For years, crypto struggled to be anything but a speculative investment. But that’s changing as crypto entrepreneurs combine crypto with breeding digital monsters — and letting users get paid for it.

Play-to-earn (P2E) games became one of the biggest crypto trends of 2021 — seeing a rush of investor interest and soaring token prices.

Every gamer’s dream — paid to play

P2E revamps the traditional gaming model by allowing users to:

• Earn in-game currency or crypto tokens for playing.
• Swap or sell these tokens for fiat currency.

Crypto gaming a.k.a. GameFi — one of the breakout blockchain applications of 2021 — uses non-fungible token (NFTs) to allow players to resell in-game items in a marketplace.

It’s estimated the blockchain gaming space holds 2.5M players — 0.1% of the 2.7B gamers in the world.

One of the top-performing cryptocurrencies happened to be a P2E game. Axie InfinityAXS

— where players can breed, raise and battle monsters called Axies — soared 165x in 2021 and was valued at $10B in November at its top.

Crypto-fied Pokemon

COVID accelerated Axie’s growth with millions unemployed in countries like Philippines and Vietnam turning to Axie to supplement lost income — leading to explosive growth:

• Generated $2.3B in total sales since launching in 2018.
• More than 2M daily active users in October.

Building an entire economy around a game isn’t easy and the industry is going through growing pains common with early tech.

• Its in-game currency, Smooth Love PotionSLP
  , is highly volatile.
• Axie’s sales relies on new pet purchases from new users — and growth has decelerated significantly in recent months.

Industry experts are also fearful of the impacts of a crypto-recession on P2E-games.

Investors: The future of P2E — 100x potential?

Ben Heidorn, Founder of Blockade Games (via Defiant), expects 100x potential in the industry — expecting players in South America and South Africa to grow its user base. Like many early stage tech, P2E games has its challenges to overcome:

• P2E games have poor gameplay and building high-quality blockbuster games (a.k.a. triple-A games) will be important for adoption.
• These platforms require crypto wallets and basic crypto understanding.