The paradigm shift of “play while earning” may revolutionize the game industry

With the development of innovation and disruptive technologies, “play while earning” games are expected to become a key factor in the mass adoption of blockchain and have a positive impact on society.

For most of us, earning income while playing games sounds like utopia. However, thanks to the “Play-to-Earn” movement, this scenario is not far from reality.

Since May 2021, blockchain-based games have achieved great success. The number of accounts or wallets related to blockchain games reached 754,000. Compared with the second quarter of this year, the number of game-related independent active wallets (UAW) increased by 25%, and a year-on-year increase of 509%. Although the number of UAWs is an indicator on the chain and will not necessarily be converted into users, there is enough evidence to support the growth of demand for blockchain games.

It seems that people are finally beginning to realize the potential behind the combination of games and blockchain technology. Especially attractive concepts like “Meta Universe” have gained attention in the mainstream media. But what exactly is “making while playing”? What are the main drivers behind this latest trend in gaming? What is the development direction of the blockchain game industry?

Blockchain-based games

Blockchain is one of the most disruptive technologies created in the past few decades. It enables individuals to conduct transactions safely without relying on a third party to do so, and it also provides ownership of the underlying assets. If blockchain technology is applied in the right way, then this technology has the potential to change any industry, and games are no exception.

Blockchain-based games are sowing the seeds of a new micro-economy. Players all over the world can create money value by playing games. The blockchain will transform the Web2.0 type of game into a decentralized Web3.0 type: In blockchain games, players change from consumers to real owners, and they can not only determine the future of the game story, but also You can also fully control their props in the game. In the process, a new micro-economy was created. So, how is this achieved?

Simply put, this is achieved by unleashing the power of NFTs (non-fungible tokens). NFT is a tokenized representation of digital assets, essentially transferring its ownership to the wallet that holds it. This ownership is recorded in an immutable, accessible, distributed and decentralized ledger (also known as the blockchain).

The paradigm shift of "play while earning" may revolutionize the game industry

This is the main difference between blockchain games and traditional games. NFTs in blockchain games include virtual land in the game, in-game props, and game-related collectibles. For example, in blockchain games such as ” Decentraland ” or “The Sandbox”, there are virtual land (which can be built on it), NFTs for combat and other types of activities, and virtual pets or other game mechanics that do not necessarily have Props for any purpose.

Provide players with real ownership

The in-game props used to enhance the game experience create $40 billion annually, accounting for 25% of the global revenue of the traditional game industry. Popular games like “Fortnite “, ” DOT A”, “Call of Duty” and “Roblox” have found a real market for these decorative items. For example, 80% of the players of “Fortnite” are addicted to decorative items to some extent, while the 42 million daily active players of “Roblox” spend an average of US$5.6 per month.

The paradigm shift of "play while earning" may revolutionize the game industry

As of the end of September, the market value of NFT is estimated to be 14.2 billion U.S. dollars. In the third quarter of 2021, in-game NFT item transactions accounted for about 20% of the quarter’s record NFT transaction volume.

In addition, in traditional games, players do not actually own them when they buy items. In fact, the player only has the right to use the digital copy of the item stored on a central server; if the server fails or disappears, the digital item will also be lost forever. In contrast, as long as the blockchain network is still running, in-game props represented in the form of NFTs will exist on the blockchain. Similarly, NFTs allow players to fully control the in-game items they purchase, which is especially important when monetizing these in-game assets.

Another factor to consider is the transferability of assets. Blockchain game players can not only resell their NFT assets on the game market, but also sell their NFT assets on a secondary market that has nothing to do with the local platform. This means that players who are willing to sell NFT assets in the game will have different choices. If a game runs on Ethereum , players can not only sell their own NFT items on the game’s local market, but also on NFT markets such as OpenSea and Rarible to earn revenue.

All in all, NFTs give players ownership of digital assets, thereby making them transferable. Blockchain games turn the purchase of in-game items into investment, while breaking the traditional structure that still exists in traditional games.

