crypto gaming

Users who have the most ability to profit from the crass profiteering mechanisms are those who use automated systems to “play” the games.

Think back to the communities you’ve been genuinely excited to be a part of throughout your life. It’s likely these were groups formed on the basis of shared interests, right? That’s because we feel a sense of belonging when we bond with others over any particular thing we feel a particular way about. For example, I love games, and I never get tired of exploring or fostering communities where I can meet other gamers. 

That’s how I know that the current GameFi space is no breeding ground for gamers like myself and my enthusiastic peers: It’s a breeding ground for bots.

And the main issue at play is a structural one.

A strong community signals potential to venture capital (VC) funds, so GameFi projects find themselves trying to raise funds at the community level before they can meet with investors. Therefore, they sell nonfungible tokens (NFTs) and other cryptocurrencies to get through the initial-stage-level hoops and try to earn enough cash to continue building. The more they sell, the better their chances. It’s easy to see how this makes builders inherently vulnerable to what a little bit of hype can do: It can, quite literally, make or break a project.

Related: 90% of GameFi projects are ruining the industry’s reputation

So, they take their incentive, accept the challenge posed to them by the very industry they love, and through no real fault of their own, they fall victim to the appeal of empty hype. They appoint influencers to spread the good word about their teaser trailer and how it’s going to result in a $200 million movie — when in reality, it might only have cost $10,000 to make. They build fan communities and exploit them for their own gain. They give away gaming assets through giveaways in a system that resembles a multilevel marketing scheme and often promises unreasonably profitable returns it cannot possibly deliver.

This further fuels an influencer-based and incentive-driven economy that only drives projects to boast numbers and fail to actually build groundbreaking products. Take Star Atlas, for example: It’s been three years of promises and nothing has been released to the public.

Plus, when people come together because of incentives instead of genuine interest, they fail to form real, solid communities. Look at 90% of GameFi Discord servers, and you’ll only find empty conversations alongside a distinct lack of what could pass as sincere excitement. With more than 100,000 members but only four people who talk, it’s obvious that operators keen on projecting a positive image of their brand are hiring shills to make their communities seem more populated than they are.

This makes both builders and ecosystems fragile, as they are standing on very shaky ground: In the absence of reliable fans, everyone’s participation is for sale. Offer an influencer a better deal than the one they’re currently promoting, and they’ll have no problem jumping ship. Often, so will builders, who are ready to run as soon as the token price is pumped high enough for their liking. This exact scenario happened when the Squid cryptocurrency, unaffiliated with the Netflix series, but hoping to bank on the association, rose to $2,800 in value and then crashed to almost zero after it was discovered that it was only a scam.

Related: The rise of mobile gaming shared a lot in common with crypto gaming

In this case, scammers made away with $3.38 million — so you could argue that empty hype and incentive-based MLM-type schemes do work.

But don’t gamers deserve better?

True gamers — the ones who are loyal to their community and come together in the name of something they truly believe in — will stay as far as they can from these dynamics. People who love what they do, not the incentives it may bring, will have no reason to join the GameFi economy as long as this is the reality they’re presented with when they approach it. Those who have spent a long time building real communities have no reason to dupe their fans in the name of bloated numbers, and they know it’s a losing game (pun absolutely intended).

Just as interesting as the economic incentives is the psychological aspect of the dynamics at play. As humans, we are governed (as in, motivated and activated) by emotions: our “value system is made up of a hierarchy of emotionally created sensations that rank what is important to us,” which is to say, our brains are physiologically primed to look for emotional rewards, even more so than financial ones. Think entertainment, dependability and a sense of belonging. If there is no emotional attachment to a specific game beyond cashing in and getting out, gamers will do just that. They’ll earn what they can through gameplay, then withdraw their native tokens and move on to the next incentive.

Who do you think will find this most attractive? Who stands to profit the most from this insanely bleak treatment? That’s right, bots.

Bots are specifically “programmed to take advantage of incentive structures to extract value, harming the game’s ecosystem,” and for blockchain games, they are a major roadblock on the road to widespread adoption. It’s not terribly hard to estimate how many bots a specific game might attract, as data companies can simply link any wallets belonging to the same person and cross-check the list. Using this method, anti-botting company Jigger analyzed more than 60 games and services and found 200,000 bots. Jigger also estimates that bots make up 40% of total GameFi users, while for some games (MetaGear, AnRkey X, and ARIVA), the percentage rises to a staggering 80%, and for Karmaverse Zombie, 96%.

That’s almost the total user base. And that’s unacceptable.

