Move2Earn vs. Play2Earn: A Brief Reflection on Sustainability
The advent of "Play2Earn" sparked a Cambrian Explosion of X2Earn crypto-projects. As the first projects now start to die out, it is no surprise that even the most knowledgeable crypto-experts are skeptical about the actual sustainability of those business models.
Tweets like this are not uncommon and share the sentiment among investors and crypto-veterans:
I know where they are coming from, yet I will make the case that Play2Earn and Move2Earn (or, more generally, "Do something good in the real world"2Earn) are unfairly thrown in the same basket. I have been evaluating crypto developments for 5 years now and, in my humble opinion, DoGood2Earn is one of the most promising future use-cases of crypto and may be up there with innovations like DeFi and DAOs.
A quick review of today’s Ponzi-esque mechanisms
The first Play2Earn games came in with a boom and grew fast. In order to take part, users invested in game-specific NFTs, motivated by the promise to earn money while playing. It sounded like a dream. As the community grew initially, prices continued to rise as demand increased, so everyone made money. Once you made a profit, you told your friends and tweeted about it. This reinforced the narrative that you really can make money solely by playing the game, ergo more players joined.
Everyone got rich and we lifted an enormous amount of people in South-East Asia out of poverty by letting them play video games, right? — Wrong.
The problems start when the peak is reached. Until then, any project — even a pure Ponzi scheme— looks like a huge success. As mgoesdistance.eth brilliantly put it (highly recommended article on Axie infinity):
The definition of a pyramid scheme is that each layer makes money as long as there are more layers coming in, at the right pace. Each pyramid scheme sounds great and looks indistinguishable from a legitimate high-growth business on the surface, as long as it lasts. But each pyramid scheme eventually reaches saturation, when new layers are unable to make a profit anymore by recruiting even more layers, which is when the whole scheme topples.
The Problem of Play2Earn
The best predictor of the Ponzi-esqueness of an X2Earn project is the utility the project provides when you strip away the initial honeymoon growth phase where the sentiment is “I can make a living by playing this game”.
This is where Play2Earn games face a challenge because, without their honeymoon gains, they only have their entertainment value left.
Is it really fun to play the contemporary crypto-games? Or did “playing” become a euphemism for tedious, repetitive grinding? Would new users join when it's evident that you can lose money?
Play2Earn games can go two ways to create sustainable value:
- Leverage the tools provided by blockchain infrastructure to create an entirely new game experience that benefits from crypto incentives. (Perhaps an experience aimed towards the niche of players who love the thrill of high stakes.)
- Create a game that is competitive in the global gaming industry based on its entertainment value alone. (Here, competition is steep.)
In short: Play2earn can be sustainable if either the crypto incentives are calibrated right by providing the additional entertainment 'kick' or the game is good enough to be fun without the monetary part.
Yet, we already spend 2.5h per day on social media, a total of 3.5h on our phones and young people play games for 5h per week. In our world full of instant gratification and distractions, where AI algorithms are trained to keep us glued to our screens for as long as possible, do we need yet another, even more addictive game?
The Move2Earn mechanism (by StepN) — is a game-changer (literally) as, for the first time, crypto is used to do good in real life.
Instead of “luring” users to stay on their phones/computers for longer, Move2Earn gets you to go outside. The underlying value — extra motivation for going outside — is a refreshing new value proposition when compared to the oversaturated entertainment industry. What StepN is for running, Dopamining will be for home workouts.
Working out has incredibly influential ripple effects on our life quality. You live longer, look better, have fewer mental health issues, are more motivated in other areas of life and are less likely to suffer from IQ loss and dementia later on. (And there’s much more.)
Motivation could be a life-changer for at least 74% of us who are overweight. Being overweight is not only a serious problem made worse by the pandemic but also creates a vicious cycle by reducing our life motivation with each extra kilo. The study that made this observation also recommended “strategies aimed at improving dopamine function” to break the cycle. This is the call for extra motivation.
This is the value proposition of Move2Earn beyond all the NFTs and coins. It can change lives.
Crypto incentives increase the power of gamification by increasing the stakes and — if implemented right — have the power to motivate you to (i) either stay more engaged in a virtual world (Play2Earn) or (ii) to support you with your real-world goals (DoGood2Earn / Move2Earn).
Raising the monetary stakes through a design based on cryptocurrencies and NFTs is the edge Play2Earn games have over traditional games. Yet, as long as users confuse “additional entertainment through high monetary stakes” with “a way of making a guaranteed profit by playing”, Play2Earn games will be vulnerable to fluctuations in prices. A Ponzi-esque reputation makes users sensitive to falling prices, causing them to jump ship to more “profitable” projects because, after the growth phase, the average user has to lose money.
On the other hand, DoGood2Earn /Move2Earn mechanisms harness the enhanced gamification for your benefit. While the virtual world is replaceable and short-lived, your goals and ambitions in the real world are not.
Dopamining in particular uses the power of crypto-infrastructure to incentivize what matters most in today's world of noise and distraction: consistency. Joining the Dopamining ecosystem is about motivation insurance for your life goals, not about making a quick buck. Even when prices drop in this fluctuating crypto market, the additional coin reward might still make the difference whether you stack another "Win" by staying consistent on your life goal or deal with the neurochemical consequences of a loss.
Ultimately though, whether a crypto-project resembles a Ponzi scheme depends on how the people perceive its underlying value. Enhanced entertainment vs. enhanced motivation. What do you value more?
Further reading: How Dopamining uses crypto infrastructure to bring your ancient brain back on track
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This article is a subjective analysis about the comparative value propositions of generic projects in the "DoGood2Earn" and "Play2Earn" domains. Within these domains, the success of a specific project depends on many more factors, e.g. Balance of token-sinks vs token-springs, continuous development of the project, tokenomics, marketing etc. Please also do your own research when evaluating a specific project.