Complete token economics framework

The boundaries between blockchain and traditional games have been delineated above. It is time to pay attention to one of the most frequently mentioned aspects of blockchain games: playing and making money. Many blockchain-based games include a complete token economics framework that allows players to make money from their game time. This is known as “Play-to-Earn”.

There are two main ways to earn while playing in blockchain games: one is by earning in-game currency. Like most dApps (decentralized applications), some blockchain games also have in-game native cryptocurrencies. These game-based cryptocurrencies can play a variety of roles, from granting governance rights to the holders to purchasing And increase the NFTs props in the game, and can even be used for other blockchain functions, such as staking. By spending time playing games, players earn this game-based cryptocurrency, which can then be exchanged for legal currency through a centralized exchange, thereby bringing this game revenue to the real world.

The paradigm shift of "play while earning" may revolutionize the game industry

Above: As of October 28, the market value of top blockchain game tokens. Source: DappRadar

Another way is that players can make profits by trading on the NFT trading platform or reselling the NFTs assets themselves. Players can obtain specific items in the game and upgrade them, and then sell them at higher prices in the market.

The impact of this “play while earning” revolution led by blockchain games is so great that the latest growth in the use of the entire blockchain industry is largely driven by blockchain games . According to DappRadar’s third quarter industry report, the number of UAW (independent active wallets) related to gaming dApps accounted for 49% of the total industry.

The paradigm shift of "play while earning" may revolutionize the game industry

Above: Since the beginning of 2021, the growth trend of the number of independent active wallets (UAW) in blockchain games

Therefore, blockchain games have become more and more popular in the past few months. But what caused this “play while earning” revolution?

Emerging economies

From a socioeconomic perspective, games based on the “play and earn” model are having a positive impact on our society. These types of games essentially democratize the source of income for those who spend time playing blockchain games. In this regard, there is nothing more that reflects the sport of “playing and earning” than Axie Infinity!

The paradigm shift of "play while earning" may revolutionize the game industry

Axie Infinity is a blockchain game developed by Vietnamese studio Sky Mavis. The game has become the pioneer of the “play while earning” revolution. Axie Infinity is exposed to this perfect storm. Through its series of mechanisms, this game of playing and making money can flourish in the emerging economy of the Philippines.

We are all aware of the economic and social impact of the COVID-19 epidemic on our lives, and this impact is even more serious in emerging economies. For Axie Infinity, the market opportunities created by this impact are already in place.

The paradigm shift of "play while earning" may revolutionize the game industry

Above: The top 15 countries for interacting with Axie Infinity games, with the Philippines ranked first

But the Sky Mavis team quickly made an action to push Axie Infinity to a higher level: build its own side chain Ronin. Ronin is an Ethereum sidechain, which solves the two major challenges that the Ethereum network brings to Axie Infinity: high transaction fees and latency. After migrating from the Ethereum network to Ronin in April 2021, Axie Infinity began its rapid development journey.

Axie Infinity has become the most traded NFT collection ever. The NFT pet Axies in the game has a transaction volume of more than $2.7 billion in the game’s internal market Axie Marketplace. The next NFT collection in transaction volume is CryptoPunks, an Ethereum-based NFT collection that has generated $2 billion in transaction volume since its launch in 2017. See below:

The paradigm shift of "play while earning" may revolutionize the game industry

Above: The top 5 most valuable NFT collectibles by historical transaction volume. Source: DappRadar

In addition, Axie Infinity generates more revenue than all other dApps or blockchain networks except Ethereum. According to data from Token Terminal, Axie Infinity generated $800 million in revenue in the third quarter of this year, which is more than the transaction fee revenue generated by the entire blockchain network such as Bitcoin and Solana, and even exceeds the well-known Ethereum NFT Market OpenSea.

