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Just to make things clear. I am bullish on blockchain technology, and blockchain-based games particularly. As you read this, you’ll probably think I’m biased, or a hater of the technology, but I’m nothing close to that, I just want to see play-to-earn games, and developers of the technology aren’t helping.

I’ve been playing games since I was a kid when the only option I had was Super Mario and Legend of Zelda on Nintendo. And, when I started growing up, I started questioning many things, like I’m I wasting my time by playing these games while developers earn billions of dollars?

After Axie Infinity appeared, the play-to-earn model was introduced. Players have finally become able to claim some profit, and earnings weren’t all going to developers of the game. Gamers were finally able to monetize their in-game skills and it seemed like a very exciting idea — at first.

But, I don’t think it’s the case. In fact, I believe that play-to-earn games are a sleeping disaster. A Ponzi Scheme of some sort, that is awaiting its doomsday.

To make things clearer, let’s take a look at the economy of Axie Infinity for the sake of the sample, and then take a quick look at other play-to-earn games to see the huge gap in the economy of the industry.

Axie Infinity allows players to earn from playing the game. To be able to earn, players will have to first buy Axie creatures. A team of Axies should consist of at least 3 Axie creatures. When the game was first released, a team of Axie would have cost you around $10. But, as of January 2022, the figure became 20 times higher, and the cheapest price to get an Axie is around $200.

This means that a team of Axies could cost you around $600. It would have been totally normal if the return on investment was big. But that’s not the case.

As you compete against other players, you’ll gain Small Love Potions or SLPs for short. These are in-game tokens that you can use to breed your Axie creatures and give birth to other Axies — which you could sell in the market. Alternatively, you can sell these SLPs and one SLP is around $0.01 as of the moment of writing this article.

Now the game developers argued in their Whitepaper that to keep the economy of the game stable, Axie Infinity will rely on bringing in new players. Of course, this model itself is unstable. First, because no game could keep a stable growth rate, and second, blockchain games are still in their infancy, and the adoption might move at a very slow rate. Which is the case.

The developers know that this model is unstable. So they argued that after amassing many players, they’ll rely on keeping the economy stable by encouraging players to invest in the game. For example, players re-invest what they earned from the game for breeding Axies, and sell them in the marketplace to newcomers.

But here is where Axie Infinity went wrong

First, you should know that 50% of Axie Infinity players are from the Philippines. In fact, most of the game’s players are from low-wage economies. This means that when they play, they want to cash out their money. But let’s suppose that they re-invest in the game as the developers of Axie Infinity “hope”.

Earnings from Axie Infinity aren’t a big deal when we look at the prices of SLP tokens that they earned. Additionally, breeding Axies requires an investment, which gamers from low-wage economies are probably not able to afford. In addition to that, players from strong economies such as the United States, for example, are able to buy NFTs from the marketplace, and these NFTs are stronger and will probably win you more matches. This advantages richer players and encourages the pay-to-win mentality within the ecosystem. But that’s what play-to-earn games are about anyways. Most of the play-to-earn games are play-to-win games.

Now here is the biggest problem. Axie Infinity knew that their players are from low-wage economies and aren’t able to get expensive NFTs. So, they provided them with scholarships. A Scholar is a person who lends his NFT Axie creature to a player and shares profit with him.

For example, John from the U.S. who has money will buy an NFT, and then lend it out to Noah from the Philippines who don’t have money to afford an NFT, but who has time to play. At first, this seems like a win-win deal. But, when Noah plays, he’ll play to cash out his money, and not re-invest it in the game. Meanwhile, John is probably not interested in Axie Infinity at all, so he’ll probably cash out too.

This in return, creates inflation in the economy of the game. Because, as we said earlier, Axie Infinity wanted to stabilize the economy of the game by encouraging players to reinvest in the ecosystem. But Scholarships break this cycle.

This means that Axie Infinity can’t rely on bringing in new players, and will not be able to keep the economy stable because people are cashing out their money.

If you’re wondering why people are cashing out. Well, the answer is simple. They probably aren’t enjoying the game. I mean as a gamer, I care a lot about game skins and perks and brag about what I collected from games in front of my friends. Although classic games don’t pay me anything, I was still happy to invest time in them because I enjoy them. And this is what went above the head of Axie Infinity creators and the heads of several play-to-earn developers.

People don’t just want a play-to-earn game that would earn them money. They want a game that they would enjoy. And instead of promoting a game to people as a “get rich” for playing platform, developers should have focused on promoting their game as a “fun” game that is worth the time, and could earn you some cryptos in addition to that.

Let’s not forget that the entry price to Axie Infinity is extraordinary, and gamers aren’t used to spending $600 to start playing a game, and I don’t think that they’ll be ready to do that anytime soon.

But this isn’t an article about Axie Infinity alone. That’s actually a sample about the largest play-to-earn game out there. So how about other games?

There are different crypto games out there. Some games provide huge crypto gains to early adopters in hope of quickly acquiring new players. This model isn’t only sick and destined to fail, but it is also very similar to Ponzi Schemes.

Other games promise a lot… by a lot, I mean a lot.

As you might already know, each play-to-earn game has its own cryptocurrency. These cryptos have prices and their prices are driven mainly by supply vs demand, and speculations of investors. The developers of these games know this, and therefore, they make huge promotional campaigns about their games to attract early adopters and launch a successful Initial Coin Offering (ICO). This is what provides these developers with enough cash flow to operate. That’s the best-case scenario, and developers will actually use that money to develop the game. The worst-case scenario is a rug pull where they’ll run away with the money, but that’s another subject.

Since these developers are unknown studios in most cases, they don’t have much money, and they don’t have much to bring to the industry. So, they lie, a LOT.

Look at most of the trailers of blockchain games, and they’ll all seem like the next big hit. But how many companies could actually provide, and make something that looks close to these trailers? I’m not sure I have the answer, and maybe not even the developers of these games do. But one thing is for sure, many will not be able to make something similar to what they promote, and all these promotional campaigns are ways to fool players to invest in their games and to be on the early adopters' list.

But play-to-earn game developers didn’t stop here. Now, before a game is launched, you’ll find the developers selling virtual plots of land. And, the prices are in tens of thousands of dollars, for a piece of code that exists on a blockchain. These plots of land are represented by NFTs, and the fancy name is what makes them valuable as it seems to me.

Well, yeah, developers would tell you that by owning land, you’ll be able to monetize it and earn more cryptos against your competition (play-to-win again).

I don’t know about you, but I’m not ready to spend thousands of dollars on a piece of virtual land in a Metaverse no matter what perks it brings. I mean, look at the market crash that occurred and how Bitcoin plunged 50% from its all-time high price of $69,000 in only two months, and you’ll notice that alternative coins saw more severe losses.

Of course, with the plunge, blockchain games saw a far worst bloodbath and shed most of their value in no time. I certainly don’t want to risk keeping my money in virtual land, in a game that I don’t know much about its future, and that its economy isn’t stable.

The case with Axie Infinity will probably be the case with other games. If play-to-earn games developers will keep their focus on selling dreams, and promoting games to people who just want to earn from playing, then this would be like a death sentence. Players will just cash out what they earned, and one day, the ecosystem will be full of players, and earnings will start to decrease, and players will run away to another game, and then re-do the same. Adopt it early, play and make a profit as much as you can, and then leave when the economy destabilizes.

It seems like play-to-earn games are a beautiful nightmare or a Ponzi Scheme, whether blockchain games developers know it or not.