Eat, sleep, do almost anything for payment in crypto

Axie Infinity – a non-fungible token-based online video game that has generated over US$4 billion in secondary NFT sales – is credited with starting the so-called “play-to-earn” (P2E) craze, which allows players to make money while we play. While the Axie hype has died down somewhat, it has also spawned a number of copycat projects that pay users to perform everyday activities.

These projects have developed into an industry of their own; a sort of “X-activity-to-earn” (X2E) model, which now includes tie-ups with brands from Asics to European football clubs, pays users in cryptocurrency to run, eat or even sleep.

Perhaps not surprisingly, questions are being raised about the economic principles on which many of these projects are based.

“The problem with some of these X2E models is that it seems like a very good innovation, but then it’s just a Ponzi [scheme],” Anndy Lian, author of the new book “NFT: From Zero to Hero,” said in an interview with discard, although he did not mention anyone by name. “And it’s actually very disturbing, to be quite honest.”

Without ongoing revenue to support what is being paid out, Lian said, the X2E model risks becoming an unsustainable compensation structure, relying on the hope that more people will come in to “pay” for tokens previously dropped.

Similar accusations were made against Axie Infinity after a period of explosive growth failed to generate earlier returns for users, as its native token SLP is now trading at $0.004 at press time after reaching as high as $0.41 in May 2021 .

Running tokenomics

One of the more popular variants of this new industry model is the “Move-to-Earn” (M2E) project StepN, which pays users in cryptocurrency to walk, jog or cycle by tracking their movements via phone GPS.

To participate in the project, users buy NFT sneakers and keep them in their phone wallet when they go for a walk, and are then compensated for their exercise in the project’s native currency, Green Satoshi Tokens (GST).

Users then withdraw the GST for profit or invest it back into the project to create more NFTs for other users to buy.

However, Brian Lu, founder of investment fund Infinity Ventures Crypto, is more optimistic about the prospects for these projects than Lian said. Discard in an interview, there are ways in which such projects can be successful.

“It always happens [need to] be people who support the token, or the token must have some type of utility [for the project to work],” he said.

StepN does this by allowing users to withdraw GST for profit or by investing it back into the ecosystem to create more sneakers NFTs. This was the tokenomics model originally adopted by Axie Infinity, which allowed users to withdraw their SLP or to re-invest it back to create more “Axies” – Pokémon-like creatures that players bred and battled for to earn more SLP.

After launching in December, GST peaked at $9.03 in late April before crashing along with the rest of the crypto market in May. Despite tie-ups with sports brand Asics and Spanish soccer club Atlético de Madrid, GST had fallen below $1 in early June, and has been trading below $0.10 since early July.

Sleeping on the job

Positioning itself as a direct response to the Move-to-Earn projects, Gang Azit Social Club (GASC) has taken a different approach, wanting to remind users that it is important for one’s mental health to take a break and relax from from time to time, and encourages this practice by paying them to do just that.

Calling itself a “Relax-to-Earn” project, GASC detects when users are within a predetermined zone using GPS and pays them in the project’s HIPS token if they press a “relax” button on their phone while they are in the room.

If anyone needs an incentive to eat, Esca – an online marketplace for food consumers and suppliers – promises to pay customers, restaurants and home cooks in both Bitcoin and USDC. According to their website, Esca believes that the commissions charged by most food delivery platforms are too high and uses cryptocurrency to balance the equation.

So many projects have appeared that promise to pay users to sleep that there is even a separate financial category for the industry – SleepFi.

The Sleepee app pays users based on their sleep quality points in its native currency, which can be converted to purchase products or services in its store. Even Move-to-Earn app MetaGym offers a SleepFi feature that pays users in their native token that can be spent in-app or cashed out for USDC.

The future of Web3 and games

Measuring the success of these projects in recent months has been difficult amid the broader crypto downturn, which has seen even well-established crypto funds and businesses file for bankruptcy or need a bailout.

If the situation doesn’t improve soon, Lu says there are other options available for such projects.

“These X2E projects that are coming [are] is going to start learning how to advertise to users and user behavior [and] user data to marketing companies that are willing to pay for it,” Lu said, explaining that this process will become more common as brand affiliation continues to gain traction.

Selling user data could work against the ethos of Web3, which is often touted as offering a new incentive model to break away from the data mining approach to business that has led to massive wealth concentration by a few giant tech companies.

But Lu says this only uses data that is publicly available on the blockchain anyway.

Returning to the genre that started it all, Lu says the industry has learned its lesson from the short-lived success of Axie Infinity and is shifting from Play-to– Earn to play-and– Earn, or Web 2.5.

These projects put gameplay back at the center of the game, with the ability to monetize – sometimes even in fiat – a bonus element rather than making a game that earns the main draw card.

Lian hopes these types of games can still survive in the meantime, but says it will be a long time before the mainstream gaming industry adopts Web3 in any meaningful way.

“I don’t think the super app is coming anytime soon,” said Lian, who explained that the technology is there, but the $300 billion-a-year gaming industry has little incentive to change. “[Game studios] may not be comfortable with how it’s actually going to help them since they really do make millions of dollars in revenue every year.”