After the rampant success of Play2Earn, a variety of additional X-to-Earn paradigms have now appeared. In an era where anything can be monetized, here’s what you need to know to catch up.
Over the last two years, a major theme has revealed itself in the blockchain industry — the X-to-Earn trend.
This trend has seen the advent of a large number of platforms that, whether successfully or unsuccessfully, attempt to allow users to monetize an array of typically usual activities using on-chain rewards.
Currently, the four most popular X-to-Earn paradigms are:
- Play-to-earn (P2E): Rewards paid based on performance in blockchain-based games
- Watch-to-earn (W2E): Users earn rewards for watching videos and other content
- Move-to-earn (M2E): Incentivizing health and fitness through effort-based rewards
- Create-to-earn (C2E): Allows users to create and monetize content over the blockchain
Given that blockchain-based digital economies and content ownership are two major pillars of the Web3 era, it is widely believed that the X-to-Earn paradigm is set to permeate a large chunk of products and services in the metaverse.
But given how quickly the X-to-Earn ecosystem is expanding, it can be difficult to keep on top of the range of potential opportunities available. With this in mind, this article serves as a simple guide to the landscape as it stands, helping you better understand the difference between each X-to-Earn paradigm and assess the benefits and risks of taking part.
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Play-to-Earn (P2E)
If you followed the news at all in the last year, odds are you’ve at least heard the term ‘play-to-earn’ in passing — after all, literally hundreds of play-to-earn games launched in 2021, many of which garnered significant attention.
As their name suggests, play-to-earn games allow users to earn rewards in the form of cryptocurrencies, usually in proportion to their in-game accomplishments or performance. By blending DeFi elements with novel game mechanics, many play-to-earn games were able to achieve considerable success in 2021, and some of the biggest secured a market cap in excess of $500 million at their peak.
Fueled by the meteoric growth of Axie Infinity, an immensely popular game NFT battle and breeding game featuring cutesy non-fungible critters known as Axies. By playing the game and winning battles, users can earn rewards in the form of Smooth Love Potions (SLP) — which can be used or exchanged for other cryptocurrencies, hence its ‘play-to-earn’ mechanics.
Since its launch in the October 2020 Binance Launchpad token sale, Axie Infinity has gone from strength to strength to strength and became the first blockchain game to reach a $1 billion market cap back in July last year, and the only one to reach a $10 billion market cap just months later last November.
At its peak, the game clocked in more than 2.7 million active users, but this has since fallen to ~100,000 daily active players. Because of this, Axie Infinity became one of the largest retail on-ramps and helped shine a spotlight on how blockchain technology could be used to enrich regular games through tokenized rewards.
This led to what can only be described as a Cambrian explosion of new play-to-earn projects in recent years. While many of these were simple low effort copycats and lacked real staying power, a handful of juggernauts also appeared in this time — promising AAA-quality graphics and sustainable tokenomics. This includes the Star Citizen-Esque play-to-earn title called Star Atlas, and the open-world exploration game Illuvium.
Indeed, several of the top 20 most profitable IDOs of all time were play-to-earn games or related platforms — including Project SEED, My Neighbor Alice, GameFi (a launchpad for P2E games), and Valhalla.
Although play-to-earn was all the rage in 2021, many games featuring play-to-earn mechanics have thus far proven to be unsustainable — with many seeing their token value plunge due to excess inflation while others saw their user bases dwindle since the gameplay wasn’t up to par with more traditional PC and mobile games.
Practically all play-to-earn games have seen their native governance and utility tokens collapse in value, with the vast majority down between 75% and 99% YTD. That said, some believe that the play-to-earn model is likely to be refined and adopted by major game publishers in the coming months and years, potentially breathing new life into the market and exposing its potential to the 2.6+ billion video game players worldwide.
Recognizing the challenges faced by earlier play-to-earn games, newer platforms are now switching to more sustainable reward models. This includes Nova Miningverse’s novel ‘Play-to-Mine’ system, which allows users to essentially mine Bitcoin (BTC) by playing its PvE and PvP roguelike/battle royale game.
