Should I Invest in PIXEL?

I spent the whole morning playing video games.

While I wasted a lot of time, I got some popberries. And I learned a little bit about the next generation of Play-to-Earn (P2E) games.

Pixels is a P2E game similar to the classic farming game Stardew Valley. It’s an open world where you can develop your land, grow different crops, and then buy and sell those crops at the market to get more exotic items and technologies.

Just like real farming, it takes a lot of work.

The “work” comes from spending a lot of time in the game. good night, many. You have to plant the seeds, water them, wait for them to grow, harvest the fruit, take the fruit to the town square to sell, buy more seeds, and repeat the process. (And that’s just farming.)

You can always buy ways to speed up farming, but if you want to start from scratch, you’ll be spending a lot of time clicking, so keep your index finger at the ready.

I became interested after hearing that Pixels was doing a cross-promotion with Binance. Because Farmer Barney kept reminding me every time I talked to him.

Binance allows users who stake cryptocurrencies on Binance Launchpool to earn PIXEL tokens. These tokens can be used to purchase items within the game, and their value may increase as the game grows in popularity.

What I wanted to know: Should I invest in PIXEL?

P2E Gaming: How It Works

P2E games reward players for the time and effort they invest in the game. Defeat monsters, complete quests, or (in Pixel’s case) grow thousands of acres of popberries.

In return for your work, you’ll receive some sort of in-game token, which can often be sold. out A game on a cryptocurrency exchange.

The P2E market is growing rapidly, with billions of dollars invested in 2023. Some games, such as Axie Infinity and Decentraland, have seen significant increases in token prices, attracting players eager to make money.

On the other hand, the market is also unstable. Many games have trouble retaining players long-term. Especially since the perceived value is based on the token price and not on fun to play.

According to DappRadar, there are currently around 1,000 P2E games with over 1 million daily active users. Top games like Axie and The Sandbox have market caps of over $1 billion, according to CoinMarketCap.

It’s tempting to classify P2E games as just another strange cryptocurrency like memecoins. But I think there’s something more important going on. As Chris Dixon said, “The next big thing will start with something that looks like a toy.”

If you think the basic skills of P2E games are: Redeemable Reward PointsThis is an invaluable innovation.

We see brands like Starbucks and Marriott offering customers “rewards” for completing certain “quests,” such as ordering a new menu item or staying at multiple hotels. All use blockchain-based reward points.

This isn’t much different from P2E games. However, today’s games need to do this at scale, with thousands or even millions of players making real-time transactions 24/7. And most blockchains are not built to handle this.

This is where Ronin comes in.

Ronin: Scaling P2E Games on Ethereum

Created by the Axie Infinity team, Ronin was developed as a sidechain for Ethereum (although this isn’t technically correct, it’s easiest to think of as a Layer-2 solution).

Ronin’s goal is to make transactions faster and cheaper than working directly with Ethereum. Gas prices have been significantly lowered, making the game more affordable to play.

(If you’re wondering why we don’t build the game on Layer-1, which is faster, building on Ethereum gives you access to everything built on Ethereum. For example, Pixels allows you to use Ethereum-based NFTs as playable characters to play your game. can.)

Of course, Ronin also has its own token, RON. The token received a lot of buzz upon launch, but immediately fell before rising significantly after Pixels recently announced its deal with Binance.

I feel the same way about RON as I do about all other Layer-2 solutions. I don’t know which one of them will win or if it will be necessary in the long run. Investing in L2 is like making a bet. You have to bet on Ethereum with the winning L1, and you have to bet on Ronin with the winning L2.

Why not just simplify and invest in Ethereum?

Ultimately, all the value created by any P2E games built on Ethereum accrue to Ethereum. Every Ethereum game means more Ethereum wallets, more Ethereum users, and a larger Ethereum ecosystem.

The easiest way to invest in not only Pixels but all Ethereum-based P2E games is Buy and hold ETH. This is like an index fund for the entire Ethereum ecosystem.

Less Pay, More Playability

If you have the time and curiosity, give Pixels a little play. Unlike most blockchain apps, it works directly in your browser out of the box without any complicated setup. Usability is something every blockchain developer should strive for.

On the other hand, I kept running into limitations in the game wanting to purchase larger lands or NFTs or access VIP rooms in the “sauna” area.

To me, traditional games like Fortnite strike the perfect balance between fun and money. Fortnite is free to play, and you can use your default character forever. But if you want to upgrade your character, buy V-Bucks (with real dollars), which is Fortnite’s source of revenue.

Upgrading your Fortnite character is all about flex. It doesn’t give you any new mechanics or make the game play any different. It’s even more fun to play as Iron Man or a giant banana. And it’s worth paying for.

I understand the appeal of Pixels, but I still want less commerce and more fun when playing games. Low payola and high playability.

Investor Implications

I believe in the potential of these games. We strongly believe in the potential of games, not just as games, but as a reward mechanism for any company that wants to incentivize their customers to do something – try a new product, go for a test drive, or use a new feature or product. ).

But for my money, ETH is still the best investment. If P2E gaming goes mainstream, ETH will become the actual in-game reward.

Health, wealth and happiness,

John Hargrave

publisher, Bitcoin Market Journal