Hey you. Yes, YOU! I hope you’ve enjoyed my writing so far. My goal is to inform more people like you about Web3 and NFTs in an approachable, friendly way. If you could take a minute to share my newsletter to someone else that would appreciate this content, it’d be much appreciated!
I’m switching gears a bit for today’s piece and going into pensive/question mode. I guess that’s what happens now that I’m full-time in this space (and part-time binging F1: Drive to Survive 🏎).
Do we want to ‘earn’ everything?
Seriously. Do we want to ‘earn’ everything we do?
Let me clear the air first. IMO, Web3 + NFTs are net positive. The innovation happening in the space is going to change industries and society as we know it in both subtle and profound ways.
Creators have a new avenue to make a decent living and be compensated beyond the initial sale of their work. Communities are able to materially participate in brand building. Verifiability of ownership has taken on a whole new meaning.
But what happens to the things we enjoy for enjoyment’s sake?
I’ve been thinking more about this with blockchain gaming, where there the concept of P2E (play to earn) is taking off. Everyone in the industry, from the biggest studios to the smaller NFT projects are all incorporating ownership, P2E, and tokenomics into their games. This is awesome as players can play a game while also turning their items acquired and/or effort into into something more than just an in-game currency. At a certain point, this could even become a source of passive income or a full-time job.
However, what happens when the game you would normally enjoy turns into a chore? Or worse, work?
A version of this happened to Axie Infinity, one of the largest P2E games. The value of the in-game tokens rose to a point where playing Axie Infinity became a source of income for many in Southeast Asia, and many ‘guilds’ (teams/companies) were made to capitalize on the money to be made.
Looks like a game from the 2000’s, right? Well when money’s involved, I guess anything can become SUPER FUN.
So what happened to Axie Infinity and the token?
Well…this.
This chart actually looks similar to a lot of NFT projects. Topshot as well actually (oh geez, need to stop thinking about that 😭)
So why did this happen?
There had to be a steady stream of users to keep the price of the token up. Too many new users, a spike in token price and expectations. Too little new users, everyone gets scared and dips and the token price decreases as people take profits or recoup losses. There are similarities with IRL marketplaces like rideshare.
I haven’t played Axie Infinity before and I am working off of pictures of the game here…but it doesn’t look that fun?
On top of that, Axie Infinity suffered a massive hack last month. However, the game and token were already on the decline by that point.
Disclaimer I’m not familiar with Axie Infinity, so please let me know if I am misrepresenting any information.
So when it comes to P2E, I have a lot of questions around the psychology of all this. Time to bust out my minor in Psychology from college (that means I’m qualified right? 🤓)
Is this psychology around ownership and monetization a known unknown amongst game developers? Do they care? Are there studies being done on this? Is P2E going to be the Web3 version of ‘social media is bad for society’?
How does the quality of the game impact the concept of user ownership and participation? What does it look like when a Fortnite (Triple A quality) game incorporates P2E mechanics vs. an Axie Infinity?
What does user behavior look like for someone that doesn’t care about the financial aspects vs. someone that treats it like a job? How do these different user personas interact with each other in the game?
What happens when a user comes for the fun but ends up staying for the financial incentives? How does their user behavior change over time? What about the other way around?
Ownership mechanics hypothetically could increase retention but is there an inflection point where it would actually decrease retention if certain game economy levers break? Will there be armies of users that just hop around from game to game to ‘farm’ the highest paying games, leaving a trail of abandoned P2E games in its wake?
Shoot, we need someone way smarter than me to answer these questions lol.
Note: These are questions, I don’t have an opinion or stance on these topics.
There may be hope
Is today’s newsletter just a list of questions? The quality of this content is trending down like that SLP token TPan.
Wait, wait! I do have a personal experience here, but with a different game, Cooltopia.
Cooltopia is a game and ecosystem (I wouldn’t quite call it a Metaverse) for Cool Cats. In the current version, you can go on various quests to earn $MILK token and hatch your pets. Lore, battling, and housing are on the roadmap along with other unannounced features.
The art is cuter than Axie Infinity, not a biased take ;)
Let’s look at the the $MILK token chart.
OOOOF! Axie Infinity 2.0 right? Well maybe not, here’s why:
Similar to Axie Infinity, Cool Cats and Cool Pets generate a certain quantity of the token every day. However, there are only 10k Cool Cats and 20k Cool Pets. Only holders can play the game and earn the token, at least for now.
Cool Cats is first and foremost a community and brand. Not just a game that can be a form of passive income. These aren’t mutually exclusive, but the order matters as it impacts motivations.
So what’s my experience been with Cooltopia?
Honestly, for the first few days I quested and swapped the $MILK token for ETH, ‘making’ about $125 to $225 a day. However, as the price of the $MILK token declined, the financial incentive mattered less and I actually started to…play the game 😱.
And by playing the game I’m actually…having fun. Who knew!
What items will I get from my Pet Supplies box? What items should my fiancé and I feed to the pet? What element will the pet be and which items should we feed if we want it to be a specific element? What should the order of items fed be?
Now I’m actually enjoying questing because the $MILK earned will be used to progress my pet vs. to swap for another currency. And this is what the Cool Cats team intended.
I hope that as the Ownership Economy grows and matures, we can build a healthy muscle around compartmentalizing ownership, emotion, and entertainment. After all, we Earn to Live, not Live to Earn, right? :)
If you have thoughts about how financial incentives are or may impact blockchain gaming or know someone that does, let me know! I want to hear from y’all.