Since the yields are derived from the returns generated by a physical mining physical facility, which is set to expand with the game’s growth, it should be able to avoid the dilution that other platforms often suffer from.
Watch-to-Earn (W2E)
Arguably one of the most intuitive X-to-Earn models that appeared in the last year is watch-to-earn (W2E) — a business model that allows users to earn digital tokens for watching videos.
Given that three of the top 10 websites in the world are used to serve video content, it is clear to see that the W2E model arguably has a huge addressable market, numbering in the billions of potential users.
Right now, the watch-to-earn space is clearly dominated by a single major player — XCAD Network. The platform allows YouTube content creators to create their own individual fan tokens and NFT moments, helping them improve their monetization options and increase exposure. For fans, the platform allows users to earn fan tokens for watching and engaging with content from their favorite creators.
XCAD Network is unusual among X-to-Earn projects in that the rewards it provides to users are directly correlated with their activity. As of writing, more than 70 content creators have already pledged to support the project, with another 50 yet to be announced. The platform is already backed by content creators with more than 260 million combined subscribers, providing it with tremendous reach.
Though XCAD Network is the first blockchain-based watch-to-earn platform, the concept has a history extending back to the early 2000s with platforms like Swagbucks and GrabPoints paying users a small amount of money for watching specific videos and adverts.
XCAD Network differs from these in that users do not need to change their consumption habits to begin earning, and simply need to install the XCAD plugin to begin earning creator tokens while continuing to watch videos on YouTube. By leveraging Zilliqa’s high-performance blockchain and paying token-based rewards, it also doesn’t suffer from the high minimum withdrawal limits older legacy platforms typically faced.
Its plugin is set to launch in Q2 2022 — that’s any time now.
Like most X-to-Earn pioneers, XCAD Network was one of the best performing projects of 2021, as its native utility token (XCAD) is now trading at 39x its public sale price. It also managed to buck the bearish trend better than most projects in 2022, demonstrating positive holder sentiment.
The watch-to-earn market also technically includes the popular blockchain-native web browser known as Brave. However, its W2E model differs from XCAD Network in that users need to opt-in to view additional adverts (some of which are videos) to begin earning Basic Attention Tokens (BAT) as a reward.
Though not quite a watch-to-earn platform, we at CoinMarketCap also have a learn and earn program — that rewards users for learning about popular crypto projects by watching videos and taking short quizzes. Check it out!
Move-to-Earn (M2E)
One of this year’s most hyped trends is a new fitness-based reward system known as Move-to-Earn. This, as you might have guessed, allows users to earn blockchain-based rewards for moving — or more specifically, for exercising.
Though the term move to earn was actually coined close to a year ago, the niche wasn't popularized until March 2022, when STEPN conducted its token sale on Binance Launchpad. The platform exploded in both value and user statistics in the weeks and months ahead, reaching a market capitalization of over $2.4 billion in less than two months.
The way it works is simple. To begin earning, users need to hold one or more sneaker NFTs, each of which entitles them to earn up to a specific amount of Green Satoshi Tokens (GST) each day by walking, jogging, or running. This GST can then be either used or sold — hence the term ‘Move-to-Earn’.
With 2.3 million monthly active users at its peak, STEPN is one of the most popular blockchain-based applications of all time. However, its model has been publicly criticized for being unsustainable, with some believing that it cannot continue to pay out attractive rewards in the face of a heavily declining market. Time will tell if it manages to prove the doubters wrong.
Given that STEPN is built on Solana, which has recently suffered multiple network shutdowns, and currently has a high barrier to entry due to the cost of acquiring sneaker NFTs, the platform now faces stiff competition from newer rivals that aim to address some of its limitations and provide a more accessible and sustainable move-to-earn model.
Indeed, STEPN isn’t the only name in the move-to-earn landscape, despite being by far the largest. These are now well over a dozen applications that feature move-to-earn capabilities, including the movement-based MMO Genopets and Step App — a platform looking to build a FitFi (fitness finance) product metaverse.
Arguably the most prominent of its competitors is MoveZ, a new M2E platform being built on BNB Chain. The project is looking to separate itself from STEPN and other move-to-earn applications by allowing users to earn rewards (in the form of BURNZ tokens) by participating in practically any form of exercise. This includes running, swimming, surfing, and more.
