Play, Earn, and Engage: The Motivational Influence of Crypto-Economic Models on Mobile Game Engagement

This study explores the impact of the Play-to-Earn (P2E) crypto-economic model, which rewards players with cryptocurrency tokens for their game engagement, on player behaviors. Industry experts and players have questioned the traditional assumption that financial incentives invariably enhance desired behaviors, particularly in gaming contexts. By utilizing a unique dataset from a prominent global mobile game provider that implemented the P2E model in several countries, except where legal restrictions apply, we conducted a Difference-in-Differences analyses, augmented by Coarsened Exact Matching, to evaluate the effect of the P2E adoption. Our results reveal a 45.35% reduction in gameplay time post-P2E implementation, suggesting that financial rewards can, counterintuitively, diminish engagement due to the crowding out of intrinsic motivation. The study extends our understanding of how extrinsic and intrinsic motivations interact and influence behavior. The findings emphasize the need for thoughtful design of crypto-economic mechanisms to balance user engagement and service profitability.