Play-to-Earn games: Are token economies sustainable?

Are the economic promises of Play-to-Earn games built to last?

In Web3, Play-to-Earn (P2E) games are upending traditional online engagement with a fresh new economic model. By blending virtual fun with real financial rewards, these games are turning playtime into payday. Thanks to blockchain technology, players can earn tokens while they game, and even convert those tokens into actual money. It sounds like a dream come true, but is this model sustainable in the long run?

Let’s take a closer look at two popular P2E games: Axie Infinity and Alien Worlds.

Axie Infinity shows us the close connection between token value and player engagement. When the AXS token value shot up, the number of daily active users followed, hitting over 2 million at its peak. But as soon as the token price dropped, so did player numbers. Alien Worlds is no stranger to this trend either. The game’s TLM token value directly influences how many players get involved in mining and other activities. What these examples show us is that the success of P2E games hangs on a delicate balance between token value and player interest.

Then there’s the issue of inflation.

The more tokens that flood the market without an increase in demand, the more their value can tank. Both Axie Infinity and Alien Worlds kicked off strong with limited token supplies and high demand, which initially drove up prices. But as more tokens became available, their value took a hit. This drop can snowball into reduced player engagement, sparking a downward spiral that threatens the game’s economic stability.

So, how do we make P2E games more stable and sustainable?

One way is to encourage players to spend their tokens within the game on things like purchases, upgrades, or special events. This helps keep the token supply in check and supports a stable economy. Another idea is in-game banks for token deposits, which can promote long-term holding and reducing oversupply. Limiting token numbers and phased releases can also prevent inflation, allowing for steady value growth. While market trends can boost short-term engagement, long-term interest requires regular updates, collaborations, and an active community.

At PixelPai, we believe that the P2E game economy, while promising, is full of challenges that need careful management for long-term sustainability. Balancing token value, player engagement, and outside influences is no simple matter, and maintaining stability asks for a smart, well-rounded strategy. That’s why we focus on security, transparency, and compliance with regulations to protect players and build trust. By staying adaptable and addressing both economic and regulatory challenges head-on, we believe the P2E industry can thrive sustainably while delivering a rewarding experience for gamers.

If you’re curious to learn more, explore the full report here.