How Blockchain Gaming ‘Scholarships’ Changed in the Bear Market

Shifts in Blockchain Gaming Earning Models

“Scholarship” profit-sharing models grew in popularity around the same time as the blockchain gaming boom of 2021 made the industry visible to the world.

The term scholarships refers to the profit-sharing agreement between two parties, the scholar and the manager, where the latter allows the use of their digital assets for the former to gain access to a blockchain game. Scholarships were first used in Axie Infinity so players could make use of their excess assets by lending them to other players who couldn’t afford purchasing their own.

The profit-sharing model was heavily associated with the PlayToEarn characteristics of blockchain gaming as it was a catalyst for project growth. More users could be onboarded to a protocol without having to spend to purchase assets. Guilds started forming based on this model. However, it proved to be unstable due to its extractive characteristic that took its toll on blockchain gaming economies.

Eventually, projects were rebranding from PlayToEarn to PlayAndOwn due to market conditions, and scholarships also had to adjust. One adjustment made was how managers educated their guild on the fragility of blockchain gaming economies, especially at the early stages of their inception.

A good example of this was how Steve Woody, Founder and CEO of Undisputed Noobs, decided to allocate their guild’s earnings from Genopets in a way that brings value to the guild, but does not hurt the game’s economy.

We have currently extracted $0 profit from the game as it’s a new economy and we want to ensure we do our best to protect it in these early stages.

We will continue to work with our members and dev teams to ensure that we are as effective as possible as we work towards ownership

— SteveWoody.eth | Undisputed Noobs (🌻,🌻) (@STEVEW00DY) September 5, 2022

Other guilds looked to bring value to the gaming economy through more traditional verticals in the gaming space. Instead of focusing on earning from just 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 gameplay.

YGG has integrated this approach as it evolved away from its original scholarship model.

“You can see YGG as an Esports and gaming community, but with the power and leverage of Web3,” John Sedano, YGG Community Marketing Lead, said. “We are connected with the biggest crypto projects and personalities, and have the help of the entire industry in building out the biggest guild in the metaverse.”

But guilds who are still implementing profit-sharing models have to update how both parties earn now that the blockchain gaming space is moving towards the PlayAndOwn mentality. New mechanics introduced in these economies are reflected in how profit-sharing scholarships evolved.

A good case study for this is how Axie Infinity has transitioned to a new gaming model, through Axie Infinity: Origins, and how the community has adapted.

Initially, the scholarship model from Axie Infinity featured some sort of split of the utility token earnings from interacting with the project. Now that new mechanics have been introduced, and the faucet of $SLP tightened, guilds are now sharing profits from Runes and Charms sales and leaderboard placements.

“The model is much more collaborative instead of competition within the guild,” Seneca-Mu, a VIP manager of an Axie Infinity guild management community, said. “We are acting more as a guild than the typical manager/scholar paradigm. Whether that be asset trading, training and education or decisions on how we evolve.”