The complicated economics of play-to-earn video games

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Video game economies face many of the same pressures as real-world economies, except cosplaying like Jerome Powell is easier when you have absolute control over the entire world, currency included. Even then, financial meltdowns were narrowly avoided, like in 2008, when the metaverse OG second life had to shut down virtual ATMs to limit a bank run.

Play-to-Earn Video Games Increase Difficulty Mode

In this type of video game, players earn and spend digital assets that live on the blockchain, not just in-game. This robs developers of the financial god mode that regular games rely on to keep their savings in check.

Axie Infinity– a play-to-earn game that once boasted 2.8 million monthly players – has seen its currency deteriorate by more than 95% this year since its peak, after runaway hyperinflation made its player earnings so huge for a quick sprint that some quit their day jobs. As paychecks dwindled, the game’s creator, Sky Mavis, changed its branding from “playing at win” to a more hesitant “game” and win”…which may be a more realistic business model for the many games being developed in this space (Sega announced one last week and a new Axie Infinity game launched last month).

Robert Hoogendoorn, chief content officer at DappRadar and founder of Play to Earn, an online magazine, told Incrypto, “Ideally no one gets rich but everyone has fun and can trade with each other… In the end, it’s not about getting rich.”—J.W.