Building Sustainable Play & Earn Ecosystems

5 min read

Play-and-earn gaming has seen tremendous growth in the past year. Building upon the early success of Axie Infinity, which has seen over 2 million daily active users this year, a whole host of new games have launched, each bringing new and exciting innovations to the space.

While the space is still in its infancy, there have been some hard lessons learned. Some of these lessons have centred on the tokenomics of the project, others on the security of its underlying technology, and even more on the overall game experience.

For play and earn ecosystems to thrive long term, there are three objectives that they must deliver on:

  1. Controlling reward token inflation.
  2. Provide a clear path to player ownership.
  3. Create more than just a financial incentive to play.

Failure in one or more of those areas will likely result in either stunted growth or the complete capitulation of the game economy. After spending countless hours participating in, analyzing, and investing in game economies, I thought I’d share some more detail on why each of the above objectives is important and how they can be achieved.

Controlling reward token inflation

The most common model of a play and earn game is that a player needs to either purchase or rent an in-game asset to begin earning rewards from their gameplay. The in-game asset is an NFT and the rewards are paid out in the game’s native reward token. I talk about this process in more detail here.


The challenge faced by the game economy designers is to strike the right balance between issuing enough rewards that it becomes attractive to players, but not an amount that puts so much inflationary pressure on the token that it drastically devalues it.

Having adequate “token sinks” in place is one of the more important mechanics to consider.


A token sink is an activity through which a token is used within the game and removed from the supply via burning. For example, I could use some of my earned tokens to upgrade my NFT, creating either a new utility or cosmetic appearance as a result.

Sinks will typically come from three different sources, i) new ecosystem entrants, ii) existing users, or iii) external partnerships.

New ecosystem entrants are often required to purchase or mint in-game NFTs with the game token, burning it in the process. This is a very effective way to reduce token supply but it also contributes to additional emissions in the long-term as those new users will be earning rewards. This is why there must also be mechanisms in place for existing users to burn game tokens.

For play & earn economies to thrive, token burns cannot come exclusively from new ecosystem entrants.

Existing users can be encouraged to burn tokens to activate some kind of in-game action. One effective method for this is to introduce a decay feature. While this is packaged in many different ways, this feature reduces the emissions a player can achieve over time until they burn tokens to negate the effects of decay.

A good example of this is within the move & earn game, STEPN, where players are rewarded for completing physical activity. The decay feature works by reducing the player’s “Durability” score each time they play the game. The more this score reduces, the lower their earnings cap is. If they burn some tokens they can increase their “Durability” score and increase their earnings cap again. It still nets out with inflation, but significantly reduces emissions overall.

Outside of in-game features, fees are another major source of token burning from existing users. Custom-built NFT marketplaces offer the ability to transact and take fees in the game token, which creates additional buy pressure as well as opportunities to burn tokens. Some ecosystems have taken this a step further by building their own blockchains or subnets to host their game, using their game token as the gas fee token. Crabada is one example of a game looking to do this with their upcoming Swimmer Network (an Avalanche subnet).

Alongside new and existing users, external partnerships can create powerful utility for the game token that is completely disconnected from emission creation. A prime example of this is with Decentral Games, which has been exploring selling metaverse advertising space within their locations in Decentraland using their game token.

The path to player ownership

One of the main attractions for prospective gamers is the ability to own in-game assets and generate income from them while playing the game. The reality is that this is still out of reach for most players. For play-and-earn games to live up to their promises, there must be a clear path for players to have ownership of in-game assets. Without this, player retention will suffer and the surrounding game economy will struggle to grow.

There are a variety of elements that contribute to player retention, but for play-and-earn games, the most important is that players feel a sense of ownership. Owning in-game assets is an important starting point. Players become more invested in the long-term success of the game and are more likely to form deeper connections to the community, reinvest their game tokens into the game economy, and participate in governance decisions.

For play-and-earn games to live up to their promises, there must be a clear path for players to have ownership of in-game assets.

If the only retention hook is attractive rewards, players will eventually move on to the next game that offers even better rewards. This is unsustainable and draws parallels to the APY wars in the DeFi space.


It’s worth calling out that creating passive income opportunities for ecosystem participants is still very important. Delegation also serves to allow new entrants to explore the game without any upfront capital investment. This helps to grow the wider player base, but the ideal scenario is that this is a stepping stone for delegated players to reinvest their earnings into becoming player owners. Without this path, there will be overwhelming sell pressure placed on the reward token from delegated players cashing out.

More than just a financial incentive to play

New players will likely arrive for the attractive rewards, but they should stay for much more than that. Players need to feel a sense of community, get value from the ecosystem, a want to spend their time within the game.

Different games will approach this differently, and I don’t completely subscribe to the idea that a game has to be incredibly fun to play or it will fail. Value comes in a variety of forms. A sense of community that facilitates social interactions within the game will arguably create longer-lasting ties than simply a fun game to play. With more PvP experiences, complex narratives, and gamification coming into the space each day, games will be forced to deliver this for their users.

Love them or hate them, BAYC has shown the power of community and the importance of building a surrounding ecosystem of experiences within the metaverse.

Play and earn games need to be games that incorporate elements of DeFi, not the other way around. Games that deliver value in a very one-dimensional way will be far less likely to sustain long term growth.

It’s still early

While what I’ve outlined is incredibly important, it’s important to recognize the stage of maturity that most play and earn economies are at right now. Tokenomic and game designs are going to see a lot of innovation over the next 12-18 months. Most projects will go through growing pains, learning some hard lessons along the way, but I remain extremely excited about what this space has to offer.