A new model for online gaming that is super-charging the NFT market has enamoured Silicon Valley thought leaders and the cryptorati alike. It lets them talk about the liberating effect of free markets and innovation, along with helping people who live in developing countries. The model is called “play to earn.”
The concept is pretty simple. Instead of people paying the game publisher for power-ups, new virtual clothing items and the like, the tables are turned. Now the game pays people for playing it.
The seminal example is a game called Axie Infinity. Launched without much fanfare in 2018, Axie Infinity has largely been in the doldrums — until now. Axie Infinity’s market capitalization, the value of all its tokens in circulation, was about $8 million last October. That value stands at $8 billion today (The game's creator, Sky Mavis, is now valued at $3 billion under a recent capital raise). By comparison, major game maker Ubisoft has a market capitalization of about $6 billion and Zynga has a market cap of $8.3 billion.
The idea of being paid for doing specific things is a thread running through AOL’s volunteer moderated chatrooms, the Web 2.0 economy’s gig work and the creator economy’s content mills. The big difference with crypto is that no one person or company is paying you for your work. You’re getting paid by a protocol. It’s gig work, except your boss is a smart contract, or a DAO.
But first, let’s look at the breathless excitement around play-to-earn gaming. Here’s Amy Wu, a venture capitalist at Lightspeed who invests in lots of gaming companies, including non-crypto ones. She’s been a major proponent of the play-to-earn model. Wu reports that Axie Infinity has “lit a fire” under every major game publisher because they’ve realised that it’s proof that marrying a game with a blockchain is a revolutionary new concept.
Arianna Simpson, an investor at Andreessen Horowitz, which has funded Axie Infinity’s maker, Sky Mavis, and affiliated projects, says the game has triggered a “paradigm shift” around ideas of what it means to work, play, and receive access to economic opportunities. Simpson was talking specifically about a portfolio company called Yield Guild Games, an Axie-related entity that subsidizes players who can’t afford to get into Axie in the first place by loaning them in-game items.
Andreessen Horowitz’s Elena Burger distilled these ideas in a recent essay, where she plays with the celebrated tech notion of seeking “product-market fit” by creating a “minimal viable product.” Instead of spending loads of time writing software that you’re not even sure anyone wants, the idea is to short-circuit it by slapping together a prototype and showing it to people so you get a sense of whether there’s a market for this thing.
Burger’s idea is something called “minimal viable participation.” She lays bare the problem with crypto networks: unlike other technology networks like, say, the market for internet access which tend to fall in price as more participants join it; crypto networks get more expensive as more people use them. Witness the recent surges in the price of gas — basically, transaction fees — on Ethereum often triggered by popular NFT drops. The more people jostle to get their transactions settled on Ethereum, the higher the gas. It’s like what Yogi Berra said: “Nobody goes there anymore, it’s too crowded.”
So how do people new to crypto networks take part? Burger sketches out three poles on a spectrum. On one end are people who participate with capital — they buy their way in by trading NFTs and so on. They’re less affected by high gas. On the other end is a more vague way of taking part simply by owning a crypto wallet. App developers are exploring new ways of letting people join projects just by owning a crypto address. What’s interesting is her description of what’s in between:
“In the middle are developing forms of earning your place at the table — everything from earning DAO tokens through participation in a working group, to submitting proposals to a DAO for a specific job, to contributing to discussions on Discord, to completing quests on Rabbithole, to play-to-earn games like Axie Infinity.”
It turns out that this notion of trading your labour for a place at the digital table is not a particularly new one. The critical theorist Tiziana Terranova highlighted this in her essay ‘Free Labour: Producing Culture for the Digital Economy’ on the then relatively new commercial Web in 2000. Terranova told us:
“Simultaneously voluntarily given and unwaged, enjoyed and exploited, free labor on the Net includes the activity of building Web sites, modifying software packages, reading and participating in mailing lists, and building virtual spaces on MUDs and MOOs…the Internet is animated by cultural and technical labor through and through, a continuous production of value that is completely immanent to the flows of the network society at large.”
Terranova reintroduces the idea of the “society-factory,” a post-industrial phenomenon where work has shifted from the factory floor to society at large. Workers and consumers, or users, now inhabit an “increasingly blurred territory” of production and consumption.
For Terranova, the internet is just one facet of post-industrial society animated by an unseen social labor. Much of her work in “Free Labor” strives to make visible these mechanics. The striking thing about the internet, according to Terranova in an essay in “Digital Labor: The Internet as Playground and Factory,” is the way it accelerates cultural production, turning these media products into “translucent objects…showing through their reliance on the labor that produces and sustains them [that] the commodity is only as good as the labor that goes into it.”
It’s this translucent property that brings to mind blockchains. Blockchains after all, are nothing if not a device for rendering what was once invisible — the transactions that make up an economy — permanently visible.
When a game like Axie Infinity blurs the territory of consumption and production by paying people to play it, the blockchain underlying it captures all these interactions. The ledger of what the protocol owes its players is publicly visible for anyone with an internet connection. What’s more, it makes financially concrete the once unseen labor relations between a network and its users.
Unlike the earlier internet eras described by Terranova, where users volunteered their time to maintain the network’s social structures, crypto-powered gaming networks make explicit the trade-off: You play this game, and you get paid for it. What’s more, everyone knows how much you got paid, thanks to the public blockchain.
The notion of networks sustaining themselves by paying humans to use them is perhaps one of the foundational notions in crypto. Bitcoin pioneered it when its inventor Satoshi Nakamoto encoded a “block reward” in the protocol, issuing fresh Bitcoin to people who ran its software: miners.
If we look again at play-to-earn through the lens of Terranova’s labour critique, and the paradigm of networks paying humans to maintain them, we see games like Axie Infinity as another instance on the spectrum of internet-powered labor, where it’s increasingly difficult to tell the difference between work and play.