Axie Infinity allows players to earn up to 75 SLP tokens per day by completing daily tasks (including mini games and player battles). Given that the average price of an SLP token is $0.1, a player who focuses on playing Axie Infinity can earn about $2,700 a year. This figure is within the range of the estimated per capita GDP of the Philippines, Vietnam, Indonesia and other Southeast Asian countries in 2021 (see the figure below). Therefore, many players in these countries make a living by playing this game.

The paradigm shift of "play while earning" may revolutionize the game industry

Although the current income from “playing and earning” games like Axie Infinity is much lower than the average income of “League of Legends” professional players (about 300,000 US dollars/year), the social impact of these blockchain games It cannot be ignored, especially in emerging economies whose financial influence has been magnified. Regardless of any demographic data barriers, “play while earning” democratizes (popularizes) game time and revenue, which is a very positive signal for the game industry. But in addition to Axie Infinity, there are several other “play and earn” games that also do this.

Other new games and tokens

The first is Splinterlands, which is a game based on the Hive blockchain. Splinterlands is a card game in which players must use their own NFTs cards to develop strategies to defeat other players in PvP (player versus game) battles. By successfully completing the battle mission, players can earn Dark Energy Crystals (DEC) tokens, which is the main currency in the Splinterlands game. In addition, in August this year, this game launched its in-game governance token SplinterShards (SPS), which promoted this game to occupy a leading position in the industry rankings, as shown in the figure below:

The paradigm shift of "play while earning" may revolutionize the game industry

Above: Since the launch of the SPS token, the number of independent active wallets (UAW) in Splinterlands games has grown. Source: DappRadar

In September this year, the Splinterlands game attracted more than 245,000 independent active wallets every day, an increase of 3267% compared to the end of June this year. This increase in user volume has resulted in 58 million transactions for the game. As far as the project itself is concerned, the market value of the game (including all cards and collectibles) has exceeded 200 million US dollars. To learn more about this game, read this guide.

In addition, the Alien Worlds game based on the WAX ​​blockchain and the Upland game based on the EOS blockchain also dramatically increased their respective player bases during the year. Alien Worlds is a “play while earning” game based on mining and fighting, attracting an average of over 500,000 active wallets per month; Upland is also a “playing while earning” game, players have a copy in the game Virtual property in real cities such as San Francisco, Brooklyn, and Manhattan, the game will be one of the most played games by players for most of 2021.

The paradigm shift of "play while earning" may revolutionize the game industry

Above: Splinterlands, Alien Worlds, and Upland games accounted for the proportion of users of game dApps in the Hive, WAX, and EOS blockchains, respectively. Source: DappRadar

Last week, the two games Alien Worlds and Splinterlands attracted more than 1 million independent active wallets. But it doesn’t stop there: CryptoBlades, Mobox, and countless other blockchain games have transformed the Binance Smart Chain (BSC) from a blockchain network that actually relied on DeFi into a network full of game dApps .

Although the “play while earning” model is completely changing the paradigm of the gaming industry, this seems to be just the beginning of a larger event: it is blurring the boundaries between the real world and the new virtual reality (ie meta universe).

virtual reality

“Meta universe” is a very attractive concept. The meta universe was originally conceived by Neal Stephenson in the science fiction novel “Snow Crash”, and by Ernest Cline’s science fiction novel “Ready Player One” (Ready Player One). ) Further promotion. Meta universe is a virtual space where individuals can create, trade, play and socialize. To be fair, the meta-universe has the potential to change the way we form communities.

The paradigm shift of "play while earning" may revolutionize the game industry

Nowadays, Metaverse has become more and more important, so much so that Facebook has renamed itself Meta in order to focus more on the development of their centralized virtual space as part of their products. But the concept of “meta universe” is not new to mainstream media, let alone gaming platforms. In 2019, DJ and producer Marshmello held a virtual concert in the “Fortress Night” Metaverse (see the picture below). More than 10.7 million people gathered on the spot. This virtual concert even had a positive effect on his album. With the domino effect, sales increased by 300%.

