Crypto Game Economy Challenge

Introduction – What are crypto games?

We have seen the rise and fall of crypto games in the past few years. With my knowledge and experience, I would like to share my perspective on it.

For those who are not familiar, crypto games use blockchain to validate transactions and results, making them supposedly secure and decentralized. With the help of blockchain, crypto games can accomplish the following:

• Store important data on the blockchain (game results, currency transactions, etc.).
• Allow the usage of NFTs (to give item ownership to the player).
• Enable players to earn money by playing games (earn through crypto tokens and convert it to money).

Note that all of these can be done without blockchain. It is just that it requires a lot more development time to build a platform to support it, while crypto games can leverage existing blockchain technology.

Issues with Crypto Games

There are many issues that crypto games are facing right now, but I want to highlight the biggest one, which is their economy. Because crypto games allow players to earn money, many are having trouble building a sustainable economy. As a result, it feels a lot like a Ponzi scheme, where early adopters get to earn good money while latecomers lose out.

Part of the reason is that most crypto games have copied Axie Infinity’s model after it became very successful. Unfortunately, that model is not sustainable, and many crypto games are experiencing the same effect.

In my view, the biggest factor right now is the target audience/player motivation and the system we build to support it.

Target audience

A game is a product meant to entertain players, and in return, players pay money for it. However, the majority of players in crypto games are there to earn money. The money has to come from somewhere and usually is from the players. But if everyone wants to earn money, then it is not possible.

Many crypto games try to change the terms such as “play and earn,” “skill to earn,” etc., to solve the issue. Some believe that improving the game quality to AAA will fix the problem. These are noble attempts but will not fully fix the issue.

For example, if the game is more skill-based to earn money, then less skilled players will lose money and quit, leaving only the skilled players. But the skilled players will face players around or above their skill level, and they will eventually quit after losing money. Eventually, the game population will shrink until it is dead.

Some make it more speculative, like making gameplay more like gambling, where winning and losing rely more on luck. But this is not a game anymore and more of a gamification with gambling as its core. Also, gamers won’t like this approach, and the target audience is gamblers instead.

Solution

The key is to have a fun game that players are willing to spend money on. It sounds simple, but it’s really the most important factor for any successful game. The main objective of games is to provide entertainment while earning money, so the focus should be on gameplay first, and then supporting features such as graphics, progression, etc., to enhance it.

For players who want to earn money, you need to build supporting features that add value to those who want to spend money. This is where you can create systems that cater to both types of audiences, enabling both to contribute to the game’s economy.

Economy to support target audience

Imagine you enjoy playing golf. You would spend money on golf equipment and sign up for a golf course that you enjoy playing. Those who want to profit from golf would be the ones making equipment and building courses that are fun to play.

Now, let’s replace golf players with gamers who enjoy playing the game and equipment makers with users who want to earn money. This creates a mutual benefit for both types of players. For me, this is the foundation to build a game economy that supports both types of players.

Players that want to earn money

• Create content such as building new characters or maps that are fun to play
• Provide services such as help player A level up character to 30

Players that wants to be entertain

• Willing to spend money on content or getting services to improve their experience.

Be careful when implementing features that give out rewards without any effort, such as staking (earning passive income with interest). This is because no value is added to the game, while money is taken out of the economy.

Summary

• Crypto games have a lot of issues, with the biggest one being a sustainable economy to support play-to-earn (P2E).
• The main cause of this issue is the target audience and player motivation, with players primarily interested in earning money in the game.
• Solution
  • To attract both audiences that want to earn and spend money, it’s important to build a fun game.
  • Additionally, the game and economy flow should provide a mutual benefit for both target audiences.
    • Spenders spend money for content and services
    • Earners earn money by selling content or providing services to spenders