How to Design P2E Game Economies?

These days, many people are looking for creative ways to earn extra income and achieve financial freedom. Traditional jobs often don’t offer the flexibility or rewards that people need. This is where play-to-earn games come in, offering an exciting new opportunity. By combining the enjoyment of gaming with the potential to earn real-world rewards, P2E games allow players to make money while having fun. These games provide a flexible and accessible way to earn, no matter where you are or what your job situation is. By taking part in in-game activities, players can earn digital assets like NFTs, which can then be traded or sold on online marketplaces.

The global market for play-to-earn games is set to grow from $1.35 billion in 2024 to $6.32 billion by 2032, with an impressive annual growth rate of 21.3%. This rapid growth shows just how popular P2E games have become and how much demand there is for them. With so many exciting new games launching, especially in the US, now is the perfect time for businesses to get involved. In this post, we’ll take a closer look at how to design the economics of a P2E game. Let’s dive in and get started!

Overview of the P2E Game Economy

Play-to-earn games are changing the way we think about gaming. They mix fun and entertainment with the chance to earn real-world value. In a P2E game, players can earn rewards like cryptocurrencies or NFTs while playing, giving players the opportunity to turn their gaming time into real money.

How P2E Games Work?

P2E games are built on blockchain technology, which is the foundation of their economy. Here’s a simple breakdown of how they work:

• Gameplay Participation: Players take part in various activities within the game, such as completing quests, battling enemies, or crafting unique items.
• Earning Rewards: As players play, they earn rewards like digital currencies or NFTs. These assets can have real-world value and can be traded or sold.
• Trading and Selling: Players can then trade or sell their earned rewards on marketplaces, either inside or outside of the game, where they can be exchanged for other cryptocurrencies or even cash.

A great example of a P2E game is Axie Infinity. In this game, players collect, breed, and battle cute creatures called Axies. Each Axie is an NFT on the Ethereum blockchain, making it unique and valuable. By fighting and completing quests, players earn an in-game currency called Smooth Love Potion, which can be traded for other cryptocurrencies or even converted into real money. 

Players can also buy, sell, and breed Axies to create more valuable creatures, which they can sell in the game’s marketplace.

Key Market Takeaways for Play-to-Earn Games

According to CognitiveMarketResearch, the P2E gaming market is booming! In 2023, it was valued at around $1.27 billion, and it’s expected to grow by 20.3% each year from 2024 to 2031. What’s driving this growth? A big factor is the rise of blockchain technology, which gives players true ownership of in-game items through NFTs. 

Source: CognitiveMarketResearch

Plus, DeFi is adding real financial rewards to the mix, making P2E games more enticing. In places where jobs might be limited, gaming has become a way for people to earn a living, making P2E games accessible to a global audience.

Some popular P2E games are leading the way. Axie Infinity, for example, lets players breed, battle, and trade digital creatures called Axies to earn cryptocurrency. The Sandbox is a virtual world where players can create and sell their own gaming experiences using NFTs. Decentraland lets users buy and sell virtual land, while Gods Unchained offers players the chance to collect and trade valuable cards. These games are fun, but they also allow players to earn real rewards, showing how versatile P2E gaming can be.

Big partnerships are also helping the P2E market grow. Big gaming companies like Ubisoft and Animoca Brands are teaming up with blockchain platforms to bring new, innovative games to life. With all of these exciting changes, the future of Play-to-Earn gaming looks brighter than ever!

Can a Play-to-Earn Game Be a Strong Business Investment?

A Play-to-Earn game offers a great business opportunity by blending fun with real-world value. Unlike traditional games, where players pay to play or buy in-game items, P2E games let players earn cryptocurrency, NFTs, or other digital assets through gameplay. This keeps players engaged, as they’re motivated to spend time and money to earn rewards.

For example, games like Splinterlands, a blockchain-based trading card game, have made over $30 million through card sales and in-game transactions. My Neighbor Alice, a farming game, earned over $10 million through land sales. Entrepreneurs can earn revenue through transaction fees, in-game purchases, and selling non-fungible tokens or exclusive content.

