During the last industry cycle in 2017 and 2018, everyone was exploring the possibility of blockchain games. After the DeFi Summer, the introduction of DeFi attributes and the inspiration of token economic mechanisms made GameFi – represented by Axie – usher in a large-scale outbreak. Play to Earn (P2E) has also become the key to all blockchain games.
Various nested economic models, the balance between token release and consumption, are all designed to prolong the life cycle of a product. Every user (including me) is enjoying the happiness of getting profit from the product until the day of collapse.
Imagine a product with 10 million daily active users, and everyone can get $20 by completing basic tasks in the game, which costs $200 million a day and $6 billion a month. Is this possible?
There are two essential problems:
- The incentive distribution mode in the game is unreasonable.
- Most users in the game are expecting getting profit instead of contributing.
For blockchain games with the opportunity to have long-term potential and many daily active users, I think the future evolution way is Play for Fun and Skill to Earn.
Play for Fun
Based on the playability of the game, most (50%-70%) users are contributors. For them, playing this game is because of the content itself, instead of the return. Even if the investment is greater than the return, it does not affect their playing enthusiasm, just like spending money on playing Web2 games.
However, at present, more than 90% of GameFi users are expecting profits and look for products with maximum annual percentage yield or return on investment. The essential reason is that if these GameFi do not have “Fi” attributes, not many users will play.
Skill to Earn
For those 10% to 20% users who play well in the game, they would like to pursue proof of work, which means long playing time can lead to high proficiency and deep understanding of the game. These users should be the core target group in token’s economic incentives. The greatest fun brought by the game is to gradually improve the playing level and get incentives, and to find equal opponents with which to compete.
In most traditional games, 0.1% or less of the players indirectly earn money from the game by playing as a professional, being host or uploader. Almost 100% of the value returns to the game developer.
At present, the GameFi is based on the return model of investing principal, that is to say, the more principal you invest, the higher your income. It has little to do with the player’s game level. (Few games have rules similar to earning bonuses by getting higher rank, but the actual achievement of players is much less than that from users’ daily tasks.)
I’m looking forward to seeing the playability strong enough in the next cycle. Most players play for fun, and the leading players rely on their own skill to earn in games with many daily active users.
The author is a partner at Sky9 Capital. He focuses on Web 3.0 infrastructure/protocols, middleware, applications and blockchain technology.