As long as this sorry state of affairs doesn’t improve, the GameFi industry will remain vulnerable to bots, scams, and hyped-up incentives that are unable to drive projects forward. And it will keep real, enthusiastic players like me away.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Contrary to what you might believe, monetary rewards in gaming are bad for player retention. Developers need to take player psychology and game design into account.

When I worked for Riot Games as its head of player acquisition in the European Union, I learned about player onboarding and long-term retention. Both are crucial to the success of gamer acquisition. I’ve seen the mechanics of user retention in gaming, and what I’ve learned is that most cryptocurrency games today lack the mechanics to keep players interested for even a short period of time.

Why haven’t more top-tier games introduced real-world rewards into their games? These are the titles where 99.9% of gamers are not professional esports athletes and enjoy no monetary rewards for the thousands of hours spent playing their favorite games. The opportunity to introduce monetary rewards has always been on the table. Why hasn’t anyone done it?

The answer lies in one of the cornerstone behavioral patterns that accompany motivation: overjustification. This well-documented mechanism reduces peoples’ interest in an activity.

It is the presence of extrinsic rewards, such as cash and prizes. Money weakens intrinsic motivation, which traditional developers say is crucial to long-term player retention.

Related: Japan is losing its place as the world's gaming capital because of crypto hostility

Games need to avoid injecting monetary rewards into an experience that is designed to be intrinsically rewarding. The enjoyment of beating a tough boss in a Dark Souls-style game stems from the fact that it requires considerable skill.

If you attach a $0.50 reward to that experience, you will end up destroying it. Participating in a FIFA video game tournament with your friends only to earn $0.15 would take the fun out of it. Offering zero dollars removes the monetary consideration and channels the focus entirely toward the game experience.

Every game has a set of mechanisms designed specifically for user retention, monetization and reactivation. These should be more profound than expecting players to return solely for tokens.

Economics without psychology

An economist ignorant of human behavior or gaming might first consider how to incentivize users to play more. The more hours a user plays, the more value players can extract from their transactions; consequently, power-users are more likely to pay for items and transactions within the game.

Therefore, increasing user retention is imperative. It increases monetization and the projected revenue per user. Suppose a user generates $0.60 per hour of gameplay on average, and you know from data and behavioral patterns that there’s a risk they stop playing entirely. The logic follows that you can start paying them $0.30 to incentivize them to continue.

Here is where overjustification comes into play.

From a pure economics standpoint, paying $0.30 and generating $0.60 is a 100% return on investment; this, ostensibly, makes complete sense. Yet, adopting such an approach is precisely where play-to-earn games are wrong.

Related: 90% of GameFi projects are ruining the industry’s reputation

Extensive studies into child behavioral psychology demonstrate the principle of overjustification. We do many things because they hold intrinsic value to us. We’re willing to do these activities and enjoy them the most only when the intrinsic rewards exist.

If a child enjoys playing the piano, then a $1 reward every time they play would decrease their motivation over time. The same goes for hard, challenging hobbies where our body or mind operates at peak levels. A state of flow is achieved when we are operating at our fullest potential. Losing that laser focus will likely make us fail.

A good matchmaking system in multiplayer games can match us against opponents that we have an exactly 50% chance to defeat, and it comes down to who performs just a little better during the match.

Our brains treat activities that provide monetary rewards differently from those that don't offer financial rewards. Introducing monetary rewards into a flow state is like throwing a wrench into a spinning wheel. Our brain focuses on the monetary outcomes and not the joy of the challenge.

The state of flow

The state of flow is the optimal place you want users to find themselves in. Good games like League of Legends and Overwatch excel at creating matchmaking systems where win rates roughly stay at equilibrium, since that puts players in a position to operate in the state of flow where they’re pushing themselves to their absolute maximum limit. This generates the highest intrinsic reward by recognizing the player’s ability, providing players with the conditions to improve and ultimately succeed.

Cryptocurrency games, on the other hand, are mostly designed around tokenomics and play-to-earn mechanics. The game loop and the joy derived from playing the game take second place to crypto rewards. It’s no longer a game but an auxiliary function to an economics model.

Nobody will invest hundreds of hours into an activity that isn’t fun unless it pays them a lot of money. And you can only pay out a lot of money if a critical mass of users work to create a significant amount of value. This quickly turns into a death spiral for nascent crypto games, as the games cannot create the amount of value needed to adequately reward players for spending hours inside an unrewarding game loop.

Developers need to create games people want to play and make this a primary goal rather than either starting with economics or adding crypto haphazardly to a working game loop. Even a fantastic game with good retention numbers could still have its retention destroyed with a play-to-earn mechanism.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.