With the rise of blockchain and cryptocurrency, the potential for high returns is huge. The P2E model creates a self-sustaining in-game economy where players can also create and trade assets, driving business growth. For example, Illuvium raised over $5 million before its launch, showing strong investor interest.

The best part? These platforms grow quickly thanks to their community-driven nature, reducing marketing costs. By offering players real-world financial opportunities, P2E games present a promising and profitable investment for the future.

Popular Play-to-Earn Games

Game	Revenue (2023)	Game Economy
Axie Infinity	$1.3 billion	Players earn through breeding, battling, and trading Axies (NFTs). Revenue comes from initial purchases and transaction fees in the marketplace.
The Sandbox	$4.5 billion	Utilizes a single-token economy (SAND) where players can create, own, and monetize their gaming experiences. Revenue generated from land sales and transactions.
Gods Unchained	$1 billion	A trading card game with a dual-token system (GODS and ETH). Players earn by competing in tournaments and trading cards, with revenue from card sales and transaction fees.

Key Features of Play-to-Earn Games

Here are some of the key features of play to earn games,

1. In-Game Currency

In Play-to-Earn games, players can earn virtual currency, often called tokens or coins, by completing quests, winning battles, or achieving milestones. This currency can be spent on items, upgrades, or other in-game benefits. Some games even allow players to trade this virtual currency for real-world value!

2. Battles and Competitions

Players can engage in exciting battles within Play-to-Earn games, whether it’s PvP (Player vs. Player) or PvE (Player vs. Environment). Winning these battles or competitions rewards players with valuable prizes, such as rare items, in-game currency, or new characters. These challenges add an extra layer of excitement and competition.

3. Trading and Marketplace

In many Play-to-Earn games, players can buy, sell, and trade in-game assets like rare items, skins, or characters. These assets can be exchanged on decentralized marketplaces, and players can even profit by selling valuable items to other players. It’s an engaging way to interact with the game’s economy and trade virtual goods.

4. Staking

Staking allows players to lock up their in-game assets, such as tokens or NFTs, in order to earn rewards over time. By staking their assets, players contribute to the game’s ecosystem while receiving additional rewards, such as extra tokens or exclusive items. It’s a way for players to passively earn by holding onto their virtual goods.

5. Governance

Some Play-to-Earn games involve players in decision-making processes through governance mechanisms. In these games, players can vote on proposals, game updates, or changes to game rules. This gives players a chance to influence the game’s development and feel more involved in the community’s direction.

P2E Game Economy: Digging Deeper

The economy in play-to-earn games works a lot like a country’s economy. Businesses in these games act like central banks, managing the game’s finances to keep everything balanced and growing. Here are the key parts:

Monetary Policy

In P2E games, businesses control the supply of in-game currency by “minting” (creating new tokens) or “burning” (removing tokens). This helps avoid inflation (too much currency) or deflation (too little), keeping the economy stable.

For example, in Axie Infinity, players earn SLP tokens, but if too many are created, the value could drop. To manage this, businesses need to adjust rewards and allow players to burn tokens (e.g., through breeding Axies), helping control the supply.

Fiscal Policy

Fiscal policy is about how the game allocates rewards taxes and invests in new features. A good fiscal policy keeps players engaged and helps the economy grow.

For instance, In The Sandbox, players earn SAND tokens by creating content. Businesses reinvest part of the revenue back into the game to improve it, which encourages more players to get involved and keeps the economy growing.

Exchange Rate Mechanisms

Businesses also manage the exchange rate of in-game currencies (like MANA or SAND) against real-world currencies (e.g., Ethereum). By monitoring market trends, they ensure the economy remains attractive, and players can trade in-game rewards for real value.

For example, in Decentraland, MANA is used to buy virtual land. The value of MANA can change based on market conditions, and players can trade it for real-world value, motivating them to stay active in the game.

Steps to Design a P2E Game Economy

Designing a play-to-earn game economy involves a combination of strategic planning and practical implementation to ensure stability, engagement, and sustainability. Each step plays a crucial role in shaping the economic foundation of the game, enabling players and developers to thrive.

