What are the uses of smart contracts in P2E games?

Play to earn (P2E) gaming has become one of the most important use cases in the Web3 ecosystem. The success of games like The Sandbox and Axie Infinity, as well as other games in the same genre, showed P2E’s potential

In the traditional gaming industry, games usually have centralized operations. Thus, there has been less innovation in the industry, which has had an effect on how technology has grown in the years since.

Since blockchain technology and smart contracts are becoming more popular and valuable, game developers have the chance to change the way games are made. Check out how P2E games use smart contacts to give players more benefits.

If blockchain technology sounds new to you, here’s a comprehensive guide to blockchain and its uses

What is a smart contract?

A smart contract allows a digital transaction to be handled instantly and without interruption. The technology behind these contracts is the blockchain. The blockchain is a distributed ledger that serves as the basis for digital currencies like Bitcoin and others. 

Since blockchain is a decentralized system, smart contracts could give authorized parties access to the data right away without the need for a middleman. As a result, the smart contract takes care of the tasks automatically.

Smart contracts can also be used to control the distribution of assets based on whether or not certain conditions are met. Compared to traditional or centralized processes, they are safer, faster, and cheaper.

For the smart contract to be legally binding, each of its terms, rules, and penalties must be followed. After receiving and verifying the data as input, a smart contract will do what is written in the contract. 

Uses of smart contracts in P2E gaming

In the past, consumers have always put their trust in attorneys and financial institutions to handle legally binding papers like contract agreements. Now a smart contract has the power to execute commands automatically without relying on intermediaries. 

Smart contracts are becoming very useful in the legal and financial fields since they can speed up processes and make it easier to automate routine tasks. In addition to that, the gaming industry was able to fix some of its problems, thanks to smart contracts.

Crypto games are becoming more and more popular due to their decentralized and transparent nature. Check out the following uses of smart contracts in P2E:

Creation of digital assets

One of the essential uses of smart contracts is to create NFTs. For example, the smart contracts used in CryptoKitties can often lead to the birth of unique breeds of kittens. Smart contracts may also be programmed to create rare breeds, which have higher prices.

Fraud prevention

Hackers can’t get into blockchain networks because cryptography and consensus rules make it hard for them to do so. If mistakes are made in smart contracts and hackers are able to take advantage of the holes, then the blockchain network could be open to attack. In 2016, the Ethereum DAO had a situation that was similar to this one.

Hackers took advantage of a flaw in the DAO smart contract, which gave them access to Ethereum’s DAO. The hackers were close to getting away with 3.6 million ETH, which was worth about $70 million at the time. Fortunately, they couldn’t carry out their plan because the blockchain is public.

In a public blockchain, anyone will see each transaction. Thus, it didn’t take long for the Ethereum community to find out about the exploit. A hard fork was done on Ethereum to stop more money from being lost.

Even though using smart contracts and blockchain technology together makes for a reliable system, it is still the developers’ job to make sure that their smart contracts have solid coding.


The use of smart contracts is also crucial to the way a P2E tokenomic works. As the player moves through the levels and wins more tokens, the game’s economy needs to be able to stay in balance. 

With the help of smart contracts, the participants’ progress and the number of tokens can be tracked and controlled. Because of this, the chance that a player will lose tokens increases as the difficulty of the levels they play grows.

In-game asset ownership

The ownership of in-game assets can be made better by using smart contracts and blockchain technology. This is done by making the game more open and fair and making sure that the rules in place are followed. 

With the help of smart contracts, all transactional data is handled in a way that lets people earn money. This way, transactions can be set up ahead of time and done automatically.

Smart contracts also don’t need any kind of centralized authority to work. Because of this, no one can change who owns these assets privately or change the public IP address that is being used to store the in-game content.

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