The Power of Stake-To-Play

Author: FaultProofBen


If you're active on Crypto Twitter (or should I say Crypto X), you've probably seen some discussion about financial incentives and speculation as it relates to Friend Tech.

I think it’s possible to create a successful, non-financialized dapp.

But, like ICOs for tokens, liquidity mining for DeFi, and PFPs for NFTs, Friend Tech’s meteoric rise has once again demonstrated the ability of financial incentives and speculation to serve as an incredible catalyst for growth.

In the world of onchain gaming, we’re beginning to see a trend of projects tapping into the power of financial incentives through what some call Risk-To-Earn, others Bet-To-Play, and the more cynical among us just pure gambling.

I don’t want overzealous regulators breathing down our necks, so I’ve come up with another, perhaps more palatable buzzword to describe this mechanism:

Stake-To-Play (S2P).

As its name suggests, S2P involves players, in some way, shape, or form, putting assets at stake in order to participate in a skill-based, PVP game.

These funds are then put into a prize pool, which is distributed to the winner(s) of the game at its end.

This may seem like a simple concept, but if you look closer there’s much more at play.

(Sorry but I had to include my obligatory intro pun somewhere 😆)

Today, we’re going to see why this is the case by diving deep into Stake-To-Play through looking at:

  • The pros and cons of S2P

  • How onchain games are implementing S2P today

  • The potential unlocks from building on S2P games

Now, let’s get into it!

The Gud and Bad Of Stake-To-Play

The core idea behind Stake-To-Play is not a new one.

Whether it be through Poker, Fantasy Football, or RuneScape people have been putting money on the line in all different kinds of games.

The reasons we do so are pretty straightforward. Not only do we like the chance to win money, but adding stake adds to the stakes, heightening a game’s drama, intrigue, and intensity.

In meatspace, this is largely handled through either sketchy custodians, or in the case of my fantasy football leagues, through everyone Venmo-ing the commissioner and trusting them to not rug.

Haphazard Venmo management is not a scalable solution, so I see a lot of benefits to implementing S2P in onchain games, which I think can allow them to grow far beyond the size they are today.

Some of the key ones are:

  • Self-Custody

Player funds are kept onchain in smart contracts, rather than with centralized, opaque, offchain custodians.

  • Access to Global Liquidity

Onchain games can tap into the capital in the cryptoeconomy, allowing anyone, anywhere to participate, which greatly increases the potential size of prize pools.

  • Sustainable Financial Incentives

Games can tap into the innate desire among crypto users to speculate and take risk without having to rely on inflationary token incentives.

  • Revenue for Builders

Onchain games that incorporate S2P can earn revenue to fund their development and growth initiatives by taking a cut of the total prize pools.

  • Modding Unlocks and Progression Towards Full Autonomy

S2P can help provide the financial incentives and economic activity to sustain a strong modding ecosystem, helping aspiring autonomous worlds become less dependent on their initial creators (more on this later).

While I see a lot of benefits, only a Sith deals in absolutes.

S2P is of course not a fit for every single onchain game, and I think there are some potential drawbacks to implementing it such as:

  • Limited Potential Userbase

Some players may not want to have to risk losing money each time they play, which could limit a game’s potential pool of players.

  • Loss of Fun

The ability to earn money is not a substitute for a good game, and its possible that some players could feel that the pressures of S2P games take the fun out of them.

  • Balance Concerns

S2P games where players can spend varying amounts run the risk of becoming pay-to-win and dominated by whales.

  • Regulation

It’s possible regulators view S2P as unregulated gambling and try to crack down on games that implement it.

Games Using S2P

Now that we have an understanding of the pros and cons of Stake-To-Play, let’s take a look at how its been implemented in practice.

In this section, I’ll give an overview of two skill-based games that have implemented S2P in some fashion, as well as my take on if its on-paper benefits are present in practice.


The Words3 board from their first mainnet game on Base. Unsurprisingly, I was deeply unprofitable.
The Words3 board from their first mainnet game on Base. Unsurprisingly, I was deeply unprofitable.

Words3 is a word-building game built in MUD by Small Brain Games.

Words3 is similar to Scrabble and Words with Friends, as players aim to form words and earn points from doing so.

However, Words3 is really more like financialized Scrabble, and incorporates S2P in that players have to pay ETH for each letter they place in the game.

The price of letters varies throughout the game based on the demand to use them, and are determined by a VRGDA function. At a high level, the VRGDA essentially raises the prices of letters when they are used, and lowers prices when they aren’t.

All the ETH that players spend throughout a round is then placed into a pot, which is distributed based on the true criteria for “winning” the game: Profitability.

Don’t let the landing page rules fool you, the objective of Words3 is to maximize profitability, or earn more ETH from playing words then you spend to create them.

