Why Tokens in Web3 Gaming?

5 min readSep 8, 2023


No, really. It’s just a game.

Why do we even need a “token”?

Let’s explore why games (web3 or not) might consider having a token, and unravel the threads that make up the tapestry of tokenomics in blockchain games.

Rewarding Players

Let’s face it. A huge chunk of web3 gaming came into being not because the game was “decentralised” and the players had “more control” or “ownership” over their game assets. It was only because you can make money off of the game tokens.

Tokens directly facilitate this, being the magic internet money of the game. Games can now build anything, build some hype, and launch a token to mint millions, if not billions from thin air.

A lot of Axie Infinity’s explosive growth can be attributed to their token model. But do we really need tokens to let players make money from gaming?

We’ve had eSports tournaments, and secondary markets like Diablo for players to cash in their in-game gains for real money.

Tokens, however, offer a new spin to the age-old rewards system. It’s like earning those arcade coins, but now you can sell them to the desperate kid who wants to beat your high score.

Too Many Whales Spoil The Soup

Let’s get real for a moment.

In the digital expanse of crypto gaming, there’s a tension you can’t ignore: the interplay between supply and demand.

Imagine a scenario where nearly every player earns tokens.

Sounds ideal?

Well, what if only a select few — our dear “whales” — are the ones buying?

P2E games are all the buzz, but without big token buyers (who eventually dump on retail), many of these token models risk imploding.

Investor’s Paradise or Mere Mirage?

And hence, the candid insight:

The current token frenzy is largely investor-driven.

The proposal to most early investors is very attractive: acquire tokens, wait for gamers to jump on board and buy/earn the token, and watch the valuation soar.

But this pyramid doesn’t grow perpetually.

If the demand doesn’t keep up, or the token surplus becomes overwhelming, or if a whale decides to dump, the value will nosedive.

The Reality of Interoperability

Some games have tried to solve this by going cross-game.

Imagine having a token that you could use in any game. Sounds epic, right? But does that make the token more valuable?

Think about it — arcade coins are only good in the arcade.

Same goes for in-game gems or currencies; their value doesn’t magically skyrocket just because you can use them in another game.

But, if you can earn tokens in one game and spend them in another?

Balancing the economies will become trickier, but you’re definitely on to something!

Is This a Game or a Bank?

As more games embrace tokens, we see a shift — from gaming to gamefi.

Some games are going for tokens to ditch traditional money. Maybe they have a 200 IQ thesis, or maybe they just hate banks.

Still, there’s the ever-looming shadow of money laundering and securities issues (thanks, SEC).

Tokens are the likely future of web3 games.

And web3 games might be the future of onboarding new users to crypto and DeFi.

Think about it —how many first-time crypto users have been made because they created a wallet and transacted on it to withdraw their earnings from Axie?

So, Do We Even Need Tokens?

So after this whirlwind tour of the crypto gaming world, we’re back where we started:

Why even have a token?

The verdict? It’s complicated.

But here’s the tea: if games keep chasing the token dream without a clear reason, they will probably die.

Maybe the real game-changer is to ditch the token and focus on the gameplay.

And this is where xRaise comes into the picture. Our Game SDK and Account Abstraction Wallet lets you have the best of both worlds (top-tier gameplay and web3 benefits) simultaneously.

If you’re a web3 game who really cares about building a good game, shoot us an email or DM us on Twitter

Learn More About xRaise on:

website: https://www.xraise.io/

docs: https://docs.xraise.io/

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