1. Define Economic Goals

The first step in designing a P2E game economy is to establish clear economic goals. Developers must determine whether the focus will be on rewarding players, sustaining long-term token value, or fostering an active marketplace..

2. Select a Token Model

Choosing the right token model is essential for a functional economy. Developers can opt for a single-token system, which simplifies transactions, or a dual-token system, which separates utility and governance. A dual-token system often includes a utility token for in-game activities and a governance token for decision-making and ownership. 

3. Establish Currency Mechanisms

Controlling the supply of in-game currency is critical. Developers must design systems for minting new tokens as rewards and burning tokens to reduce oversupply. These mechanisms prevent issues like inflation, which can devalue tokens, or scarcity, which may deter new players. 

4. Incorporate Reward Systems

Reward systems are at the heart of player motivation in P2E games. Players should earn tokens for meaningful activities, such as completing missions, winning battles, or trading assets. It is essential to balance the reward structure to avoid over-saturating the economy or discouraging participation due to insufficient incentives.

5. Design Token Sinks

Token sinks are mechanisms that encourage players to spend their earned tokens within the game. Examples include purchasing upgrades, unlocking premium content, or entering tournaments. Token sinks maintain circulation, reduce oversupply, and enhance the overall value of tokens by creating consistent demand.

6. Integrate Secondary Market Dynamics

Many P2E games allow players to trade tokens and assets in secondary markets. Developers must account for this external exchange of tokens and design systems to manage liquidity, exchange rates, and token outflows. 

7. Implement Balancing Policies

Economic policies help stabilize the game’s economy during periods of growth or downturn. Expansionary policies, such as increasing rewards or introducing new content, can boost activity during slow periods. Conversely, contractionary measures, such as reducing minting or limiting token rewards, can prevent overheating during periods of rapid growth.

8. Monitor and Analyze Economic Data

Regular monitoring of economic metrics is vital to maintaining balance. Developers should track data such as token supply, player activity, and secondary market trends. Analytics can reveal potential issues, allowing developers to refine monetary and fiscal policies. 

Balancing Supply and Demand in P2E Games

One of the biggest challenges in designing a successful P2E game economy is keeping the balance between supply and demand. Here are some key strategies to maintain that balance:

Minting vs. Burning

To manage the economy, businesses must keep an eye on how many new tokens (minting) are created versus how many are removed (burning). If too many tokens are minted and not enough are burned, it can lead to inflation (too much currency in circulation). On the other hand, if more tokens are burned than minted, it can create scarcity, which might drive up token value but could also make the game less appealing to new players.

In-Game Incentives

Adjusting rewards for activities within the game helps control the supply of tokens. For example, if players are earning too many tokens from certain actions, businesses might reduce those rewards or introduce new ways to spend tokens (called “sinks”). This helps keep the economy stable and prevents inflation.

For example, In The Sandbox, players can earn SAND tokens by creating and selling virtual experiences, like games and assets, using tools like the Game Maker and VOXEDIT. To keep the economy balanced, the game encourages players to spend their SAND on LAND—virtual real estate that can be developed and monetized—or on unique items that enhance the gaming experience. 

Secondary Market Dynamics

When players can trade tokens for real money or other assets on secondary markets, it adds extra complexity to the game economy. Businesses need to monitor these external exchanges to ensure that too many tokens aren’t flowing out of the game, which could weaken the in-game economy. Proper measures need to be in place to keep this in check.

Challenges and Solutions for P2P Game Economy: Axie Infinity Case Study

Axie Infinity Ecosystem (Source: Axie Pulse)

Axie Infinity is a great example of how a well-designed game economy can influence player engagement and success in P2E games. The game uses two tokens: Smooth Love Potion, a utility token, and Axie Infinity Shards, a governance token. While this setup adds depth, it also creates some tricky economic challenges.

SLP Inflation

One of the major challenges that Axie Infinity faced was the inflation of SLP. In simple terms, too many SLP tokens were being created, but not enough were being removed from circulation. Players earned SLP by winning battles and completing tasks, but the game lacked effective ways to “burn” (or destroy) the tokens, leading to an oversupply.