By combining this with deflationary tokenomics, a variety of social experiences (e.g. Boost Zones and leaderboards), and multiple onboarding routes, MoveZ hopes to provide a more accessible and sustainable M2E model.
Create to Earn (C2E)
The introduction of blockchain-powered digital worlds and metaverses has led to the elaboration of novel virtual economies that give users free rein to create and sell their own virtual items and experiences.
The create-to-earn model was first popularized by Decentraland, a virtual landscape filled with user-owned parcels of land — on top of which practically anything can be built. Using Decentraland's builder tool, users can create a wide variety of assets for the platform, including buildings, animated experiences, wearables, works of art, and more. These can be given away, sold on third-party marketplaces, or directly monetized in the app in some cases — e.g. for advertising, gambling, and events.
With the recent explosion of interest surrounding the metaverse, platforms like The Sandbox, CEEK VR, High Street, and more have attracted a great deal of attention among builders and creatives, who flocked to these platforms to begin designing new virtual experiences. Since content ownership is widely considered to be one of the main pillars of the Web3 era, it isn’t unreasonable to assume that the create-to-earn model will become more prevalent in the coming years — particularly among major brands and platforms.
The first generation of mass-market metaverse platforms is already being developed. This includes XANA, a metaverse platform built on a custom Ethereum sidechain. 2 years in the making, XANA has already been adopted by a huge number of global institutions — including The Olympics, Tokyo City, Fuji Group, and a variety of anime brands.
The platform allows individuals and brands to build powerful products and experiences in the metaverse which can be monetized. Like earlier platforms including Decentraland and Axie Infinity, it also features a limited digital landscape represented by user-owned parcels of land. These can be used to build interactive experiences that can be accessed on mobile, desktop, and even in VR.
After completing a record-breaking token sale on DAO Maker (the same platform behind the P2E title My Neighbor Alice and M2E project Step App), XANA looks set to join Decentraland and The Sandbox among the largest metaverse applications.
Given that these platforms typically charge little to no commission on the sales on user creations, they represent an attractive alternative to centralized platforms like Meta’s upcoming metaverse — which plans to charge a staggering 47.5% fee on virtual assets sales within its app.
That said, it should be noted that create-to-earn is different from most other X-to-Earn models in that the revenue users can earn typically comes from P2P transactions — rather than from token emission. Because of this, they may be the most sustainable model in the long run.
X-to-Earn: What to Consider as a Participant
As you might have noticed, whatever can be monetized using the X-to-Earn model, likely will be at some point. Indeed, this can already be seen in the slew of projects cropping up looking to kickstart another X-to-Earn niche — whether that be Sleep-to-Earn, Drive-to-Earn, Eat-to-Earn, or something else.
While the vast majority of these will likely fail, some will go on to achieve at least some degree of success. Though it’s often difficult to determine exactly which projects will achieve success, there are a few things you might want to consider before participating — helping to maximize your odds of picking a winner.
These include:
- Sustainability: Many X-to-Earn projects entice users with high rewards for seemingly little effort. While this can be attractive in the short term, it often leads to runaway token inflation — putting major downward pressure on the token value. Because of this, X-to-Earn projects with sustainable tokenomics and realistic rewards may fare better long term. If the reward token has zero utility, expect it to plummet.
- Accessibility: While plenty of X-to-Earn projects go on to generate significant hype, many aren’t all that accessible in their earliest days. Instead, most use some sort of gating system to ensure that only lucky, wealthy, or prominent users get first access. Consider the barriers to entry before any X-to-Earn investment.
- Revenue source: X-to-Earn projects that generate rewards purely from the inflation of their token or a dedicated reward pool derived from the total supply can struggle to maintain value in the absence of significant token utility. Others, however, funnel rewards from a variety of sources, which can make them more resilient.
- Competition: As the X-to-Earn landscape heats up, competition generally increases considerably. Because of this, it’s important to regularly check what the competition offers to see if the opportunities elsewhere are better — bearing in mind the potentially transient nature of many of these platforms. While the first mover generally performs best, this isn’t always the case.
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