The paradigm shift of "play while earning" may revolutionize the game industry

Above: In 2019, Marshmello held a virtual concert in the “Fortress Night” Metaverse

For a decentralized virtual world, what is very attractive is that these types of events have already happened. Decentraland is an important virtual world running on Ethereum. It hosted a four-day music festival (see the picture below), in which DJ and music producer Deadmau5 played the main role.

The paradigm shift of "play while earning" may revolutionize the game industry

The picture above is from a four-day online virtual music festival held by Decentraland

Large-scale sandbox games like Minecraft allow players to build on an endless digital space and have been around us since the past ten years. “World of Warcraft” has created more than $10 billion in revenue in the past 10 years. And the virtual world based on blockchain is not lagging behind.

In the third quarter of this year, the blockchain virtual world has accumulated more than 56 million U.S. dollars in transaction volume, with The Sandbox game at the forefront. The Sandbox has become a reference meta-universe game. Similar to Minecraft, The Sandbox is a virtual world. Players own and customize 166,000 different virtual plots (each plot is a An Ethereum-based NFT), players can make games, design stylish characters or get the game’s local currency SAND by completing tasks. So far, this popular game has established important partnerships with well-known brands such as Atari, The Walking Dead, The Smurfs, and recently Snoop Dogg (American singer) has also sold The Sandbox On the NFT plot, it received $17 million in revenue.

The paradigm shift of "play while earning" may revolutionize the game industry

Above: The transaction volume of major virtual world dApps in the third quarter of this year. Source: DappRadar

Other popular blockchain digital world games include “Ember Sword” (sold 12,000 virtual plots and created more than 400 million US dollars), “Treeverse” (market value of 71.8 million US dollars), “Blankos Block Party”, ” Somnium Space”, “CryptoVoxels”, “My Neighbour Alice”, etc. The decentralized meta-universe is becoming a collection of virtual reality ecosystems based on “play and earn” games.

In addition, big fashion brands such as Burberry, Gucci and Dolce & Gabbana have turned their attention to Metaverse. The integration between important brands, well-known celebrities and the decentralized meta-universe may become an important channel for both parties to generate revenue.

All in all, the decentralized virtual world will become people using their apes or cats, wearing clothes that are more expensive than them and in real life, and hanging out with friends who have never met in the real world. Although most of these games are still in the development stage, they have attracted the attention of large companies including several venture capital firms.

VCs are pouring in

Traditional free-to-play games (Free-to-Play) are one of the largest industries in the world. Most “Free-to-Play” games provide players with complete game content for free and sell virtual game items such as skins and emoticons. To make money. According to data from Statista, the video game industry generated nearly US$159 billion in revenue in 2020, and it is expected that this figure will exceed US$200 billion by 2023. Considering the impressive numbers in traditional industries, as well as the rapid popularity and socio-economic impact of emerging “play while earning” games, important investors have already started their own actions.

In the past few months, news about venture capital investment in blockchain games has been around us. In September of this year, Sorare, a start-up company based on a “play and earn” fantasy football game, received US$680 million in Series B financing from SoftBank’s Vision Fund 2.

A few days later, Dapper Labs, the startup behind the popular NFT collection NBA Top Shot and the NFT breeding game CryptoKitties, received more than $600 million in investment from Andreessen Horowitz (a16z), GV, Version One Ventures and Coatue. The investment situation of major blockchain companies in 2021 is shown in the figure below:

The paradigm shift of "play while earning" may revolutionize the game industry

Above: Venture capital received by major blockchain game companies in 2021

With the huge market opportunities, the latest developments in the “play while earning” movement have not been overlooked. Three weeks ago, a16z invested US$150 million in Sky Mavis, the team behind Axie Infinity.

The list goes on. Animoca Brands is a venture capital firm focused on digital entertainment, blockchain, and gamification. The agency invested an unknown amount of money in “Star Atlas” (a game that will run on the Solana platform). In addition to “Star Atlas”, games invested by Animoca Brands also include traditional game platforms such as “The Sandbox”, “Revv Racing” and “Arc8”.

