Forget Play-to-Earn – The Future Of Web3 Is Data-to-Earn

Blockchain gaming is edging closer to the mainstream. Despite last year’s turbulent market, bigger studios and better games are entering the fray, offering much-needed maturity to the nascent sector. The result is not just more innovative gaming experiences but a greater move toward intent-based and user-centric applications.

Games and gamers are paying particular attention to digital ownership in this next wave of web3. For players, they want to own their identity and accomplishments. For gaming, it wants better ways to connect with audiences and understand who’s engaging.

Enter data-to-earn. An evolution beyond play-to-earn, this concept unlocks passive income opportunities for players who opt to share their data with brands, representing a significant departure in how online identity can be monetized. Let’s explore.

Gaming and the blockchain, today

Until now, play-to-earn has been the predominant earning method in blockchain gaming. Players earn potentially valuable in-game assets and cryptocurrencies for completing tasks, like winning battles or progressing through levels. The game type found traction after the COVID-19 pandemic with developing countries like The Phillippines embracing play-to-earn to generate additional income.

But this game segment is far from perfect. If the in-game economy is unbalanced or poorly designed, it can lead to problems like inflation. And, as the name implies, play-to-earn obligates gamer engagement. If they don’t play, they don’t earn. Forcing play is not sustainable and removes the sense of what games are supposed to be: fun.

Data-to-earn takes a different approach. New web3 protocols and platforms enable users to bind their gaming, social media, and various other accounts to the blockchain. The result is two-fold. First, users can unite their digital identities and show their accomplishments, assets, and history in one place. Second, they can choose how their data is used. If they opt-in and share this data with brands, users can passively earn when brands leverage their on-chain and off-chain data.

This inverts the power dynamics of data ownership. Rather than personal information being trapped in siloed databases, leading to a fragmented user identity scattered across various platforms owned by corporations, users take back control of what’s theirs. The data-to-earn era lets them decide how to best aggregate and earn from their information.

What’s In It For Games And Gamers?

Games and gamers fully support this concept. For the game industry, data-to-earn solves crucial challenges. Regulations like Europe’s GDPR and California’s CPA, coupled with restrictive measures from tech giants, make precise user targeting difficult. This has led to revenue losses for ad networks in recent years. For example, Unity lost $110M in revenue and a $5B market cap following the introduction of Apple’s IDFA.

By directly accessing user data with consent on the blockchain, the gaming ecosystem gains comprehensive and compliant information for better user targeting, attribution, and understanding—all in a trustless manner. Major web3 publishers and distributors are already making this possible. For example, BNB Chain, Avalanche, and Ronin, the gaming blockchain from the masterminds behind Axie Infinity and Pixels, are connecting studios with data toolkits to better identify potential users, retain existing players, and offer rewards for their data.

For gamers, their data has been misused and leaked for years. Data-to-earn not only restores privacy but also introduces new revenue opportunities. Sharing preferences, ownership, social relations, and past experiences directly with brands can earn users passive income as well as personalized services. Authorizing and linking more accounts, and actively engaging with brand-user interactions, can boost potential income even further.

A Paradigm Shift in Web3

The things users get up to online—from social media to online shopping and, of course, gaming—are key parts of their identity. So, why not make it an integrated element of their digital identity too? Big tech has shown time and again that it isn’t an appropriate custodian of this information. Now, as the world evolves from web2 to web3, it’s time to consolidate on-chain identity and give this data back to the rightful owner.

This is most exciting in gaming as there’s a use case for the industry to join the revolution. It needs high-quality data on its user base to inform decision-making and improve efficiencies. Working directly with gamers gets around restrictive regulations and cuts out third-party data brokers. And, uniting digital identity allows gamers to show off their achievements and assets—a key part of gamer culture that subsequently increases ecosystem engagement.

Play-to-earn will still have an important place in blockchain gaming, of course, and it will be interesting to see how gamers mix and match the active and passive revenue styles. But data-to-earn promises a revenue and cultural paradigm shift as web3 goes mainstream. Watch this space.