Blockchain Gaming for Fun and Profit
#playtoearn is a fabulous opportunity, but the real money is in the meta-game.
Blockchain gaming is so hot right now! Every day there are new reports of how much money people are making from leading titles. Axie Infinity. Splinterlands, Alien Worlds. Zed’s Run. Upland.
Are you on the train, or do you feel like you’re missing out?
What game are you REALLY playing?
It’s amazing that blockchain enables you to own your in-game assets and currency, facilitating markets that are external to the game itself. There has always been a meta-game around any multiplayer game — meta-game is the ‘game around the game’. I was taught that “any workplace with three or more employees has office politics: if you think yours does not, it’s because you are losing.”
Gaming is the same way. Every multi-player game has a ‘meta-game’ around it… cultural norms about different play-styles, shifting norms in which classes are considered more powerful, and usually politics between various factions, guilds, or alliances that often transcend individual games, as players join each other across multiple gaming platforms.
The two-tier system (internal game design, external markets) ratchets up the meta-game to a whole new level. Before you get into #playtoearn and start turning your passion for games into hot new digital cash, it’s time for some introspection.
Are you going to play the actual game, or are you going to play the meta-game? You have to know the rules to do well in any game, so you really need to know which game you’re actually playing, and which rules to focus on.
A Game of Markets
Whether you focus on playing the game itself, or the meta-game, you are subjected to market forces. In effect, if you play the game you’re also playing the meta-game, but you can play the meta-game without playing the actual game (although playing the game can help you with the meta-game).
The core idea of #playtoearn is that you can receive valuable rewards for in-game actions. You can drive up the value your gaming time can generate by investing NFTs for the game that help you optimize your performance in-game. Earning money for playing a game you love is a cool idea, but blockchain games are subject to global market forces. This means that the base value for “grinding” within a game will be driven down to the level of sustenance wages in the poorest country where the game gains popularity. You can usually improve this by choosing the right in-game optimizations, but if you live in a comparatively rich country, the base value will be too low for you to live on. But don’t despair, the real money is in the meta-game!
Evaluating new projects
Think about this: if I’m playing to earn, or investing into game assets, who am I going to sell them to? Every sale has to have a buyer.
I always start by playing the actual game at least a few times, and ask myself some quick questions:
Is it fun to play?
Is there any depth or strategic complexity?
Can I imagine casual players wanting to fork up a few bucks each month to do better within the game itself?
There need to be players that are playing because they enjoy the game, not just playing to earn. If every player is just trying to make money, then the game is just a Ponzi in a pretty wrapper! There may still be profitable strategies, but the risks are higher and the potential is lower.
You can’t have a healthy #playtoearn game economy without some #paytowin game mechanics, but the game needs enough strategic complexity that it can be fun without #paytowin… so that casual players can enjoy without it being a money sink.
The next thing that I look for are in-depth guides. These might not be available yet if a game is brand new, but there are usually some available if the game has been out for a while. Conveniently, a friend of mine published a fantastic example while I was working on this article.
In-depth guides help you to see the relationships between the game and the metagame. They help you to evaluate whether a game is likely to have enough complexity to attract and retain more casual players. Finally, they give you a starting point for which in-game assets might be the best investments.
Pro tip: When you find great in-depth guides, check out what else the author is writing about, and follow their future work. This is a great way to find more blockchain games where you might be able to get an edge in the meta-game!
Finally, I want an understanding of where the game is in its adoption cycle. I wrote two weeks ago about inflation and tokenomics. When it comes to blockchain games, the biggest returns come when the player-base is growing faster than rate at which the game tokenomics can make new game assets available. Unmet demand will drive prices up.
When growth slows down, the inflation of in-game assets will start to drive prices down until the game reaches a more mature equilibrium. It can also be useful to build up large positions during equilibrium stages, in anticipation of future growth … just realize that’s a longer-term investment and plan accordingly.
So you found a Good Game… now what?
Most blockchain games have some blend of in-game currencies, NFTs, and governance tokens. The categories may also be a little blurry… if governance tokens have in-game benefits, or if NFTs provide boosts to governance token staking rewards, etc.
The strategies here are going to be very game-dependent. Ideally, I like to see independent markets for both in-game currencies and NFTs. If the game only has NFTs, but no in-game currencies or governance tokens yet, that’s even better! The team may be planning a big token release for once they hit certain growth metrics, and airdrops can be fantastic for boosting the value of your in-game assets!
Finally, changes to the game mechanics can affect the value of assets. Actually playing the game, following the sentiment of the Discord or Telegram groups, and finding good game guides can all help you figure out if something is overpowered or might be nerfed. If something gets nerfed, its value will likely fall. Don’t buy OP assets!
At the same time, if something gets nerfed then the game equilibrium will shift and assets that are underpowered now might be more balanced (or even overpowered) after the changes. Predicting which assets will benefit from changes to game mechanics can be very profitable.
Finally, remember that it’s all a game! Even if you’re playing the markets meta-game and trying to make money, it’s still a game. Sometimes you win, sometimes you lose. Even with a good system there are mistakes, variance in results, and unexpected events.
Keep your investments within your risk plan, and keep your risk plan in alignment with your lifestyle and circumstances. Please subscribe for more great content, and forward to a friend or three!
Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Savage Corner writers hold crypto assets and actively trade in certain markets.