How Blockchain Gaming ‘Scholarships’ Changed in the Bear Market
The extractive PlayToEarn scholarship model has evolved with the PlayAndOwn transformation of the blockchain gaming industry
Shifts in Blockchain Gaming Monetization Models
Profit-sharing “scholarship” models grew in popularity around the same time that the blockchain gaming boom of 2021 made the industry visible to the world.
The term stipend refers to the profit sharing agreement between two parties, the stipend and the manager, where the latter allows the use of their digital assets for the former to access a blockchain game. Scholarships were first used in Axie Infinity, allowing players to utilize excess assets by lending them to other players who could not afford to purchase their own.
The profit sharing model was strongly associated with the PlayToEarn characteristics of blockchain games as it was a catalyst for project growth. Multiple users can be added to a protocol without having to spend money to buy assets. Guilds began to form based on this model. However, it proved to be unstable due to its mining characteristics which took its toll on the blockchain gaming economies.
Eventually, projects were changed from PlayToEarn to PlayAndOwn due to market conditions, and the stipends also had to be adjusted. One adjustment that was made was how leaders educated their guild about the fragility of blockchain gaming economies, especially in the early stages of the startup.
A good example of this was how Steve Woody, founder and CEO of Undisputed Noobs, decided to allocate the guild’s revenue from Genopets in a way that adds value to the guild but doesn’t hurt the game’s economy.
We are currently extracting $0 profit from the game as it is a new economy and we want to make sure we do our best to protect it in these early stages.
We will continue to work with our members and development teams to ensure we are as efficient as possible as we work towards ownership
— SteveWoody.eth | Undisputed Noobs (🌻,🌻) (@STEVEW00DY) 5 September 2022
Other guilds looked to bring value to the gaming economy through more traditional verticals in the gaming space. Rather than focusing on profiting from simply interacting with the project, these guilds lend assets to scholars who can use these Non-fungible tokens (NFTs) to create content or participate in competitive games.
YGG has integrated this approach as it evolved away from its original scholarship model.
“You can think of YGG as an esports and gaming community, but with the power and influence of Web3,” said John Sedano, YGG Community Marketing Lead. “We’re connected to the biggest crypto projects and personalities, and have the help of the entire industry to build out the biggest guild in the metaverse.”
But guilds still implementing profit-sharing models need to update how both parties profit now that the blockchain gaming space is moving towards the PlayAndOwn mentality. New mechanics introduced in these economies are reflected in how the profit-sharing grants evolved.
A good case study for this is how Axie Infinity has transitioned to a new game model, through Axie Infinity: Origins, and how the community has adapted.
Originally, the grant model from Axie Infinity contained a kind of split of the utility token income from interaction with the project. Now that new mechanics have been introduced, and the faucet of $SLP tightened, guilds now share profits from Runes and Charms sales and leaderboard placements.
“The model is much more cooperative rather than competitive within the guild,” said Seneca-Mu, a VIP boss in an Axie Infinity guild management community. “We act more like a guild than the typical manager/fellow paradigm. Whether it’s trading assets, training and education, or making decisions about how we develop.”