How Bad Was the Inflation?

In early 2021, Axie Infinity was minting (creating) far more SLP than it was burning. For example, in January 2021, Sky Mavis (the game’s developer) reported that daily minting volumes were four times higher than burning volumes. By the end of 2021, this disparity worsened, with players generating over 1 billion SLP per day while the rate of burning remained low. This excessive supply of SLP caused its value to drop, leading to inflation.

Market Dynamics and Player Behavior

As the game grew, a secondary market developed where players could exchange SLP for real-world money. This created an additional challenge: players could easily cash out their SLP for fiat currency, which drained tokens from the game economy. The ease of cashing out led some players to focus more on earning and selling SLP rather than actually playing the game. This shift in priorities hurt the long-term sustainability of the game’s economy.

Solutions Implemented by Axie Infinity

To address these challenges, Sky Mavis made several key changes:

• Reduced SLP Rewards: They lowered the number of SLP players could earn through activities like daily quests and battles. This helped slow down the creation of new tokens.
• Introduced AXS Rewards: Sky Mavis started rewarding players with AXS instead of just SLP for certain activities, encouraging players to engage more with the governance side of the game.
• Buyback Program: They launched a buyback program, purchasing SLP from the market to reduce the excess supply of tokens.
• New Ways to Spend SLP: To create “token sinks,” Sky Mavis added new ways for players to spend their SLP, like cosmetic upgrades and Axie body parts, which helped lower the surplus of tokens in circulation.

Some More Updates in Late 2021….

In late 2021, the developers introduced several updates aimed at addressing the inflation problem:

• Balancing In-Game Rewards: They reduced the rewards for certain activities, such as daily quests, to lower the rate of new SLP being minted.
• AXS Rewards: They offered AXS tokens for certain actions to shift the focus from SLP and encourage engagement with the governance system.
• Buybacks and Anti-Bot Measures: Sky Mavis implemented a limited-time buyback program and took steps to prevent bots and hacks from inflating the minting rate of SLP.

Axie Infinity’s experience shows how important it is to manage a game’s economy carefully. By adjusting rewards, offering new ways to spend tokens, and reducing supply, Sky Mavis worked to stabilize the economy and keep the game fun and sustainable for players.

Top 5 Play-to-Earn Games and Their Game Economies

Here’s a detailed look at five of the most prominent P2E games currently available, along with insights into their economies.

1. Axie Infinity

Axie Infinity is a fun and popular P2E game inspired by Pokémon, where players collect, breed, and battle creatures called Axies. These Axies are NFTs on the Ethereum blockchain, and players can earn real money through their gameplay.

Economy:

• Tokens: There are two main tokens in Axie Infinity. Smooth Love Potion is earned through battles and quests, while Axie Infinity Shards are used for governance (voting on game changes) and staking.
• Earnings: Players earn SLP by winning battles, and while the price of SLP fluctuates (usually between $0.01 to $0.03), dedicated players can earn a steady income from it.
• Market Impact: With over $4 billion in sales since launch, Axie Infinity’s economy has become one of the most impactful in the crypto gaming space.

2. The Sandbox

The Sandbox is a creative virtual world where users can create, own, and monetize their own gaming experiences using NFTs and the SAND token. It’s like a digital playground where creativity meets earning potential.

Economy:

• Tokens: The native currency, SAND, is used for transactions, governance, and staking within the game.
• Land Ownership: Players can buy virtual land (NFTs), which can be developed into games or other experiences. Depending on the location and demand, land prices can range from a few hundred to several thousand dollars.
• User Engagement: With over 1 million active users, The Sandbox hosts frequent events and gives out SAND tokens as rewards, keeping players engaged and incentivized.

3. Illuvium

Illuvium is a stunning open-world RPG where players capture and battle creatures called Illuvials. It combines exploration with strategic auto-battling mechanics in an immersive environment.

