Security and Play to Earn Games: How to Avoid Losses
Play to earn games drove the adoption of cryptocurrencies for a mass audience. It was games like Axie Infinity that brought blockchain tokens and wallets, turning them from esoteric niche investments to everyday technology.
But the rise of decentralized projects also coincided with a growth of exploits and losses. Additionally, many new users entered the world of crypto with little knowledge of price volatility, scam projects, and risks of total loss. Yet play to earn games are very appealing and may be accessed safely even by players that rarely used crypto before.
Here are the top 5 tips for surviving and thriving in the play to earn world.
Don’t Fall for Hype
The P2E world contains anything from AAA-grade games to quickly slapped together versions, and sometimes a thinly veiled cash grab. The best approach is to start with already active games that have at least an open beta product. Projects that demand an upfront investment in tokens or playable characters, with no clear date for launching a game, may be riskier.
The best approach is to play games with a free-to-play version and only use the blockchain aspect if it feels intuitive and is easily integrated.
Practice Good Wallet Awareness
The wallet is the simplest yet most risky feature in using P2E games. In 2022, the usage of wallets has been simplified, and most players will choose one of the many browser extensions, for instance, MetaMask.
The first thing about a wallet is to never lose the private keys or the 12-word seed phrase. An immediate second is not to compromise that phrase and keep it safe.
A wallet can be set to connect automatically to games. The best approach is to disable the feature and only connect the wallet manually to trusted sites. Otherwise, a malicious site may run an automated smart contract to sign transactions with the wallet. This way, holders of NFT collections have been robbed in the past, being unaware they are signing away their non-fungible tokens.
Keep Dedicated Wallets for Each Game
To avoid having a wallet with too many resources, it is best to use a new wallet for each game, and the assets to be just enough to play. That way, even if the wallet is lost or the game is compromised, the losses will be limited. For instance, recently the Axie Infinity game suffered significant losses of around $630M, affecting almost all users that deposited funds to the game.
Some games will require a different wallet from the beginning because they are on different blockchains. Be aware of the assets and how to set the transaction – sending a token to the wrong blockchain may lead to losses. Wallets have been made easier, but there is still a need to input a transaction address. Make sure you never send funds to a smart contract – the address looks the same as an end recipient, but the funds will be lost.
Be Careful About NFTs
Buying NFT collections is also a risk. First, make sure you are buying the right items – a verified checkmark or an official website is the best source. Never click on links in DMs or answer solicitations to buy NFTs from unknown actors. Use official marketplaces such as OpenSea.
Protecting the wallet containing NFTs as explained above is crucial. If you want to keep the items for the longer term or use them as investment, it may be better to store them in a dedicated wallet.
Be Careful About Market Risk
The assets and game items on the blockchain are a powerful tool to bring real-life valuation to gaming. However, there are no guarantees that a game’s token will preserve its value. Be aware of how to trade in the token to lock gains, because crypto-assets can still lose up to 90% of their value within days.
Also, NFT items are not always liquid and easy to flip, so be sure you know why you are acquiring the items and what benefits they will bring within the game. During peak times, games like Axie Infinity commanded valuations of hundreds of thousands of USD for their most prominent playable NFTs. But now, even those legendary items cannot bring much higher game earnings.
Play to earn games can also be time-consuming while promising relatively low rewards. Make sure you understand the expected returns before investing in a game. Check the project’s social media activity and look for complaints and problems from the community.
Joining a play to earn game may also require the purchase of crypto assets. Tokens like ETH, BNB, MATIC, SOL, and others are needed to pay for transactions within the game, for moving NFTs, and for exchanging the rewards.
Play to earn game descriptions are not recommendations for investment. Do your own due diligence before buying any digital coin or token, investing in a game or an NFT collection. Using digital coins and tokens can lead to losses due to technical reasons or market risk.