Play to Earn: a 0 to 1 Explainer
This is the first thread in a series on P2E games, which will run every other day starting today until my brain is empty. H/t @AriannaSimpson, @gabusch, & @cdixon, who've each contributed different mental models to my thinking on this topic.👇
This is the first thread in a series on P2E games, which will run every other day starting today until my brain is empty. H/t @AriannaSimpson, @gabusch, & @cdixon, who've each contributed different mental models to my thinking on this topic.👇
In explaining Play to Earn, it might be helpful to start with a concept that we are all by now familiar with. The jobs we do online, everyday, produce value within a profoundly un-fun metaverse made up of inboxes and Slack channels.
Most of the work products we produce are digital, and people pay us because they value those digital products, whether they be articles, slide decks, or software. In the process, we consume the digital products others have created, and in many cases, we pay money for them.
Some online environments are by design way more fun. We call these games, and some people are better than others at playing these games. Those people, like professional athletes, make significant sums of money as e-sports gamers.
Less skilled recreational gamers and fans pay them tournament fees for the opportunity to watch, compete with, and engage with them.
Because elite Web 2.0 gamers have no true ownership over the loot bags they've won and the dragons they've slain, the digital product they ship is the experience of watching them perform.
It's similar to how music artists have very little ownership over their IP and have no choice but to monetize through performance.
Because the production logic of live performance is characterized by increasing returns to scale, performance revenue is power law driven, and the result is that only a small number of music artists and e-sports gamers can make a career under this paradigm.
A game universe built around ownable digital assets unlocks direct monetization of the work product of gamers. You can imagine that some people are better suited to breed, play, and ultimately appreciate the value of a Axie.
You can also imagine that on the flip side, as in the real economy, there's a market of people who don't have the skill or time to play these games but do have money and are happy to pay someone else in order to procure a nicer Axie than they are able to win themselves.
In this universe, instead of the platform capturing all the asset value and celebrity gamers getting a cut for driving engagement, every incremental digital asset earned by any gamer captures a fair amount of ecosystem value, as priced by a real market of buyers and sellers.
And what this means is that a much larger swath of gamers will be able to make money. This idea, that normal people can start to make money in games, is called Play to Earn.
On Wednesday, I'll be sharing some of my non-expert ideas on experimental macroeconomics and game design, which I know a few of you have been wondering about ever since I brashly promised a mirror post 🙈:
https://twitter.com/WuCarra/status/1432487246037504002
For related reading on how NFTs enable creators to capture the full value of their work in any discipline (not just gaming), check out @cdixon's classic revisit of the 1000 True Fans thesis: a16z.com/2021/02/27/nft…
• • •
Missing some Tweet in this thread? You can try to
force a refresh
