5.8 billion and slightly ahead of Filecoin’s nearly $1.3 billion. However, it is worth mentioning that since Axie Infinity is managed by its community, all of its revenue goes into the community treasury controlled by AXS holders. Next, we’ll explain how GameFi projects make money through Play-to-Earn. 1. Transaction fees Since the feature of “playing to make money” is to tokenize in-game items in the form of NFTs, users can freely trade their assets on any market that supports the project’s token standard. While players can choose to trade assets using partner vendor platforms such as OpenSea, GameFi projects typically each operate their own marketplaces, allowing users to easily buy and sell their in-game items without having to move assets to other solutions ( or wallet). As such, the official marketplace for blockchain gaming solutions is often where most of a franchise’s in-game assets are traded. As a convenient trading platform and, of course, to generate revenue, “earn as you play” solutions typically take a cut of transactions made through their own marketplace, even though the number of direct game sales between projects and users is very limited or close to zero. In the case of Axie Infinity, the project charges a market fee of 4.25%, and sellers must pay a certain amount of tokens to the community treasury each time an item is successfully sold. To date, market fees have accounted for about 12.5% ​​of the project’s treasury revenue, making it the project’s second-largest source of revenue. And, since new players have to purchase three Axial creatures from the market to start the game, we expect it to continue to play a significant (and even more important) role in Axie Infinity’s finances. 2. Expenses related to in-game activities While “play and earn” games try to provide players with a way to “make money without having to spend money,” it’s not uncommon for GameFi projects to require users to pay to complete core tasks in the game. This is somewhat similar to the pay-to-play model of P2W: users can play the game for free, but have to spend money on in-game items to get the best performance or experience all the features. However, the main difference between Pay to Win and Earn while Playing is that the latter provides users with the opportunity to earn money, which is used to pay for a specific action, giving them the opportunity to earn back the money they put into the game. While this provides a great revenue stream for the protocol, the GameFi project can still maintain its commitment to the core tenets of the “play and earn” model. While three Axie mobs are enough for users to start the game, participate in tournaments, and fight non-player characters (NPCs) and other players in Axie Infinity, breeding is an important feature that allows the community to expand by adding new mobs their collection. Since reproduction is costly and accounts for the majority of project revenue, all AXS spent on reproduction goes to community finances. As of Jan. 20, Axie Infinity has collected more than $1.1 billion in reproductive costs, which is almost 85% of all revenue the program has made since its launch. 3. Land sales Just like the real world, blockchain games and virtual lands in the decentralized metaverse are some of the most valuable items that individuals and organizations can hold, so they are often expensive. At the same time, since virtual lands are sold directly to buyers by game franchises, most of the revenue generated goes to the community treasury. Most GameFi solutions can play without buying any land, but have virtual real estate to equip players with more abilities, resources, and perks. For example, while virtual real estate plots offer a fair amount of resources, when players fulfill certain challenges, unique items can be obtained. Therefore, the higher the level of a character, the more likely it is to generate income for the owner. Another way to make money from virtual real estate land is by renting out the land in exchange for monthly income. Cryptocurrency projects can also take advantage of this opportunity to buy large parcels of land and display their brand logo on the map, allowing them to advertise their brand, products and services to players while generating a steady stream of income through land leases. Similar to metaverse projects like The Sandbox, Axie Infinity has also launched virtual lands to boost its sales and expand its virtual universe with more features and activities. As such, players can purchase land in Lunacia’s Axie homestead for additional benefits, such as resources that are periodically spawned in the node, and can also host user-generated content. According to Axie Infinity’s white paper, land sales have generated around $15 million (4,500 ETH) so far, with a record sale of up to $2.3 million (550 ETH) on a piece of virtual land in the project’s metaverse. 4. NFT sales As mentioned earlier, most asset sales on the GameFi platform, such as NFTs, are conducted between users. However, this does not mean that the game. BitYard Exchange Business Request: media@bityard.exchange BitYard Telegram Communities BitYard News & Events — https://t.me/BITYARDNEWS English — https://t.me/BityardEnglish --- How does the Play and Earn business model was originally published in BitYard Token Insight on Medium, where people are continuing the conversation by highlighting and responding to this story.
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