With the addition of these well-known venture capital funds to the blockchain game industry, this will undoubtedly enhance existing game dApps such as Axie Infinity and Sorare, and will pave the way for the next generation of “play while earning” games.

AAA games coming soon

It is undeniable that the “make money while playing” game has attracted much attention. As mentioned earlier, this model has become a driving force to promote the development of the entire blockchain industry. With the rapid growth of the player base, some new projects are trying to improve the existing products to a new level.

As mentioned earlier, Animoca Brands announced its investment in “Star Atlas”. This game is currently in development. It will be an AAA-level “play and earn” open world space exploration strategy MMORPG (massively multiplayer online role-playing game) , Relies on Unreal Engine 5 (Unreal Engine 5) developed by Epic Games. Thanks to its token economics and various game NFTs, the goal of “Star Atlas” is to build a real galactic economy, including combat, politics, and mining.

Solana’s upcoming other noteworthy games include “Aurory”. Although it is not an AAA-level game, this game has the potential to become a successor to “Project Seed”, “Cryowar” and “Ninja Game” on the chain. An RPG (role playing) blue chip game based on the “play and earn” mode.

“Illuvium” is another highly anticipated game. This game is also an open world RPG game running on the Immutable X blockchain. Illuvium will allow players to capture and breed creatures called Illuvials. Similar to “Pokemon”, this game follows a combat mechanism similar to “League of Legends”. The pattern design, music, and token economics in Illuvium have attracted a lot of attention in the blockchain game industry and won the label of AAA game.

The paradigm shift of "play while earning" may revolutionize the game industry

The above picture is from the blockchain game “Illuvium”

It should be noted that Immutable X is an Ethereum L2 solution that relies on ZK Rollups as a consensus mechanism. This blockchain architecture allows players to enjoy a faster gaming experience without paying gas fees. Other related games will also enter Immutable X, including “Guild of Guardians” (a blockchain mobile RPG game with more than 150,000 fans), “My Crypto Heroes”, and of course “Gods Unchained” (a game Immutable X is a well-known card game).

Finally, it is worth mentioning the startup Gala Games led by Eric Schiermeyer, co-founder of Zynga (social gaming company). Gala Games aims to build a decentralized ecosystem based on “play and earn” games. Gala’s goal is to allow players to have network nodes that will eventually run the entire blockchain. So far, this startup has only launched a farming game called “Town Star”, where players can get the network’s native token GALA and the game’s own token TOWN.

In addition, Gala will also launch the fantasy RPG game “Mirandus” with a large-scale digital world as the background, the battle arena game “Spider Tanks”, the space epic “Echoes of Empire”, and the tower defense game “Fortified”. All these games are in the development stage.

The paradigm shift of "play while earning" may revolutionize the game industry

“Play while earning” games become more popular by letting players own the ownership and profit of the time and capital invested in the game. Changing the socioeconomics of the entire region is not seen every day. When we understand the role played by blockchain games, the impact will be more profound.

Write at the end

These decentralized gaming platforms are related to concepts such as “meta universe”. The virtual world will change the way we socialize and even change the current profit model. Platforms like Decentraland, The Sandbox, and Somnium Space will also become places for users to build NFTs and show them to others, creating a Nolan-style “Inception” paradigm.

In addition, a major feature of the gaming industry is the ability to attract a large number of fans. In 2016, the craze of “Pokemon Go” brought thousands of people together in one place at the same time because they desperately needed to catch the monster they dreamed of. E-sports competitions have also attracted a large audience. The 2019 “League of Legends” Tournament is watched by 100 million people around the world and is broadcast in 19 different languages ​​through 30 platforms including ESPN (entertainment and sports network). Super Bowl LV is watched by 130 million people worldwide. On this planet with 2.4 billion players, with the development of innovation and disruptive technologies, “play while earning” games are expected to become a key factor in the mass adoption of blockchain and have a positive impact on our society.

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