I’ve long been a sceptic of GameFi, the intersection of blockchain and gaming. The sector took off during the pandemic, as games such as Axie Infinity exploded in popularity.
The only problem is, players fled the space once the tokens they earned for playing fell in value, as crypto sold off aggressively and many such cryptocurrencies fell 90% or more. This has led to questions around the sustainability of the model. If the tokens fall in price, why would the players continue playing?
There is also the issue of whether a blockchain is even necessary. Why not just create a regular game?
To gauge how people inside the industry are feeling, and what they think about all these hurdles, I interviewed Tatsuya Kohrogi, Chief Strategy Officer at DEA, the creators behind the web3 gaming platform, PlayMining.
Invezz (IZ): In short, can you please explain why you need a blockchain for PlayMining, rather than focusing on just creating a gaming product?
Tatsuya Kohrogi (TK): Blockchain is what enables the Play-to-Earn (P2E) aspect of our games, which allows people to earn DEAPcoin just by playing. By having a cryptocurrency token ecosystem, we are able to build apps that interact with this ecosystem in many ways. It also ties into our PlayMining NFT marketplace. Blockchain is what ensures the NFTs our users buy have intrinsic value. Furthermore, many of the NFTs available for purchase on the PlayMining NFT marketplace are also imbued with blockchain smart contracts that enable them to add utility to PlayMining games. For example, we sell farmland NFTs that can be used in our Lucky Farmer game to give players access to special crops, increase the odds of their winning, and also increase the amount of DEP tokens they can win when they score certain combinations.
As for why we choose to make PlayMining a P2E gaming platform instead of a regular gaming platform: we believe very strongly in creating social good through our games. We don’t want to just sell games to people—we want to provide entertainment products that will enrich their lives. While anybody can play a P2E game and earn tokens, the game genre has really taken off in Southeast Asia, a region in which the average monthly salary is comparatively quite low. We can help people earn supplemental income in a non-laborious way, which is something that non-blockchain games are unable to do. Some of our players even earn a full-time income just by playing PlayMining games! And as can be seen in our collaboration with TEPCO, rewards can also be a great way to incentivize other actions that contribute to social good in the real world. We are always looking for new ways we can create social good through our entertainment platform, and having a blockchain-powered rewards ecosystem is a great tool that we can use to achieve our goals.
IZ: The unique selling point here is that gamers receive tokens when they carry out social tasks, such as inspecting physical infrastructure in their towns. This sounds great in theory, but how do the economics work? Where do the tokens and money to pay these users come from?
TK: The money to pay users comes from multiple streams of income: in-game paid experiential value, digital item sales, NFT sales, income from solving problems corporations face, third-party game studios using our platform, advertising revenue, etc.
Games launched on the PlayMining platform can make use of our DEAPcoin token economy and PlayMining NFT marketplace. Players can earn DEP through play, and NFTs can be bought with DEP or legal tender. DEP can also be traded on popular crypto exchanges, including OKX, Gate.io, Uniswap, Bitmart and Bitrue. In short, the tokens come from the DEAPcoin ecosystem we have built into our PlayMining platform, which is strengthened through a high volume of NFT sales.
IZ: While all of crypto struggled, P2E games were among the worst affected over the last year. Falling prices of tokens meant that the incentive to play games was gone, leading many to declaring the P2E model as unsustainable. What makes you think that this can change going forward?
TK: Just monetizing players from a traditional gaming business model is not good enough for web3 gaming. We have been around for five years and this is our second bear market, but we have come to learn that the key to a sustainable ecosystem is a diversification of monetisation channels that are unique to blockchain gaming. We are still very early in blockchain gaming, and I think the market is quick to take a stance on what works and what doesn’t.
To take a clear stance, I am a strong believer that tying token incentives and gaming to real-world problem-solving is both societally essential and a profound opportunity for value creation.
An example of diversification in value creation is having sources of income from both B2C and B2B. At DEA we are trying to revolutionize the way people live and play by creating new forms of entertainment. We are seeing that GameFi-For-Good is popular amongst our community, where investors and players can empower others by lending out their NFTs. This experience alone has become a new form of social contribution to diverse communities and we see this as an early example of how web3 gaming can do good in ways that traditional gaming was not able to.
Our strategic partners also expand to corporations, non-profit organizations, gaming studios and gaming guilds. We see endless opportunities where gamification can be applied to the real-world problems these organizations face.
A lot of existing gamers and game developers have a preconceived idea of what gaming should look like. But I would like to encourage blockchain game builders to think outside of the box: what entertainment experiences can we create that are unique to blockchain gaming?
We at DEA believe that GameFi will act as a bridge between the actions we take in the digital world and real world.
IZ: DEAPcoin is 97% off its all-time high – how has this affected the popularity of the game, and has the game seen users fall in line with the industry as a whole?
TK: The popularity of our games has been unaffected. We have released five games on the PlayMining platform and we have seen an increase in NFT sales as the token price has become cheaper, because it allowed for new users to acquire NFTs at a cheaper price.
IZ: DEAPcoin is down 25% since the announcement of a buyback program to “sustainably increase the token’s value”. Will funds continue to be used to bolster demand for the token amid its falling price? Are you concerned that users will flee the game if the token continues to fall?
TK: The buyback program is a mechanism implemented every month, so we plan to continue to buy back tokens from the market.
The macro economy is not favourable now and our action plan for a more diversified economy has only recently been put to action. We believe token price stability and gradual growth are two important factors in building user trust and giving back value. So it is one of our business priorities to stabilize the economy and keep implementing the above-mentioned business plans.
Regarding concern around user retention, we make sure to provide value in multiple ways other than token price increases, such as co-creation of games and IP content, paying creator royalties, release of new games and x-and-earn services. Therefore we are focused on what we can control and we see these market lows as an opportunity to onboard new users into our ecosystem with the support of our existing community members.
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