By Elizabeth Howcroft

(Reuters] – Jarindr Thitadilaka claimed that he earned up to $2,000 per month in digital pet sales last year. He would then breed the pets and take them into battle for cryptocurrencies.

Bangkok’s 28-year old was playing “play to earn”, one of the newer, blockchain-based online games. These are entertainment and financial speculation.

This game can be a lucrative business amid all the buzz around virtual worlds and NFTs. It attracts millions of gamers as well as billions of dollars in investment from those who view the games to help introduce people to cryptocurrency.

AxieInfinity allows users to buy virtual blobs-like creatures that have varying attributes such as NFTs (or non-fungible tokens) – digital assets whose owners are recorded on the Blockchain – at prices ranging from hundreds of thousand dollars up to tens or thousands.

You can use your pets to win battles or create new ones. The value of the pet depends on its rarity. You can trade the assets with other players, who claim it hosts about 1.5 million users per day.

It’s more than a simple game. Thitadilaka said that it’s now more of an ecosystem. You could call it a nation, right?

A $615 million theft by AxieInfinity brought to light the dangers inherent in this unregulated speculative industry and crypto gaming. Hackers targeted an area of the system that allowed for the exchange of crypto currency within the game.

Sky Mavis (Axie Infinity) a Vietnamese-based investor, stated that it will reimburse the money lost through its balance sheet and 150 million from investors, including Binance cryptocurrency exchange and venture capital firm, a16z.

Aleksander Larsen, cofounder of Sky Mavis, told Reuters that he would rather have done things differently to ensure security for the launch in 2018.

He said, “We ran 100 miles an hour to get to this point.” The tradeoffs that we had to make were not ideal.

One of the most significant crypto heists, this hack shined a spotlight on play-to earn games. This young market, which is largely unexplored outside of crypto and gaming circles has become big business.

DappRadar estimates that $4.9 billion was spent by gamers on NFTs for games in 2017. This figure represents 3% of global gaming revenue. While demand for gaming NFTs has declined since November’s peak, they still managed to make $484 million in revenue in 2022.

DappRadar stated that investors have increased their interest in NFT-based gaming, and projects attracted $4 billion in venture capital funding in 2017, up from $80,000 in 2020.

Larsen stated that “there are many users who wish to interact with tech,” and added that Axie Infinity’s revenue exceeded $1.3 million last year. “It’s as if you discovered a new continent… it’s kind of like finding America over and again.”

Graphic: Monthly sales of gaming-related NFTs- https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrqnwqpm/Monthly%20sales%20of%20gaming-related%20NFTs.png

There are two types of HAVES: Haves and have nots

These games have added complexity by the emergence of unofficial financial networks. Players leverage their in-game wealth to gain additional income.

Thitadilaka, a Thai player who wanted to make more than just playing online in July 2013, decided that it was time for him and some friends to start a group known as “guild”. Their NFTs were made available to anyone who wants to play Axie Infinity free of charge, but they did not invest in any assets. They also took a share of the winnings.

    This model is commonplace across play-to-earn games. Thitadilaka stated that his GuildFi grew to include 3,000 Axie Infinity members who shared their earnings 50/50 with asset-owners.  Thitadilaka is now the full-time manager of GuildFi and has raised $146 millions from investors.

Some of the most popular gaming areas worldwide are in Southeast Asian countries like Thailand and the Philippines.

Teriz Pia (25 years old) lives in Manila. Her brother, Real Deal Guild, founded a gaming guild that allows players to earn money by playing games.

She now claims she earns as high as $20,000 per month from her 300+ players in multiple games and other crypto assets.

Axie Infinity Pia gives her players 70% and she takes 30%. She splits the 60-40 profit in Pegaxy (a play-to earn game where players trade NFTs to virtual horses for the chance to race to win crypto tokens),

I don’t refer to them as workers. She said that she calls them her friends or scholars. If you are a teacher, the salary is… Although I am a graduate of college, it is not enough. It was something I had never imagined I would be able to do.

Pia cautioned, however that it could prove to be dangerous.

There is a lot at stake. “When I invest in a game, there is a lot of risk. As a Real Deal Guild member, we have a team of partners, researchers and analysts, but it’s still cryptocurrency, so it’s still possible to lose.

Yield Guild Games is one of the largest play-to earn networks. It said that it had 10,000 Axie Infinity gamers as of the fourth quarter 2021. They kept 70% of their earnings, and received $11.7million in total.

Pegaxy was founded by Corey Wilton (25), an Australian-based entrepreneur. He claims that the site has approximately 160,000 users per day. His estimates are that 95% play-to earn games users participate as renters, generating revenue but not owning any of the assets. 5% however, are asset owners.

« HOW DO PEOPLE HURT?

Experts in legal matters warn that there’s no safety net available for investors who invest in high-risk assets. This leaves them vulnerable in the event of a project failing or the asset market drying up.

Global regulators are trying to understand cryptocurrency. However, they have little control over NFTs and the niche side-project of play-to earn games. These typically use crypto tokens in-game that can be converted into money.

This is a risky way to gain any value from projects such as this. Earning in blockchain-based play-to-earn games often involves receiving rewards in native tokens of the projects,” stated David Lee, cryptocurrency associate with London-based Fladgate.

The market’s supply and demand determine the value of the assets. “There is no guarantee that the token will be worth the same amount as the asset in-game. There can be considerable volatility in price, which means that assets may become less valuable if the project is discontinued or becomes less popular.

But these gamers insist that luck is a key factor in success.

Wilton from Pegaxy stated that “there is money to make, but also money to lose here.” “Playing to make money should not be confused by charity. This is how people end up getting hurt.”