Understanding X-to-Earn Applications: A New Era of Online Income

In the last decade, the world gradually shifted to the gig economy, accelerated by COVID-19 and global conflicts, which prompted people towards alternative income sources in Web3. This includes X-to-Earn projects, with Web3 gaming significantly leading this movement’s growth. Now, it is possible to earn with crypto projects.

However, according to CoinGecko, 75% of blockchain games have failed. CoinGecko has studied the statistics of 2817 Web3 games launched from 2018 to 2023. Only 690 retained the audience, while the rest lost all users within two weeks. The best year for blockchain games was 2021 – only 339 out of 738 projects failed. The worst year was 2022 – 742 games failed, while developers launched 693 projects.

We at IdeaSoft are an experienced team with diverse experience in Web3. Along with that, we own Eventyr, top Ukrainian game development company. It became a part of our company after we bought it as a consequence of our venture builder strategy. Eventyr’s case studies prove its vast expertise. Together with Eventyr team and its expertise, we prepared this article. Read further to find out more about X-to-Earn applications.

Table of Contents:

1. Definition of X-to-Earn Applications
2. Types of X-to-Earn Applications
3. Benefits of X-to-Earn Applications
4. Best Practices for Web3 X-to-Earn Application Development
5. Notable examples of X-to-Earn games
6. Summary

Definition of X-to-Earn Applications

The core of the X-to-Earn model is to connect in-game activities with real-world economic value with the support of Web3 technology so that players can get tangible rewards for the time and energy invested in the game. In addition, with the further popularity of Web3, the X-to-Earn model is being further extended and is bringing more forms of innovation.

The first is to build a virtual economic system in the game. The term X-to-Earn promotes the development of the virtual economic system in the game. By participating in the game, players mine, trade, and upgrade digital assets to realize the value exchange between the virtual and real economies. X-to-Earn brings a new business model and profit path to the game industry.

The second is to bring socialization and collaboration between players. By jointly participating in-game tasks, competitive games, and other activities, players can obtain shared benefits and achieve win-win benefits among groups. X-to-Earn mode not only enriches the social nature of the game but also helps build closer community relationships.

Finally, it provides developers with a new profit model. By selling in-game digital assets, taxing, etc., developers can achieve a more stable source of income. In addition, developers can further promote the development of the game ecosystem by motivating players to participate in game governance and content creation.

With the advent of the Web3 era, the X-to-Earn applications are leading the game industry into a new stage. By empowering players, promoting decentralized economic models, and realizing asset liquidity and interoperability, the Play-to-Earn gaming model brings more innovation space and business opportunities to the game industry. As an important part of the Web3 world, X-to-Earn will continue to lead the game industry to develop in a more free, fair, and prosperous direction.

What we have witnessed so far is just the beginning of transforming the way we work, play, socialize, create, and learn. Examples like Axie Infinity and Sandbox showed the diversification of opportunities from the Play-to-earn field.

In essence, various X-to-Earn models involve through different behaviors to earn rewards. The variable X signifies distinct yet similar actions, aiming for participation, actions, presence, and digital currency earnings through various activities.

Szymon Mądry, Head of Business Development at IdeaSoft

Types of X-to-Earn Applications

We prepared this article together with Eventyr, one of Ukraine’s top game development companies. Each X-to-Earn category has unique potential in the expanding universe of X-to-Earn applications. Still, Daniel Slupski, CEO of Eventyr, highlights the following:

• Play-to-Earn (P2E) continues to be a frontrunner, given its ability to deeply engage users by merging entertainment with economic incentives. Its potential lies in transforming traditional gaming into a more participatory and rewarding experience, appealing to a vast, already-established gamer community. In 2024, the trend in play-to-earn games is shifting toward creating intrinsically enjoyable games with earning elements that complement rather than dominate the gameplay. This approach aligns with the interests of both gamers and investors, ensuring a balanced and sustainable ecosystem.
• Move-to-Earn (M2E) is another area with immense growth potential. By incentivizing physical activity, M2E apps tap into a broad demographic concerned with health and fitness, marrying the wellness industry with digital rewards. This sector has the unique advantage of promoting real-world activities, which can lead to more sustainable user habits and long-term engagement.
• Learn-to-Earn (L2E) platforms have a transformative potential, especially in the education and professional development sectors. They democratize access to learning, making it more accessible and rewarding. The scalability of L2E models in various knowledge domains and their potential to impact skill development on a global scale make them particularly promising.
• Create-to-Earn (C2E) and Watch-to-Earn (W2E) each have their merits. C2E projects empower content creators in a digital economy while Watch-to-Earn crypto projects innovate how we consume media. However, their long-term potential may be more niche than P2E, M2E, and L2E, which address more universal needs and interests.

While all X-to-Earn models hold significant promise, P2E, L2E, and C2E show the most potential due to their broad appeal, ability to integrate into everyday life, and potential for long-term, sustainable engagement.

Benefits of X-to-Earn Projects

The transformative potential of X-to-Earn applications is inevitable. This domain leverages blockchain and decentralized principles to redefine the relationship between players, games, and economic value. It significantly redefines how to design a Web3.0 app to get the best UX. Let’s delve into a few key benefits of X-to-Earn applications in more detail.

Monetization of Gameplay

X-to-Earn models redefine the traditional gaming experience by enabling players to monetize their skills and time. In conventional gaming, players invest significant hours mastering a game, but the rewards are often confined to in-game achievements. Players receive tangible rewards with X-to-Earn apps, often through cryptocurrencies or valuable in-game assets. This fundamentally alters the relationship between player effort and real-world compensation.

