PlayDough Technologies has raised $2m of funding as it seeks to leverage the rapid growth of the “play-to-earn” gaming industry. The platform describes itself “as a conduit that democratises access” to the play-to-earn gaming economy, which has become a mainstay for millions of people worldwide, particularly in developing markets.
While Western gamers may be less familiar with the play-to-earn model – beyond the top end of competitive e-gaming – such games are taking off at pace in many developing markets, leveraging blockchain technologies. The idea is that gamers are rewarded for time spent playing in virtual currency that can be spent within the game, in other games that accept the currency, or exchanged for alternative currencies. They may also receive non-fungible tokens (NFTs) that enable them to permanently retain rewards and achievements won in the game – a new weapon, say, or costume – for use elsewhere, or for sale.
The best-known example of the genre is Axie Infinity, in which players must build a team of three monsters – known as Axies, after axolotls – which they then use to complete challenges and fight battles. Each Axie is digitised as an NFT, plus players earn Ethereum-based cryptocurrency while they’re playing. Axie Infinity has attracted significant numbers of players across Asia, particularly in the Philippines, where it increasingly provides a significant proportion of some people’s income.
The difficulty with this model is that players must make an initial investment in order to begin playing – in the case of Axie Infinity, PlayDough co-founder Mehul Khati points out that it now takes around $3,000 to get started with three Axies. This is where PlayDough enters the picture – it has invested directly in Axie Infinity, buying up Axies and breeding more of them. PlayDough users can then adopt its Axies to play the game, splitting the earnings they receive; PlayDough takes around 30% of the income generated.
“We think our space is right at the centre of some powerful trends,” Khati explains. “We’ve seen the growth of gaming, of collectibles, of the metaverse and of decentralised finance, and this at the nexus of them all.”
Effectively, PlayDough operates both as an investment platform, enabling users to build portfolios of gaming NFTs, and as an enabler of the gig economy, ensuring that new players can get past the upfront costs they must incur in order to start earning from the game.
It is a fast-moving area where some questions are still to be answered. For example, there has been some criticism of the model as akin to gambling; inevitably, the value of a virtual currency on a game rises and falls, which exposes players to volatility that could be problematic if they’re relying on the income. And as with other blockchain applications, there is also concern about a lack of regulation in the sector; there is no requirement on games providers to consider anti-money laundering regulation or know-your-customer rules, for example.
Nevertheless, Khati is convinced that this is a market where there will now be rapid growth across many geographies. “Gaming seems to be achieving the borderless ideals of cryptocurrency at full speed,” he says. “While building a community around PlayDough has been satisfying, the ability to look at play-to-earn as a yield generation strategy has also been a motivator for the trader in me - we have built valuation models, breeding strategies and training programs for our community to be able to generate the highest yield possible.”
In time, PlayDough’s users will have access to a much wider range of games through the platform, which ahs already begun building inventory in titles such as Sorare and Gods Unchained. Khati sees huge potential for “cross chain universes”, where currencies and NFTs can be moved from one game to another.
The company’s investors are also excited. Shamyl Malike, CEO of Westridge Markets, the lead investor in PlayDough’s founding round, says: “We think that PlayDough is building at the intersection of four of the strongest trends in the blockchain space.”