Report on How GameFi Blockchain Play-to-Earn Games Created New Sub Economies and Environment Issues 2022

May 10, 2022 2 min read

How blockchain games create entire economies on top of their gameplay: Report

Blockchain technology brings economic building blocks to games and sparks a tsunami of economic activity — inside and outside the games.

In the Philippines and other low-income countries, Axie Infinity’s game became a billion-dollar industry that helped thousands of players weather the effects of pandemic mitigation. One key to success: strong property rights.

Players can trade in-game material on third-party marketplaces like OpenSea when they take it out of the game. As a result of the freedom to set prices and to trade easily, a tsunami of economic activity occurred both inside and outside the game.

The ability to earn, in-game, and then take those earnings outside to a third party platform and trade for cash to spend in the real world, has changed how people interact with games and created new sub economies because of these online crypto income opportunities. The kind of things players earn include NFT’s and both layer 1 and layer 2 tokens, all of which can be moved off of the platform and traded for cash to spend in the real world.

The value of some of those items may or may not translate favorable in the trade, however, as NFT’s fluctuate wildly. Ideally, you want to also earn native tokens from solid blockchains, where the token’s value is stable or trending upwards because of the inherent usefulness of the token, and the resulting demand for it. Games like Alien Worlds allow users to earn both in-game NFT’s (which can be moved off the game) as well as TLM (Trilium), it’s native token (stable within the crypto game market). The free to play game allows players to earn via mining NFT’s, going on missions, leasing ships and competing in contests and staking TLM to planetary DAO’s to earn TLM coin and additional NFT’s.

Unfortunately, there is a downside to these opportunities and their growing popularity – the environmental impacts of the (disproportionate) energy consumption and emissions from blockchain and crypto currency opportunities. See more from the article below.

The making of a new economy

In the past, creating a well-functioning marketplace with an in-game currency and open standards for game content was simply outside the scope of any development studio. With blockchains, this has changed. Developers can launch a token within an hour or create nonfungible tokens (NFTs) for game materials.

The feature gives users strong property rights and the ability to take their characters and items outside of their games to third-party marketplaces or even into other games with little extra development cost.

As a result of the addition of decentralized finance (DeFi) technology, players have financial opportunities they have never had before, which have led to the lightning-fast adoption of these games.

Comparing the top five blockchain games : Alien Worlds, Axie Infinity, Bomb Crypto, DeFi Kingdom and Splinterlands. There are different gameplay features and incentives in each of these games. There is a comparison of daily active users, transactions, deposits and gameplay – along with tokenomics, which are economic incentives for the in-game currency.

But, no report would be complete without covering the dark side of blockchain gaming. Environmental concerns, a sharp divide between the haves and the have-nots, the legality and tax implications are all valid concerns around these new economies. This is especially important as the sheer success makes these games increasingly attractive to players and game developers.

GameFi titles were responsible for more than 35% of all Polygon transactions during peaks in 2021 and early 2022. But, without addressing the possible issues, the long-term viability of the whole blockchain game space is compromised, as critics and regulators will use these arguments to hinder development or make it harder for players to participate.

Get ready, fight!

The report has an optimistic conclusion about the future of blockchain gaming and the potential unlocked by economic freedom. Lower transaction costs, stronger property rights and open standards all work together to break open the planned economies of prior game markets.

Blockchain technology opens a world of new opportunities for developers and players. If environmental and regulatory concerns can be addressed, 2022 will be the best year for GameFi yet.

This article is for information purposes only and represents neither investment advice nor an investment analysis or an invitation to buy or sell financial instruments. Specifically, the document does not serve as a substitute for individual investment or other advice.

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