The "Merchant of Narratives" joins the "onchain AWS"
GC ALPHA 59
Disclaimer: None of this information should be taken as financial advice. DYOR + I will hold some of the assets mentioned in this newsletter.
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“PLAY TO EARN IS DUMB AND HERE’S WHY”
Adam Fern, co-founder of PoP, recently published an article titled “Play to Earn is Dumb and Here's Why,” criticizing the core of its incentive model. Let’s get into his arguments and explore other takes on the topic as well:
Adam argues that P2E forces fun and finance to live next to each other. These different motivations split the experience into two, and when finance enters the picture, the meaning of the system changes
“Earning” (income) will always lead to securing more important needs in Maslow’s hierarchy than “fun” does. Therefore, P2E always becomes the dominant factor
Furthermore, he shares how they experienced this with Pirate Nation. Initially, their post-TGE metrics were great. But over time, they noticed that too many tokens got into the hands of misaligned parties, creating a downward spiral of sell pressure
This pretty much happened to any P2A/P2E campaign in the past year
He ends by saying that the goal has always been to “build a game worth playing independent of financial incentive. The kind people would pay to play, not be paid to play”
But I'd argue that you can only persuade people to pay to play when the potential reward of participation exceeds their initial "investment”
Loopify added his thoughts to the conversation:
He says that giving tokens should be a marketing cost, and not a retention strategy
Yet, not many have figured out how to effectively use a pool of (token) rewards for UA, except for Sleepagotchi, maybe, which managed to achieve a positive RORS recently. Other examples are probably only seen in crypto games targeted to a Web2 audience
Heimdall, the chief economist of Citadel, has a different take:
He argues that fun and finance can coexist, but the fundamental issue comes from distributing tokens without competition between the players for incentives
When players compete in an open economy with “real risk” (e.g., destruction), competitive equilibria can be created, and earnings become tied to P2P value exchange
For context, Citadel is building an onchain EVE Online, and is largely inspired by the design of their economy, where interdependencies and destruction play a central role
Lastly, he adds: “Earning is just a byproduct of having a real economy”
Apix argues that Adam is saying that tokens in games generally don’t work pretty much:
“imo it's not about "earning destroys the game", it's how players earn in a game “
He adds that, generally, tokens are not a great vehicle for earning in a game. It feels artificial, plus teams and investors have locked tokens, an incentive structure that incentivizes them to sell
Recently, BEN.ZZZ (from Cambria) shared his thoughts on this topic of utility tokens in the hands of the team and investors, an interesting take
Furthermore, he adds the examples of how he earns in Gigaverse and CS:GO, which isn’t propped up by a token, but by an item economy driven by player demand
However, you could argue it is propped up by a potential future token allocation or multiple
Overall, conversations like these illustrate how we need new systems and incentive designs for crypto economies to survive
After all, incentives are the best predictor for behavior - “Show me the incentive and I'll show you the outcome.” - Charlie Munger
MERCHANTS OF NARRATIVES
In more news from Proof of Play (PoP), Ico Beast just shared he joined the company as a “mindshare lead”
Ico will be telling PoP’s story (vision), will help architect the communication strategy, and the overall company narrative. I.e., we can expect a lot of bullposting
Something seems to be coming to Abstract this week
Reading between the lines, it seems PoP is getting closer to rolling out its larger GTM strategy, and I wouldn’t be surprised to see a Q3/Q4 ‘25 token launch
We’ve been following PoP’s moves and speculating about them this year:
In February, I shared my value thesis on the “onchain AWS”. PoP is building the next Chainlink, but faster and more affordable (and tailored for gaming). I also wonder when and if they will expand beyond VRFs
Back then (and still now), we missed information on how much assets within the Pirate Nation ecosystem accrued value for PoP’s token, other than them generating “Proof of Play Points”
I.e., what kind of allocation can we expect for token stakers and NFT holders?
A recent comparison could be PROMPT, which allocated 39% of the total supply to PRIME stakers. However, I wouldn’t expect such a high number here
In general, on the topic of hires, we have seen more companies start working with crypto figures with an audience, including Gigaverse (Aiz and Eli), Coinbase (Alex on Chain), and now Proof of Play
In a space as small as CT, distribution is king, especially when it is of high signal (i.e., the figure is reputable). And so, people also claim Breadguy added $500M to MegaETH’s future token
The Ico announcement made PIRATE pump up from $13M to a $25M MC at its peak
“Brands don't sell, but faces do". As these figures create trust, authority, and continuous mindshare, which should translate to token buying and holding at a later point
Another example of this (but in this case, a founder) is Jeremy Horn, who managed to pull off the most successful gaming NFT mint of 2023
Overall, Proof of Play was not top of mind, but that is going to change very soon, and I expect this will be part of a larger rollout to a token launch
ON THE RISE
Fableborne sweeps more rare Kingdoms, using 3569 RON in validator rewards
PlayStation trophies and games can now grant you XP and rewards on GAM3S