Play-to-Earn and NFT Gaming: Explained
|— Play-to-earn and NFT games aim to create a more player-centric gaming ecosystem where players own their in-game assets and can earn incentives for spending time playing games. |
— In-game tokens and assets are stored on the blockchain as NFTs, meaning players fully control these assets within the game and outside of it. They can even trade them on NFT marketplaces.
— Decentraland, The Sandbox and Axie Infinity are some of the most successful play-to-earn and NFT games that have enabled players to generate sizeable incomes.
NFT and play-to-earn games are two new entrants in the gaming space that aim to redefine how in-game asset ownership and game incentives work. In short, these games leverage blockchain infrastructure and crypto tokens to enable a new form of game dynamics where players have a real-value incentive to play games.
The Current Stake of Gaming
In the current gaming ecosystem, players spend massive amounts of time to win in-game items. In fact, many spend thousands of dollars purchasing gaming assets for a single game.
However, you Don’t Own Gaming Assets in Traditional Games.
Despite spending real time and real value to acquire in-game items, gamers never exercise complete ownership over them. In traditional games, assets can’t be taken to another gaming platform; nor can they be sold to another gamer. If the game itself is discontinued, the money paid for those items becomes a sunk cost. This is not ownership, it’s rent.
There’s No Real Value at Stake
Further, with the gaming industry being one of the most profitable industries worldwide, players don’t stand to win any real monetary value. Instead, gaming is about accessing new levels or climbing a leader board. But all of that disappears once the game is switched off.
Play-to-Earn and NFT Games: A New Chapter for Gaming
Instead, NFT and play-to-earn (P2E) games offer real value, real ownership and real incentives for gamers. While some companies and gamers disapprove of NFT and P2E games, many major game studios are already proving the potential of NFT games by developing their own.
In this article, we will understand what NFT and P2E games are, how they benefit players, and explore examples of each of the two.
How Do NFT Games Work?
Before we answer that question, let’s quickly recap what NFTs are and why they matter.
Non-fungible tokens, aka NFTs, are unique tokenized assets that exist on the blockchain. They use an ERC721 token standard, which allows any type of digital file to be minted and put into circulation as a crypto asset.
This allows for real ownership and even reselling. To explain, whoever controls the private key for the blockchain address where an NFT is stored (the owner) can then sell that token for real value at a later date. The blockchain provides the infrastructure for both the ownership and the trade.
NFTs don’t exist within the game itself – rather, they exist independently on the blockchain and are compatible with the game’s infrastructure.
Now, What Are NFT Games?
NFT games are any digital game in which the in-game assets are represented by NFTs. For example, if Apex Legends or Call of Duty presented their characters and gun-skins as NFTs on the blockchain, they would be NFT games.
Instead of just using assets within the game ecosystem, like you do in traditional games, NFT gamers actually own their items as tokens in a crypto wallet. Only the owner can move or delete their skins or other NFTs, even if the game itself ceases to exist.
Further, players get the freedom to transfer these items to other crypto wallets or sell them for real money on secondary NFT marketplaces. Some projects are even experimenting with cross-game compatibility of in-game NFTs. This opens up a wide scope of possibilities for gamers and developers.
Compared to traditional games where players have almost zero control over their assets, NFT games aims to provide a more player-centric gaming ecosystem.
NFT Gaming in Action: Gaming and the Metaverse
The metaverse is an integral part of the transition between traditional and blockchain gaming.
It aims to brings new level of reality to digital gaming, socializing and events, and NFTs are a defining factor in this transition. Whereas in regular games, players have little control over their environment and the game itself disappears when they switch off, the Metaverse offers an “always on” environment. This means players can own, curate and build out parts of the ecosystem via NFTs. Not only that, they can even monetize the experiences they create.
It’s an endless shared virtual space and with the realism of actually owning your world – just like in real life. Further, it’s a goldmine of earning opportunities and new business models waiting to be discovered – and it’s all down to NFTs and blockchain.
That said, it’s still in its nascent stage, and gaming is the one sector playing a crucial role in bringing wider adoption of the metaverse.
Two of the most popular metaverse games include The Sandbox and Decentraland. These games enable players to own pieces of the metaverse in the form of an NFTs; ranging from land to avatars to in-game items.
Players can choose to build anything from an apartment or a farm to a small tool. Since these assets are represented by NFTs, players can trade the lands or items within the game ecosystem or outside of it.
Beyond the simple ownership of NFTs, Metaverse platforms offer gamers multiple ways to earn active and passive income , via gaming incentives, rental of NFT based property and many more.
What Is Play-to-Earn (P2E)?
Play-to-earn (P2E) is a blockchain gaming mechanic where players earn crypto tokens as rewards for; completing tasks, winning battles against other players, or progressing through levels within a game.
These rewards can be native cryptocurrencies like MANA from Decentraland, NFT assets — skins, cards, characters, etc. — or popular cryptocurrencies like ETH or USDT.
The working principle behind P2E games is simple: the more time you invest in the game, the higher your chances of winning rewards with real value – predominantly cryptocurrencies.
For instance, a P2E game like Decentraland enable you to rent out your virtual land to generate a passive income. Then there are many P2E games that allow you to fight battles and win tokens. For example, Axie Infinity enables players to earn points with real-world value, via the game’s native cryptocurrencies AXS and SLP.
To give you a broad understanding the ecosystem and some of the biggest projects in blockchain gaming, here’s a list some of the top NFT games.
Top NFT Game Axie Infinity: Explained
Axie Infinity is one of the most popular play-to-earn games. It lets you collect and breed cute characters called Axies, each of them with different abilities. Each Axie is a unique non-fungible token that you hold in your crypto wallet.
You can use these Axies to form a team and fight battles with other player-owned or computer-controlled Axie teams. Your goal is to reduce the health of your opponent’s Axies to zero before they do the same to you. Winning battles helps you earn Axie’s tokens. Firstly, Smooth Love Potion (SLP) act as Axie Infinity’s native currency. Then Axie Infinity Shards (AXS) acts as the ecosystem’s governance token. This is what makes Axie Infinity a P2E game. However, there is no penalty if you lose a game.
To gain a better advantage, you can even create Axies with new traits through breeding. However, there’s a limit to how many times you can breed them. This controls the supply, ensuring there aren’t too many Axies in circulation.
In addition, you can use runes and charms – which come in non-NFT and NFT versions – to give your Axies new abilities.
Interestingly, Axie Infinity runs on its own Ethereum sidechain, Ronin, which manages all transactions and minimizes transaction costs for users.
To start playing, you must download the Ronin Wallet browser extension and bridge some ETH onto its sidechain. This Ronin wallet is where you will receive all of your rewards and NFTs.
But how does a player make money? Here’s how:
- Exchanging SLP and AXS tokens for fiat or crypto on a crypto exchange.
- Staking AXS to earn passive income.
- Trading your in-game NFTs on an NFT marketplace. The rarer your NFTs, the higher the prices they may fetch.
NFT Gaming and Play to Earn: How To Secure Your Digital Value
NFT games are synonymous with autonomous digital ownership and equitable value distribution to their players.
While this autonomy and ownership over your in-game assets is remarkable, it comes with a responsibility — securing your assets. And what better way than to use a hardware wallet to do that?
At Ledger, we make the most secure hardware wallets where you can store your seed phrase and private keys offline. But to help you still interact with all your favorite online NFT and P2E games, you can Ledger Live — an application enabling online interactions while your seed phrase and keys remain offline.
So, grab your favorite Ledger Nano and jump in to join the new gaming revolution.