- Understanding the basic model of P2A is a different type of token sale; the ROI of their P2A held post-TGE can be easily calculated.
- Which means that the token being used as a “reward”(in exchange for the amount spent) won’t be competitive as before, as it can be predicted and failure to meet the expected return will directly decrease the users and revenue. Moreover, new P2A models are launching daily with higher expected returns.
- The game studio increases token emission to meet the expected return, which will lead to higher sell pressure without adequate token sinks.
- Offering discounted rates on game items sounds like a valid utility, but when total P2A is dead, how can you expect people will spend this token to purchase items?
- With VC funding stuck, the studio has two options to cover its runway:
1. Offer OTC tokens at a discounted rate.
2. Liquidate through a CEX.
- Eventually, the token will be dumped by all channels (players, studio, and VCs), leading to a death spiral.
In summary, current P2A is designed to extract $ value from the market before TGE, leveraging hype and expectation on the token and extracting liquidity from an external venue(CEX), which is unsustainable.