Economy:

• Tokens: The game’s native token, ILV, is earned through gameplay, especially in PvE quests and competitive PvP battles.
• Rewards Pool: Illuvium has set aside over 200,000 ILV tokens to reward players, making it an appealing P2E game for those looking to earn while having fun.
• Market Dynamics: As interest in high-quality NFT games grows, Illuvium’s economy is poised for success, attracting gamers and investors alike.

4. Decentraland

Decentraland is a decentralized virtual reality platform where users can explore, build, and trade digital assets in a fully immersive environment. It’s like a digital world where users can be creators, traders, and adventurers all at once.

Economy:

• Tokens: The MANA token is used to buy virtual land (NFTs), create experiences, and trade items within Decentraland.
• Market Activity: Virtual land sales have been booming, with prime locations selling for over $10,000 in some cases.
• User Base: With over 300,000 active users, Decentraland is a bustling hub for creators, explorers, and traders.

5. Splinterlands

Splinterlands is a trading card game where players collect NFT-based cards and battle other players. It’s a strategy game that blends traditional card game mechanics with blockchain technology.

Economy:

• Tokens: Players earn Dark Energy Crystals by winning battles. These can be traded or used in the game.
• Card Trading Market: The marketplace allows players to buy and sell cards, with rare cards sometimes selling for anywhere between $50 and $500, depending on their rarity and usefulness.
• Active Community: With millions of battles played monthly, Splinterlands has a thriving community that drives its economy through continuous gameplay and trading.

Conclusion

What I think about P2E games is that they have the potential to transform the gaming industry by giving players the chance to earn real-world value while enjoying their favorite games. By building a strong P2E game economy, businesses can attract a larger audience, foster deeper player loyalty, and create sustainable revenue streams. The ability to reward players through in-game assets, token sales, and player-driven markets is an exciting development for both gamers and developers alike.

In my opinion, the key to success in P2E games lies in designing a balanced and engaging in-game economy. If done right, businesses can incentivize player participation, encourage asset creation and trading, and drive meaningful economic activity within the game. This not only enhances the gaming experience but also creates a thriving virtual marketplace that benefits both players and developers in the long run.

Looking to Develop a Play to Earn Game?

At Idea Usher, we specialize in creating engaging and profitable P2E games. With over 500,000 hours of coding experience, our team is skilled in blockchain, smart contracts, and game design. We’ll work closely with you to develop a P2E game that captivates players, rewards their involvement, and drives long-term revenue. From crafting solid tokenomics and integrating NFTs to refining gameplay and in-game economies, we’ll ensure your game stands out in the competitive P2E market. Let’s build the future of gaming together!

FAQs

Q1: How to Develop a Play-to-Earn Game?

A1: To develop a P2E game, start by choosing a blockchain platform and defining your game concept. Then, create engaging gameplay where players can earn rewards, like tokens or NFTs. Use smart contracts to manage transactions and ownership. Focus on creating a fun and rewarding player experience, and test the game thoroughly before launch. It’s all about making a game that’s exciting and has a solid economy behind it!

Q2: Are Play-to-Earn Games Profitable?

A2: Yes, P2E games can be profitable, but success depends on game design and the economy behind it. If the game is engaging and offers valuable rewards, players will keep coming back. Revenue can come from token sales, NFTs, and in-game purchases. However, challenges like market shifts and player retention can affect profitability, so it’s important to plan a sustainable and balanced economy for long-term success.

Q3: What Are the Parts of a P2E Game Economy?

A3: A P2E game economy includes tokens, NFTs, rewards, marketplaces, and smart contracts. Tokens are used for in-game purchases or rewards, while NFTs represent unique assets like characters or items. Players earn rewards through gameplay, and a marketplace lets them buy, sell, or trade NFTs. Smart contracts ensure secure transactions and ownership verification, keeping the economy running smoothly.

Q4: How to Design a P2E Game Economy?

A4: Designing a P2E game economy is about balancing rewards and sustainability. Start by deciding what players can earn, like tokens or NFTs. Build a token system that ensures rewards are valuable but won’t cause inflation. Create ways for players to trade and stake assets and introduce mechanisms to keep the economy healthy.