Play to Earn, Play and Earn, and How Axie Will Evolve

There has been a lot of conversations recently around the evolution of Play to Earn into a concept of Play and Earn. A rather subtle difference in phrasing but a significant one that will have important ramifications on the future of the NFT gaming space. I’m sure everyone reading has some idea of what Play to Earn is, but for those who don’t, I will give my own quick overview. Play to Earn is the idea that gamer’s time is valuable, and that the time they put into a game can, and should be, rewarded with some kind of value. Whether that be through rare NFTs that they can later sell on a marketplace, or a native token, such as $SLP, that you can sell on a DEX (decentralized exchange) like Katana or Uniswap. Players are playing to earn in game currencies, and therefore making money from playing games.

So, is there a problem with Play to Earn?

The term Play to Earn was around far before Axie Infinity truly took off in 2021 and the project hit exponential growth. I can’t find the early tweets from 2018/2019 but Jiho used to use this term all the time in the early Axie Infinity journey. This was one of the main early hooks of NFT gaming, playing to earn in game currencies. The simple comparison was gold in WoW, where the crypto application would be players are playing WoW to earn gold, and in turn, can sell the gold on secondary marketplaces. The early meaning of the phrase had more of a focus on earning as a secondary to the game itself. It didn’t have the connotation that it does today. Recently, the term ‘Play to Earn’ has evolved into meaning that players have the right to earn, or that the default expectation is earning inside of a game.

Brycent recently tweeted something that I want to further expand on. He says in the tweet below that Play to Earn games are ‘Token First Economies”. What does that mean? It means the game revolves around earning the in-game currencies, or the function of the game is focused on the currency itself. Take Axie for example, before the launch of Origin (coming soon), some would say the purpose of the game has evolved into earning $SLP, the in-game currency. Players’ 9main focus is on the token itself, not the fun of playing the game. This ties into my point before, the underlining meaning is that “I should earn because I am playing the game” and not “I am playing the game, therefore I may earn.” Yes, there are still positive secondary consequences of developing this type of game, like generating massive network effects, scholars, and twitter hype (it happened with Pegaxy too). These network effects are short lived, though. As yield-hungry players flock to the game, their goal is to pull out whatever profit there may be, using up all the resources to the point where there is nothing left. This model isn’t sustainable.


“I play the game, therefore I should earn” vs “I play the game, therefore I may earn”



Enter “Play and Earn”

P&E removes the expectation of instant profits and enters in a more sustainable model where users play the game because they enjoy the game, and as a result of playing the game right they have the ability to earn.

So what does that do?

It takes the focus away from in-game currencies and puts it back on the game itself. It removes the “leeches” that don’t actually care about the future success of the game and puts the focus on the people who care about the long term success of the game. Which, ironically, actually aligns incentives with the community even though it reduces short term profits. If you are a community member, you probably net out more if a game has a sustainable future, then a short term hype cycle with high yields. The users will grow exponentially. More game experiences will be developed. More value will be driven to core governance tokens, like $AXS, which means more value to community members holding $AXS.

That begs the question, when should a user earn something of value in game?

I have given some thought to this and the best analogy that I can think of is that game economies must mimic real life economies. If we are to be developing digital nations, and moving away from physical borders and boundaries, then we must be developing functioning economies as well. You may be thinking “Well YCB, that is rather obvious”. You may be right, however, I think it is one of the most important things that NFT games need to focus on when building. People spend their entire lives studying macro economies and how each element of the world folds together to make markets work, so building this is rather complex.

However, I think we can simplify the qualifications into something rather practical and basic. If a player is to earn in game, they have to produce something of value, or have some level of ‘proof of skill’. Which means there are two things to unpack here, production and skill.


Production.


What does it mean to produce something in a game? Well it obviously depends on the game design itself. If we take a farm for example, I spend my time producing some resource from farming. Production. Breaking that down further, 1) How long did it take me to make it? 2) How much effort did I have to put in to make it? and most importantly, 3) Can anyone use it? Does it have value?

We can use an apple farmer and their production of apples as a real-life example. The farmer has to either plant the apple tree, or nurture it so that it grows–effort. The tree has to take the time to grow into a stage in which in can produce apples–time. The farmer then harvests the apples and gives them to people that want them–value. The farmer is therefore rewarded for their time and effort with profit from providing value to people. While this may seem trivial, the same process should apply to games.

If you don’t spend any time, didn’t put in any human effort (not bots), and what you produced can’t be used by someone else, then you shouldn’t earn anything. There was no sweat equity, no skin in the game from the player. On the flip side, if you put time, effort, and someone can then use what you make for some other function of the game itself, then you should be rewarded for that action. You passed the necessary bar of qualifying to earn. The earning was the secondary function of the playing. You played the game first–producing something of value for other players–and earned something second.


Skill.


I recently talked with Misotsune, the Co-Founder of Solarbots, on my podcast (link here). In this, we talked about the term they used in their white paper on ‘Proof of Skill’ mining. PoS mining is kind of analogous to Proof of Work where you have to prove to others that you put in some minimal level of work in order to get rewarded. You have to put in some level of skill in order to ‘mine’ [earn] something in game. Whether this is through defeating PvE bosses or winning in PvP tournaments, you differentiated your skill set from others enough, you proved to others that you have mastered something in game that they can’t. You passed the level of putting in enough work, enough time and effort into the game. You played the game first, and earned an NFT/token second.

Professional athletes are an easy analogy for this. They have so much skill in a specific area that they are paid to perform this skill on a mass scale for people to watch. At the end of the day, it is entertainment. How much skill you have drives how much you entertain people, and as a result, how much money you can make. The same applies to eSports/Proof of Skill.


Is building this type of game easy? No. Absolutely not. It is actually probably harder than building a normal game. Why? You have to balance two things. 1) The player experience (which is already hard enough with the thousands of games that we have available to play) and 2) The in-game economy. We still struggle to do that with the real world economy. Now a game might be easier because game developers can easily change supply/burn rates to balance out certain components; however, it still takes a lot of time, dedication, data, and focus to get this right. It is much more challenging, but rewarding, to focus on both aspects. The winners that come out of NFT gaming will get this balance right.


Where does that leave us with Axie Infinity?

With the upcoming release of Origin, and the future release of land, I think the team is understanding the importance of the P2E vs P&E distinction. That just because someone plays the game, that doesn’t give them the right to earn. And it shouldn’t. As I stated above, there has to be both some type of production and some level of skill in order to be able to earn.

The new gameplay with the release of Origin will put the focus back on the game itself, and move away from grinding just to earn $SLP. The focus on earning $SLP has a much shorter half-life and is not sustainable long term. It also doesn’t attract players and community members that want to play long term, positive sum games. Moving to a more game-centered approach, this evolution will help Axie Infinity cross the chasm into a new set of NFT users and gamers that join the community, and ultimately lead to a long-term alignment.

Further, the evolution of land gameplay will also generate unique experiences where players can have different roles in game to accomplish different tasks. Not only will this contribute to the long-term alignment, but also will give players unique content experiences that they didn’t have before, allow for players to take on more of the production-type roles, grow the user base, and further drive value to $AXS.


A more sustainable model creates more long term games that everyone can play and win together. The results are positive sum, rather than zero-sum, cycles, where many can win–instead of a scenario where only few win, and the game dies.

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