The world of Web3, blockchain , cryptocurrencies, and P2E games have their fans, enthusiasts, and experts, but it does not necessarily have a good reputation with the general public. Indeed, this recent and emerging ecosystem is all too often associated with scams, scams, and other frauds of all kinds. However, even if there are indeed deviations inherent to all economic activities, this ecosystem is promising. So what is it really? Are P2E games ( Play2Earn ) just simple Ponzi schemes doomed to collapse? This is what we will study in this file.
What is a P2E game ( Play2Earn )?
The P2E gaming model ( Play2Earn ) appeared with the emergence of Web3 made possible thanks to the technological innovation of blockchain , and offers a new economic model in the Gaming industry.
Concretely, these Web3 games allow players to earn real rewards in their games:
- In-game digital items in the form of NFTs that players can resell for FIAT money,
- Tokens and cryptocurrencies directly integrated into the game that players can then exchange for FIAT money.
From then on, players can earn real money by playing their favorite video game, which constitutes a real revolution in the video game industry.
New economic ecosystem or Ponzi?
A recent economic model in full development, the economy of P2E games ( Play2Earn ) is the subject of lively debates between experts and economists. For some it is about the future and the future of games. For others it is just a Ponzi bordering on scam and fraud... So in order to better understand what it is, let's start by studying the mechanism of a Ponzi chain.
What is a Ponzi scheme?
The Ponzi scheme is an investment fraud that consists of misleading investors into believing that they will receive high returns when they are only paid with funds from new investors. A true scam and scam, those responsible for a Ponzi scheme make no investment or return and only misappropriate the money invested as long as the pyramid operates. Because in fact, when investors want to withdraw their money, there are not sufficient funds to reimburse them, and then the Ponzi scheme collapses.
Comparison between a Ponzi and P2E games
In order to determine whether Web3 P2E ( Play2Earn ) games are just Ponzi schemes or not, it is appropriate to compare these two economic ecosystems.
Similarities between Play2Earn and Ponzi scheme:
The Ponzi scheme scam and Web3 P2E games have some similarities in how they work:
- both give hope for a return on their investment,
- both base their sustainability on the recruitment of new investors,
- both allow early investors to make more money on the backs of newcomers...
Considering this, one could quickly think that Web3 P2E ( Play2Earn ) games are Ponzi schemes. However, their differences should also be studied before drawing hasty conclusions.
The differences between Play2Earn and Ponzi pyramid:
First major difference between a Ponzi scheme and a Play2Earn game, only the Ponzi pyramid promises a return on your investment! Indeed, P2E games on Web3 do not promise any percentage of profitability regarding the financial investment of players in the game.
Then, in a Ponzi, only the initial financial investment is a condition to benefit from these so-called “Return on Investment” (ROI) whereas in Play To Earn games it is the skills, activity, and performance of the players. who are rewarded, not their financial investment in the game.
Axie Infinity case study
In the game Axie Infinity , players compete through their digital animals called “Axies” available in the form of NFTs that players can buy, sell, or rent in-game.
The game Axie Infinity has allowed thousands of players to earn a lot of money, and even make a living from it, especially in poor countries.
However, the game's economic ecosystem then collapsed following a significant loss in the number of active players, which caused the game's AXS token to plummet.
The game Axie Infinity saw an explosion in the number of new players in 2021 and incredible enthusiasm. But this cannot last indefinitely, the game saw a decline in its number of new daily players in 2022, which led to a drop in demand for purchasing Axies NFTs in the face of an ever-increasing supply of sales. The price of NFTs and the AXS Token then fell by 86% while the number of daily active players in the game fell by 60%.
In summary, we can see that if people only play to win money, then the minute they stop winning as much money as before, they will also simply stop playing... This is the experience lived by the game Axie Infinity , the pioneer of Play2Earn games.
STEPN case study
STEPN , like Axie Infinity in P2E games ( Play2Earn ), was the pioneering application in the industry of so-called “ Move2Earn ” platforms. This concept promises its users to earn money via the application by making physical efforts and activities in real life.
Since its launch, the platform has succeeded in converting millions of players who have purchased virtual sneakers allowing them to earn STEPN Tokens simply by walking! And in the same way as on Axie Infinity , players can buy, sell, or rent their pairs of shoes to earn money and ensure passive income.
Interestingly enough, it's important to note that the STEPN published an article titled " Are All Play-to-Earn Games Ponzi?" “. This is a testament to the fact that Web3 game developers are aware that maintaining a stable economic ecosystem is not easy.
Furthermore, the STEPN did not hesitate to assert that “ if people play to win money, they will be more motivated to cheat”.
What future for Play-to-Earn games?
Let's be honest. It is extremely hard to create a video game that is entertaining and enjoyable to play. Web2 video game publishers take several years to design a game, and success is very rarely achieved with players. Indeed, how many Web2 video games have been commercial failures with very few active players? A lot ! A majority even…
So in addition to this difficulty in being able to design a quality video game that will be successful with the general public, it is even more complex to add an internal economic layer to a game that would allow players to earn money while playing. to a pleasant and pleasant game. It will therefore still take years before P2E Web3 games can really be developed and establish themselves among the general public.
And unfortunately, at the moment, web3 is flooded with low quality games, with poor gameplay, whose only promise is to be able to make money for players, which very much resembles Ponzi schemes …
Indeed, for P2E games ( Play2Earn ) on Web3 to be able to offer real stability and sustainability it will be necessary:
- That players are primarily interested in the game, its gameplay, and the pleasure of playing, rather than potentially winning money.,
- That NFTs and tokens won in games can be used in several different games so that they are no longer dependent on a single project and community,
- That the game economy through Tokens, and NFTs, is intended above all for the pleasure of playing and entertainment without unbalancing the game like Fortnite skins.
In summary, the main error perhaps comes from the very concept of the Play2Earn game which should rather be called “Play for fun, and possibly earn NFTs and money based on your performance”.
CONCLUSION
Web3 P2E ( Play2Earn ) games are above all games. That is to say that they are a way to entertain yourself, to have fun, like Web2 games. However, Web3 games also have the potential to earn rewards with financial value. However, P2E games offer no guarantee of winning money, nor any return on players' financial investment. And like all games, there are winners and losers. This is the very principle of a game!
But be careful, don't be fooled! There are P2E game projects ( Play2Earn ) on Web3 which are in reality nothing but scams and scams, like the world of cryptocurrencies, or in the real economy. So before you decide to invest money in a Play to Earn game, we strongly recommend that you do your due diligence by carrying out your own checks in advance, for example by consulting player reviews, or using our guide and directory of P2E games on Web3.
