Problems of Current P2E Models

Volatile Token Price Movements

Most crypto tokens follow the market sentiment where when major tokens dump, many other tokens follow. In most P2E games, since there isn't adequate inflation control, when the price dumps with the market, the price action amplifies.

Since the major reason for this volatility is over-inflation which is connected to improper issuance control and lack of burns, it has turned into a significant pain point for projects.

Privatized Scholar System

One amazing feature that NFT gaming platforms have provided their users is the option to rent NFTs to other players and earn passive income. Since NFTs appreciate in value exponentially, this also creates demand, and certain renters might even be open to buying these NFTs for a higher premium.

The issue here is that these agreements between scholars and managers are largely trust-based. For a platform to facilitate NFT rentals properly and in a completely decentralized way, the system has to be trustless. Meaning that all of these processes associated with NFT rentals have to run through smart contracts.

Complicated Strategy and Gameplay

Play to Earn games have always been about complicated gameplay. Most of these games also have complicated strategies that users have to apply to progress. The P2E industry itself has kind of been categorized as a niche and is moving toward who can make the most mindblowing games that have exciting graphics.

The issue here is that the players outgrow these games quickly and player retention reduces substantially. This basically means that a lot of players drop out early and the platforms become stagnant. Simple and fun-to-play gameplay is still missing from the space. One that players can make a substantial income from and yet can play again and again.

Lack of Token Burning Mechanism

Inflation is the number one challenge when it comes to a platform's tokenomics. Especially in P2E gaming platforms, where tokens are the basis for rewards and monetization, over-inflation has historically been known to cripple many platforms. These issues are multiplied several folds when the platform attracts more users and the daily volumes increase.

Here, the market is flooded with more tokens than the demand, and the token gets devalued. Part of this problem is because most platforms only design tokenomics for rewards distribution and do not have any deflation mechanisms set in place. A simple process such as token burning can help mitigate this problem when strategically implemented in the tokenomics design.

Oversupply of NFTs Over Time

Tokenomically, NFTs are also at risk for over-inflation. While ERC721 NFTs are unique and non-interchangeable, they are also driven by market demand. Here, when there is an increased supply of a particular class or collection of NFTs in the market, the demand for them decreases and are devalued.

This is especially true when platforms have no mechanisms set in place to provide gamified incentives for players to hold NFTs.

Nerfing of NFTs for Balancing

The phenomenon is extremely common with P2E games these days and is very damaging to the entire game. In order for an NFT to have value outside the game, it has to have some sort of utility inside the game. With a lack of or minimal utility inside the game, NFT value depreciates.

Gaming projects sometimes nerf their NFTs to balance out the games and this causes a complete devaluation of their NFTs. Furthermore, latecomers to games often do not reap the same benefits as early birds. While this might seem like a normal phenomenon in crypto, in gaming, this can be quite damaging. A game is only appealing to a player if they get the same experience as any other player. In P2E gaming, this also means that a player that plays the exact same game as another player should get the same or similar incentives as the other player.