People are making millions playing blockchain games, but will it stick?

So, when I discovered this play-to-earn movement, where people could get into crypto by investing their time and skill instead, I was like, ‘oh my God, we’ve been working on the wrong problem here’.

Blockchain gaming seems to be one of the areas of Web3 where people are actually getting real value out of it, as you said, so how is it evolving?

Axies from the game Axie Infinity.Credit:

When I first wrote about Axie Infinity in August 2020 it was the first time it appeared on Coindesk and there were fewer than 500 people around the world playing it daily. Since then, the whole space has gone viral. There are literally thousands of blockchain games in the works, it’s one of the biggest areas of blockchain innovation. And the money that has poured into the space ㅡ around $US6.5 billion ($9.4 billion) according to DappRadar ㅡ is just nuts.

So, I do think it has kick-started a very exciting area of innovation, but admittedly, it has a long way to go. There are a lot of criticisms of blockchain games, but I think they’re here to stay.

The money that’s pouring into the space, it’s mostly venture capital money, right?

Yeah, the VCs are really leading the way. A16z has been huge, Sequoia, Lightspeed, Hashed, Bitkraft, Infinity Ventures Crypto (IVC). And of course, Animoca Brands. There’s a really long list, they’re all really pouring a lot of money into the space.

We’ll see a consolidation of projects – that’s just standard tech, not everyone is GMI [gonna make it].

Emfarsis director Leah Callon-Butler

Is that a good thing? The early days of Web3 were very community funded with people buying into ICOs, but now you’ve got VCs who are looking to take equity stakes pre-launch. It seems like a bit of a money grab.

I think the criticisms are fair in terms of people wanting to see strong community ownership, but all projects have very different ways of divvying up their token allocations and incentivising the community. So, I think it’s too much of a broad stroke to say that VCs are ruining Web3.

I actually feel a lot more confident about the projects that have been funded by leading VCs and that are probably about to go into a long bear market. I still think we’ll see a consolidation of projects – that’s just standard tech, not everyone is GMI [gonna make it] – but with VCs coming into the space and offering larger amounts of money, we’re getting less volatility in treasuries like we saw in years past, and there’s higher quality due diligence being done.


The VCs aren’t just going to allow their investment portfolios to tank, so I think they’ll provide the support needed. So, there’ll be consolidation in the market, but it’ll be because of fundamental flaws in the projects, or bad timing, not because of any lack of support.

I think Jack Dorsey made this point, but when you see VC investment in Web3, it seems to fly in the face of the whole thing. Web3 wants to be decentralised, not owned by the same companies that operate Web2, so getting investment from someone like Sequoia seems counterintuitive.

I totally agree. I do believe that VC investment is a good thing, but we also need to see clear roadmaps to decentralisation. And that road is long and nuanced. Some projects will be able to decentralise quicker than others, but it’s a case-by-case basis.

In some cases, it’s worth asking if communities actually want to manage the project themselves? Some DAOs [decentralised autonomous organisations] are struggling to incentivise participation. They put out voting proposals and things like that, but people don’t turn up to vote, and they don’t participate. They’re having to simplify their governance structures to get people to participate.

It’s interesting you say that about DAOs. The cynic in me can’t help but feel like there are a lot of people in Web3 who want to speculate on a community’s token, but they don’t want to participate in the actual community itself.

When you have these secondary markets, that’s just part of a decentralised economy, we can’t stop it. It’s something – particularly in blockchain games – that is going to be one of the hardest things to figure out. How do you create a healthy, sustainable virtual economy that is strengthened against things like secondary market speculation?

In the blockchain gaming space, where do you see it going beyond blockchains? Could we see NFTs and in-game collectibles in triple-A games?

Personally, I think it’s inevitable that blockchain will be implemented into a large majority of games. I don’t think it’ll be in every single game, but I do think it’ll be a significant category in mainstream gaming.

At the moment we’re seeing huge pushback from traditional gaming companies. So many of them have made announcements about integrating NFTs in their games and had to roll the whole thing back because of the vitriol spewed at them on Twitter.

Doesn’t that mean it’s less likely to happen? Gamers seem to really not want it.

Gamers are very passionate about their games. I think they’re worried that introducing a monetary element to their game is a threat to their enjoyment or idea of pure fun. It’s similar to when free-to-play games were first introduced, and the gaming community pushed back against that model too. But look at it today, mobile free-to-play is prolific across the world. And ultimately, people don’t necessarily like change when it comes to things that they already know and love, so I’m not surprised that there’s pushback in that way.

There are a number of different concepts in blockchain gaming that everyone’s battling at the moment. But that concept of being able to own your digital assets, to me, gamers understand that better than anyone else, and that’s going to be the future. Currently, no one owns anything on the internet, but I can see this becoming incredibly important to people.

At the moment, it’s sort of sad, right? People are so unaware of their digital rights. They can’t possibly see why they would want to own their data or their assets on the internet. But once they start to recognise the value in that, I think it will be a very mainstream market.

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