NFTs in Gaming: Play-to-Earn and Virtual Economies

A friend’s teenager spent three months grinding a play-to-earn game last year, convinced he’d found a way to fund his gap year. He made about £40 total, after gas fees ate most of it. That gap between the promise and the payout defines most of this space.

What “Play-to-Earn” Actually Means

Play-to-earn games let players own in-game items as NFTs — tokens on a blockchain proving you hold a specific sword, character, or plot of virtual land. Those items can then be sold for real money on an open marketplace.

The pitch sounds simple: play a game, earn assets, cash out. The reality involves volatile token economies, upfront costs to even start playing, and markets that can collapse the value of your earnings overnight.

Traditional games let you buy skins with real money that stay locked to your account forever. Play-to-earn flips that arrangement — items become tradeable assets with a price that moves independently of the game itself.

Not every title calling itself play-to-earn actually delivers earnings. Many launched with the label purely for marketing, then quietly dropped the earning mechanics once regulatory scrutiny increased through 2025.

How In-Game NFTs Work

Each NFT is a unique token recorded on a blockchain, usually Ethereum, Polygon, or a game-specific chain built for lower transaction fees. Owning the token means owning that specific in-game asset outright.

Games mint new NFTs as rewards for playing, or sell them directly at launch. Players trade them on marketplaces like OpenSea or game-specific exchanges, setting whatever price the market will bear.

Scarcity drives value here, same as any collectible. A rare weapon skin used by only 200 players will trade differently than one held by 200,000. Supply and demand, dressed up in gaming language.

Some games add extra utility beyond cosmetics, letting a rare NFT grant faster crafting speeds or exclusive access to certain areas. That functional layer makes valuation genuinely harder than pricing a simple skin.

Axie Infinity: The Rise and the Reckoning

Axie Infinity became the poster child for play-to-earn in 2021, with players in the Philippines reportedly earning more from the game than local minimum wage. It felt like a genuine economic breakthrough at the time.

The model relied on new players constantly buying in, funding rewards for existing players — structurally similar to schemes that need endless growth to survive long-term. When new player growth slowed in 2022, token prices collapsed over 90%.

Axie’s developer, Sky Mavis, also suffered a $625 million hack of its Ronin bridge in March 2022, one of the largest crypto thefts ever recorded at that point. The combination gutted user trust the game never fully rebuilt.

Sky Mavis has spent the years since trying to rebuild credibility, launching new titles under the Axie brand with far more conservative token economics. Player numbers remain a fraction of the 2021 peak.

Virtual Economies: Who Actually Makes Money

Early adopters and the game’s own developers tend to capture most of the value in these economies. Late arrivals buying in near the peak usually absorb the losses when momentum eventually fades.

Guilds emerged to bridge this gap — organisations that buy expensive starter NFTs and lend them to players who can’t afford entry, splitting the earnings between both parties. Yield Guild Games became one of the largest, managing thousands of “scholars” across multiple games.

This scholarship model raises its own questions. Scholars do the actual grinding for a cut of proceeds while guild owners hold the appreciating assets. It resembles gig work more than gaming, dressed in blockchain terminology.

Guild owners face their own risk too. A game’s token collapsing wipes out the value of every scholarship they’ve built, regardless of how many scholars were actively grinding at the time.

The UK Gambling Commission Angle

UK regulators have started scrutinising whether certain play-to-earn mechanics count as gambling. Loot boxes with randomised NFT rewards sit uncomfortably close to a slot machine, structurally speaking, once real money is involved.

The Gambling Commission hasn’t issued a blanket ruling on NFT-based games specifically. Individual titles get assessed case by case, based on whether outcomes are genuinely random and whether real money changes hands for a chance-based reward.

This matters practically. A UK-based play-to-earn game found to meet the legal definition of gambling would need a full gambling licence, changing its entire business model overnight and its tax treatment along with it.

Why Big Studios Are Cautious

Major publishers tested the waters in 2022, then largely retreated. Ubisoft’s NFT experiment drew such strong player backlash that most quietly dropped further plans within a year of launch.

Player sentiment matters more than the technology here. Surveys consistently show most gamers view NFTs as a way to extract money from a hobby they already pay for, not an exciting new feature worth embracing.

Square Enix pushed harder than most, continuing NFT-focused releases through 2025. Reception stayed lukewarm at best, and sales figures for these titles trailed the studio’s traditional releases by a wide margin.