Exploring Sustainability in P2E Games and the Rise of GameFi

The emergence of NFT and P2E games has brought a new dimension to the gaming experience, allowing players to own and trade game assets with crypto wallets on NFT marketplaces. This has opened up new possibilities for games, such as the ability for players to earn real-world money by participating in the game. However, this has also introduced economic complexities that were not present before.

One of the most notable examples of this is the emergence of gaming guilds, which are large communities of players that pool resources in order to extract value from emerging P2E games. These guilds would buy in-game assets and tokens directly from game developers, who used this mechanic to finance game development. Retail investors also speculated on the future earnings potential of these gaming assets.

This led to a situation where armies of low-income players were gaming with borrowed assets, earning more than they would in their regular jobs, but also generating a decent yield for the asset owner. Everyone was winning until the economies collapsed as players, needing to pay rent, were selling in-game tokens for fiat currencies, devaluing the token and reducing earnings for everyone in the system. This caused a death spiral to the bottom, leading to the industry almost dying as it was questionable whether it was even possible to develop game economies that could last beyond an initial hype.

The early P2E games started to fail, creating major challenges for the teams developing these games, especially for the teams that just collected financing and did not yet deliver on any of their promises. This led to questions about the sustainability of P2E games and the ability to create game economies that can last beyond an initial hype.

Were they working on something that was predestined to die?

The global bear market saved these development teams for now as they now had some time to reinvent themselves. Since all crypto assets collapsed due to macroeconomic conditions globally, they had an excuse to take more time to develop and potentially pivot. Some of the teams have taken the lead to develop more sustainable and deeper economies that they will have to put to the test in the next bull market.

There seems to be a light at the end of the tunnel, as developers have recognized that they need to build better, more complex games that will allow for more sustainable ecosystems. Not everyone in the game could be only extracting value from the game. Some people must put money into the game. While growth with definitely support a game economy at first, the question remains what happens when the growth peaks out?

The game had to be not only fun and addictive, it should also turn into something approaching a global phenomena in order to ensure that enough people join the game play. It must deliver so much value and entertainment that many people want to be part of the community and are willing to play without extracting value from the system. They could if they had to, but would not want to. We have seen plenty of examples where games became a global phenomena but not every game can achieve such heights.

Overall, while the introduction of NFT and P2E games has brought new possibilities to the gaming industry, it has also highlighted the need for game developers to consider the long-term sustainability of their games and the potential economic complexities that may arise.

I would like to explore the game Crypto Unicorns and follow their swing for the fences in the search for economic stability. Learn more in this post.