Thread by @BehemothTips

Why MOST Play-to-Earn games are doomed to fail. A thread.

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#crypto #cryptocurrency #p2e #p2egaming #tokenomics

Over the past few years we have seen a lot of P2E games fail. Some characteristics are an initial pump lasting a few weeks followed by an inevitable downtrend all the way to 0.

One example being @BombCryptoGame last year.

There are few fundamental problems with most of these games. Namely;

- the game does not have to be in the blockchain in the first place

- it is not fun to play the game (nobody would play had it not been for the crypto rewards)

- target market limited + huge supply pressure

A lot of projects that use blockchain "only for the hype" have one thing in common: greater fool theory.

They do not have fundamental value, utility, or any reason for actually using the blockchain.

Unfortunately, a lot of P2E games fall under this category. There is not an astute justification to how blockchain actually improves the underlying foundation.

More importantly, though, most of these games are NOT fun to play. Had it not been for the financial incentives, there would be 0 users. This is where the problem gets drawn into the supply/demand problem.

The contingent of people playing the game have 0 reasons to hold the underlying token. This creates a HUGE supply pressure.

Players treat earned tokens as a cash flow and directly dump them on LPs or exchanges to get their stable/fiat.

The only way a token price holds onto this huge sell pressure created by ALL players is an even bigger inflow of new players buying the coins.

You see where this is going right?

This whole scheme resembles a ponzi. The second you lose momentum on onboarding new players the token price crashes.

Therefore the only period where the token price pumps is when your new players outnumber existing ones, namely, until few months after the ICO.

This doesn't necessarily mean all P2E games are scam. However, you should be careful picking the winners.

1 - understand where the yield is coming from. Is it only from new players buying in? Is it ads? Is it the developers burning VC money?

These are important questions to ask.

2 - "Would I play this game if there were no crypto rewards?"

Usually it is pretty easy to answer this one. If you answered yes, the game might just be successful in retaining existing players.

3 - Team and roadmap.

Does the team have solid game design experience? Are they reliable people? What is their vision for the game?

Make your own research. Learn the name of the dog the CEO had when he/she was a child kind of research.

4 - As always, tokenomics. What is the vesting and unlock schedule. What is the total supply, how much does the team own?

These are your go-to questions on every crypto project.

A good heuristic. If you are playing the game and you are a shitty player earning as much as everyone else can, it is too good to be true.

You might get away with good money if you are early, but might as well just roll the dice at a casino at that point.

That is it for this thread. Let me know what you think and follow for more!