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A new use-case for cryptocurrency is booming, particularly in parts of Asia, and it’s gaining traction in other parts of the developing world. Not only is “play-to-earn” a new source of income where people can earn real money by playing computer games, but it’s also turning the crypto market on its head by enabling investors to invest in a different category and for crypto holders to earn a yield. It’s creating a three-way economy of building wealth and, at the same time, simplifying entry into the crypto world.
There is still a long way to go until all the bumps are smoothed out, but the proof of concept has succeeded, and a wave of both investment and innovative projects are making their way into the mainstream. We’re at the “early adopters” phase of the Innovation Adoption Curve, and now is the time to learn about this new market and how you can take advantage in three ways. And the best part is, you don’t have to be an avid gamer, nor a crypto or NFT holder, to get in on the action.
Related: 5 Reasons Why NFTs Are The Metaverse’s Ideal Revenue Model
1. Play-to-earn (P2E)
There are more than 800 blockchain-based video games that allow you to earn rewards with cryptocurrency or NFTs, according to Playtoearn.net. Of those, 200-plus are live. Most went live within the last few years, with the leading P2E game, Axie Infinity, starting in March 2018. It has since hit a $3 billion valuation.
Hype around these games began during the pandemic in 2020, when Axie Infinity launched its governance token AXS onto public exchanges. A rise in players fueled the demand, and Axie Infinity’s protocol revenue jumped a staggering 12,047% in three month. In May 2020, its revenue was just under $3 million; by August of that year, it peaked at $364.4 million.
Axie Infinity Sky Mavis reports that the game has surpassed two million daily active users. The majority of players are found in South-East Asia, with 10% in the United States and a remaining 20-25% across Europe and Africa, according to Naavik. But there’s one particular barrier for Axie Infinity players: You need to buy three Axie characters (NFTs) to be able to play the game and earn rewards. These NFTs are now fetching around$400 each, pricing out many potential players.
So if you want to play the game and you don’t have a spare $1,200, you could apply for a scholarship program through a guild. Loot To Yield records 23 guilds at the time of writing, which invest in game NFTs and lend them to players. The earnings are then shared with the guild and the player.
So you don’t want to play the game? You can still make money from P2E by owning NFTs and renting them to guilds. This is a relatively newer trend hitting the NFT space, but it’s showing some serious hype. Not many guilds offer this service, but just like play-to-earn, it’s sure to catch on, too.
A study by Stratis found 58% of 197 game developers from the U.S. and UK said they are starting to use blockchain technology, while 47% have already started incorporating NFTs in their games. It won’t be long before we see more innovation happening in the NFT gaming space, generating more money-making opportunities.
3. Invest in NFT games and guilds
If you don’t want to play the games and you don’t own game NFTs, the third option is to invest in the games and guilds directly. You can do this a few different ways.
Before an organization’s token is listed on a public exchange, there is usually a pre-sale round on Launchpad. This is when the public can have the opportunity to invest in the token at a pre-sale value, which is usually much lower than the initial exchange offering. It’s super competitive; you may not be guaranteed a certain allocation, and there are limited allocation amounts and vesting periods.
Once they are publicly available on an exchange, you can also consider investing in them by purchasing from the exchanges. Compare decentralized exchanges, such as PancakeSswap or Uniswap, with centralized exchanges like Binance or Kucoin.
Depending on how they have designed the token utility, you may also be able to stake your coins. For example, if you buy Axie Infinity’s AXS token, you can stake it and earn more rewards, currently with a return of 88% APR at the time of this writing.
The blockchain gaming NFT market is estimated to be worth just under $10 billion, but it’s a drop in the gaming world’s ocean, making up just 6% of the $173 billion gaming industry (measured by revenue).
Related: How Esports and Gaming Are Bringing Crypto to the Masses
While we’re at a pivotal moment in time to see this new industry flourish, there is still more to come within the current suite of games, platforms and NFTs. And there will be even more opportunity with new projects that are in development and those that haven’t yet even begun. It’s a great time to watch this space and get involved.
Disclaimer: This is general advice. Cryptocurrencies are speculative, complex and involve significant risks. They are highly volatile and sensitive to secondary activity. Consider your own circumstances, and obtain your own advice, before making any decision. The author is an investor of Balthazar and may have holdings in the cryptocurrencies discussed.