From BlockchainGaming Wiki

Play-to-earn is a system wherein players can expect to earn money from playing games. While gambling and professional sports have long been "play-to-earn" in a sense, the term has taken on new meaning in the blockchain era, as reduced barriers to payment and new possible economic models have made it ubiquitous in blockchain gaming. Some typical ways of playing to earn include:

  • Some gaming cryptocurrencies reward users simply for playing or getting achievements in games, even those not designed or intended for blockchain integration
  • Blockchain games commonly hold tournaments, with prizes that have real value. Some platforms also allow betting
  • Games that use cryptocurrency in-game or allow conversion of in-game money to cryptocurrency (more common for regulatory and token economic reasons) enable players to exchange for currency useable in the real world
  • Games with human mining and/or proof-of-play features offer a continuous supply of cryptocurrency and/or NFTs to players, either newly minted or taken from transaction fees

Some blockchain games have been criticized as being not truly play-to-earn but rather "pay-to-earn" due to advantages given to those who make an initial investment[1]. While most blockchain games are free, their economic models usually work similarly to mobile freemium games in that they sell smart property including virtual real estate that often has powerful in-game abilities, making it easier to earn more.

Another problem with play-to-earn systems is AI bots, which may reduce earnings for humans who compete fairly. Most blockchain games use centralized methods to solve this problem, but theoretically it could one day be solved by a decentralized Turing Test.