Ownership of Virtual Assets

Blockchain technology is pivotal in X-to-Earn applications by ensuring true ownership of in-game assets. Non-fungible tokens (NFTs), unique digital assets secured by blockchain, grant players the right to buy, sell, and trade their virtual items outside the game environment. This concept of ownership adds a new layer of value to in-game possessions, creating a market for virtual assets.

Decentralization

X-to-Earn applications often operate on decentralized platforms, reducing the dominance of a single authority. This decentralization contributes to a fairer and more democratic gaming ecosystem. Traditional games often have centralized control over economies, item distribution, and player transactions. In contrast, X-to-Earn models leverage decentralized technologies to distribute control, enhancing transparency and trust among the player community.

Global Accessibility

One of the distinctive features of X-to-Earn projects is its ability to transcend geographical boundaries. Regardless of economic disparities, players from diverse regions can participate and earn in these decentralized gaming ecosystems. This global accessibility not only opens up economic opportunities for players worldwide but also fosters a more inclusive gaming community.

Community Building

X-to-Earn applications like Play-to-Earn blockchain games emphasize community engagement as an integral aspect of the gaming experience. Players collaborate, compete, and strategize to optimize their earnings. The shared interest in earning real-world value creates a strong sense of community, where players actively contribute to the success and growth of the game. Community building becomes a key driver for the sustainability and popularity of X-to-Earn games.

Best Practices for Web3 X-to-Earn Application Development

Here are the best practices from our IdeaSoft team to help you create a blockchain application without significant problems.

Strong Blockchain Integration

Ensure seamless integration with a robust and scalable blockchain network. Ethereum and other compatible blockchain platforms are commonly used for X-to-Earn applications. Smart contracts on the blockchain facilitate transparent and secure transactions. This enables features like asset ownership and value transfer.

Token Standards and Interoperability

Adhere to established token standards such as ERC-20 or ERC-721 to ensure interoperability with wallets, exchanges, and other decentralized applications. Consider incorporating standards like ERC-1155. They can ensure more flexible and efficient management of in-game assets.

Decentralized Identity and Authentication

Implement decentralized identity solutions to enhance security and privacy. Decentralized authentication methods, such as blockchain-based logins, reduce the risk of centralized data breaches. They also enhance user control over the personal information.

Scalable and Gas-Efficient Transactions

Design smart contracts and transaction processes to be gas-efficient and scalable. High transaction fees can deter users. We recommend optimizing the code and leveraging layer 2 scaling solutions to enhance the overall user experience.

As CEO of a game development company working in the Web3 domain, I’m observing a pivotal transformation in the play-to-earn (P2E) model in 2024. Our approach emphasizes two key aspects: integrating real value into gaming experiences and evolving sustainable business models.

Initially, the P2E industry faced challenges. Many projects resembled gambling more than gaming, appealing more to small investors seeking quick profits than to genuine gamers. This led to unsustainable models that lacked engagement and long-term viability.

Innovative business models are emerging, focusing on dynamic tokenomics that support the game’s economy without overwhelming it. These models prioritize player retention and game quality, ensuring the P2E experience is rewarding and engaging.

Daniel Slupski, CEO at Eventyr

Notable examples of X-to-Earn games

Here are 3 examples of X-to-Earn games that got a lot of positive feedback from gamers.

Decentraland

The gameplay is based on creating land plots, works of art, and NFTs, owning which users participate in managing the decentralized DAO platform. Due to this, the Decentraland community can participate in the management of the game. The game has launched its own digital coin, MANA. All in-game items are in the Ethereum blockchain.

The game was launched in 2016. After that, the developers significantly improved it, as a 3D world appeared after the 2D experiment. So, Decentraland is a virtual space with digital real estate and other assets.

Splinterlands

The point of this game is to collect a squad for battles at a certain time. Splinterlands refers to collectible fantasy games. Launched in 2018, it is based on the Hive blockchain. It was originally known as Steem Monsters, but the name was changed after a while. If we talk about the concept, there is something similar to popular games like Dota Auto Chess and Hearthstone Battlegrounds.

The accumulation of DEC tokens is carried out due to completing tasks or winning battles. The size of the reward depends on the league. For example, participants of the bronze league receive about 8 NFT for winning. In-game tokens can be withdrawn.

Gods Unchained

It is a collectible game where players must earn cards to form a deck of unique, rare cards. ERC-721 tokens are utilized within the system. It should be noted that Gods Unchained‘s development staff includes former Google and Riot Games engineers. This composition made it possible to get about 15 million dollars in funding.

Certainly, this funding has made the game one of the best, according to the gaming community. If we compare Gods Unchained with its competitors, here, each player gets full ownership of the game items. In addition, the game can be run in different modes, and you can even activate single-player or multiplayer modes. There are daily tournaments. The advantages gamers note are the gorgeous graphics and the gaming process’s dynamism.

Summary

X-to-Earn is an incentive for users to engage in some kind of behavior – eating, reading, writing, curating, interacting, etc. Projects often design a scenario to “intentionally” encourage users to participate, but such incentives are often difficult to sustain and are not conducive to increasing user stickiness.

While the core of X-to-Earn is the act of x, many projects incorporate social-fi elements. The social-fi element can be understood as a strategy to encourage user growth. Still, the social element must also fit in with the x behavior to increase user stickiness and create a vibrant ecosystem.

Regarding current behavioral patterns, the X-to-Earn model is not a disruptive innovation. It is more of a reproduction of everyday human behavior or a reinvention of the existing Internet model of entertainment addiction. However, some proponents believe X-to-Earn can be revolutionary for specific industries, particularly Decentralized Exchanges (DEXs) employing the Automated Market Maker (AMM) model. AMM DEXs with X-to-Earn features could incentivize users to provide liquidity and participate in governance, fostering a more robust and community-driven DeFi ecosystem.