High hopes, harsh reality: The rise and fall of “to-earn” projects
01.10.2024
People have always been greedy for easy money through games, movement or tapping, but often it ends sadly. Is there a future for earning money for daily actions?
The Hamster Kombat airdrop have saddened thousands, if not millions, of users. However, this scenario is not new — the crypto community has already seen the rapid rise and fall of several mechanics that supposedly allow to earn money for simple actions. What have we learned from that?
Table of Contents
Early appearance: hope for stable earnings
Healthy habits replace gaming, but not for long
Mechanics become simpler
Will the community learn from past failures?
Is there any hope for making money?
Early appearance: hope for stable earnings
The emergence of web3 games has generated massive interest in earning cryptocurrency through fairly simple actions. Play-to-earn (P2E) games became a new type where users can earn cryptocurrency and NFTs through activities.
Axie Infinity was a pioneer in this area. To start the game, users needed initial capital to purchase Axie, a virtual NFT pet. Users could earn tokens by completing tasks, participating in battles with other players, and passing levels in the game. Tokens were exchanged for other digital or fiat currencies, and items could be sold on crypto exchanges and NFT marketplaces.
And, no joke, being a pioneer, the game was considered an option for real earnings for a long time. It gained especially resounding popularity in the Philippines. In 2020, when the whole world was covered by a pandemic, borders were closed, and people began to lose their jobs, enterprising Filipino crypto enthusiasts began to create guilds, offering ordinary users the opportunity to earn money on P2E games.
However, Axie Infinity was ruined by in-game inflation. As a result of its constant growth, the price of its utility token, Smooth Love Potion (SLP), began to decline. To maintain high demand for SLP and AXS (the governance token), an infinite number of new registrations, including players who have neither one nor the other, are needed.
If the number of monthly active users (MAU) was more than 2.7 million at the peak, then in July 2024, this number was just over 310,000. The decline in Axie Infinity indicators occurred during the correction period of the entire digital asset market after Bitcoin (BTC) reached its previous all-time high (ATH) on Nov. 10, 2021.