When the play-to-earn trend was in decline, another trend emerged: move-to-earn. Although the potential of these projects is attractive because they can attract a large community, so far, no project has overcome the “dead corner” of inflation.
The most prominent recent is the plunge of StepN-a project that allows owners of NFT shoes to participate in walks to earn rewards, and at the same time buy, sell, and upgrade NFT shoe items.
However, for many people, game-fi projects (blockchain games—combining gaming with financial elements) still have significant appeal, becoming another option for monetizing cryptocurrencies. So how can we make profits and reduce risks in similar projects like this?
The first mechanism is the number of days of return on investment. Players must purchase a game character or equipment to generate tokens, which can then be exchanged for money.
Payback days are calculated by dividing the initial cost by the daily net earnings (after expenses have been deducted). For example, if the initial deposit is 1000 USDC/USDT and every day you can earn a net 25 USDC/USDT, then the payback days is 40 days.
The second mechanism for the further incentive is the creation of new characters or equipment, also known as “mints”. When a certain condition is met, the player can mint and make a profit. For example, in the game StepN, when there are 2 pairs of shoes from level 5 or higher, they can be used to mint to create a new pair of shoes.
The third mechanism is the element of luck during gameplay. Players can randomly receive a certain gift box, and depending on the level of the assets in the game the player has, the gift will have different values. Back in the game StepN, there are mystery boxes at 5 different levels.
But human greed is obvious, and every player wants to maximize their own interests, even finding ways to exploit the game’s vulnerabilities or even intentionally cheat.
Uncovering game-fi: When players take advantage of the “dead corner” of inflation
In a play-to-earn game, the player can only play for a certain amount of time in a day. However, there are also people who coordinate to play continuously 24/24, also known as plowing in the game. There are professional groups of up to dozens of people. Players are hired to work the game for the owner.
Even though move-to-earn games have controlled the maximum number of tokens that can be earned within 24 hours, players still have ways to circumvent it, such as running with many different accounts at the same time.
The attractive profit margin from minting shoes in the game StepN has created shoe farms just for minting, no longer the original goal of players having to be active outdoors.
With game tokens being generated quickly and mints far exceeding the game creators’ estimates, token burning mechanisms don’t solve the problem either. When supply is greater than demand, the price will naturally fall.
Controlling inflation is the biggest headache of game-fi projects. Therefore, a project can only survive and develop when fraud is controlled and vulnerabilities are closed.
The project must also have a balanced incentive mechanism to both attract newcomers and keep the game’s token price.
So, how do you play game-fi soberly?
In game-fi, the advantage always goes to the early entrants, as the initial price of the game’s tokens or characters/equipment is usually very cheap. Once the game was popular, the price increased several dozen times, even hundreds of times.
However, the biggest temptation is the player’s greed, and that is also a trap. Feeling that making money is easy, most players want to earn more but forget about the need to calculate their initial payback days.
For example, before entering the game, the player calculates the average payback day of 30 days. But after playing for 10, 20 days, it is reinvested, or even invested more capital, increasing the number of days to payback, so it extends
So far, the life cycle of game-fi projects has remained at a few months because the inflation challenge in games has not been completely resolved. That is why, for players who reinvest or join late, the risk of loss is very large.
The old know that there are people who, at the right time when the game starts to have trouble, after 1 month have lost 70-80%.
As such, participating in game-fi projects comes with a lot of risks, even those that have a lot of potential thanks to the value of the game as well as the potential number of participants.
In order to be able to “play the roller coaster” with game-fi, one must adhere to discipline and prioritize the protection of investment capital. This means that if you define the number of payback days as x days, then you must withdraw your capital regularly in x days and must not reinvest or invest more.
If you have the ability to detect and participate in the project right from the start, that is a great advantage, but you also need to be careful in preserving capital, taking partial profits, and leaving only the profits in the game to continue.
This helps you to take precautions so that even if the game “goes to zero”, it will not affect the original capital and the profit that has been taken out before.
The game-fi trend, especially related to health, knowledge, and experience, will continue to develop in many different forms. This trend is new but is attracting more players to participate.
Therefore, screening projects to avoid scammers is the first thing you need to do, and then, from an investment perspective, you need to be disciplined in risk management as well as capital management. I wish you to play the game while awake to be both healthy for you and for your wallet.