Words3 launched its first mainnet game on Base on August 9, which lasted four days, saw 122 players participate, and accrued a total prize pool worth more than $22K.

My Thoughts:

Overall, I feel Words3’s use of S2P greatly adds to the stakes, novelty, and fun of the game. The changing prices of letters and words adds a new layer of strategy that isn’t present in other word-building games.

With that said, as I discussed in my piece covering the event, I felt that the 4-day game length and the use of VRGDA pricing gave too much of an advantage towards early players who could collect rent from placing the first words. I also feel that there was some risk of pay-to-win given that there were no caps on the amount of ETH each player could spend.

I would imagine it’s on the roadmap, but the ability to create custom games, with different time limits, pricing functions, and spending caps, would greatly alleviate these issues.


Image courtesy of 0xKepler.
Image courtesy of 0xKepler.

Rhascau is a turn-based racing game developed by Minters and live on Arbitrum Nova.

In Rhascau, players hop into a ship and aim to complete a lap around a racetrack.

Like an onchain board game, you do this through turns where you roll a virtual die, which determines how far you can advance your ship. During your turns, you can also utilize abilities to attack and immobilize other ships as well as move further up the board.

Where Rhascau implements S2P is through the ability to have paid games. In paid games, players all put a given amount of ETH into a pot which gets distributed to the winner.

Free games are pretty self-explanatory. Their free, and players don’t have any skin in the game other than their pride.

My Thoughts:

I think Rhascau’s implementation of S2P does a good job of finding the best of both worlds, as it gives players a choice of whether they want to take on the risk of losing their hard-earned ETH.

I think this can help Rhascau, and other games that implement it, appeal to both casual players who want stress-free fun and hardcore ones who want to up the stakes.

With that said, I do think that because there are only four players in a match, Rhascau could stand to implement some sort of measures to protect from manipulation. For example, Rhascau would want to avoid a situation in which the player could join a game more than once and unfairly influence its outcome.

What Stake-To-Play Could Unlock

We have context on the gud and the bad of S2P, as well as how its being implemented in games like Words3 and Rhascau.

Now, let’s explore some of the ways in which I imagine people may build on S2P games, and the implications for doing so.

Third-Party Prize Pools

Onchain games themselves do not necessarily have to implement Stake-To-Play in their base contracts.

An underlying game could remain free-to-play, and instead leave the implementation of S2P prize pools to third-party developers.

Take Sky Strife for example.

In its current iteration, Sky Strife is a free-to-play, PVP real-time strategy (RTS) game. There is no cost to entering a match.

However, it’s possible for a modder to build a “S2P layer” on top of Sky Strife, where players can participate in games in which you pay in ETH to enter.

We could also see communities, brands, and other projects use this to create and sponsor tournaments without needing to handle or custody any funds.

(Perhaps we’ll see WASD create a tournament like this someday 👀)

This could not only create intense, high-stakes Sky Strife games but also create a source of revenue for the developers who build this infrastructure.

Onchain Betting Markets

I probably don’t need to spend a ton of time pitching you all on gambling.

Betting is becoming an increasingly large part of our society. Anecdotally, I can’t count how many of my normie friends bet on sports.

The numbers bear this out too, as gambling revenue in the US rose more than 2x from 2020 to 2022 alone.

I could easily see this demand translating into onchain games, with developers building protocols where you can bet on the outcome of different PVP matches.

As a degen, this would be a lot of fun. However, I imagine there is likely significant regulatory risk in doing this, as well as the need to combat manipulation vectors in order to prevent players from throwing games.

Power Players

The most exciting potential I imagined that could be enabled by S2P and onchain games could help create what I call (for lack of a better term) “Power Players.”

(If someone comes up with a better name for this, please let me know)

Power Players are players who would compete in games with external capital, all of which would be facilitated by smart contracts.

Let me explain this idea by using Words3 as an example.

It seems likely that with the proliferation of bots, many onchain games are going to be increasingly competitive.

Some games, like Words3, are attempting to combat this by placing a focus on making it easier for players to build their own bots by creating botkits.

There are going to be those become amazing bot builders and are great at Words3, but don’t have as much capital as they’d like to play the game. These are our Power Players.

In addition, there will likely be a large subset of players who can’t build any bot, let alone a competitive one. Despite this, this group may still want exposure to the potential upside of winning or placing high in a game of Words3.

Onchain games and S2P enable the needs of both these stakeholders to be met.

For instance, we could see something like a “Yearn of Words3” emerge. For our purposes, let’s call this “Yearn3.”

With Yearn3, a Power Player would create a vault that others can deposit their funds into. The Power Player would be able to use the aggregated capital in this vault to play Words3, and then take a cut of the total profits earned.

This could create a whole new profession of players who are able to make a living off of playing onchain games, as well as provide a new source of returns for yield-hungry degens.

This would be similar to the vision of being able to play games for a living that was floated around in the 2021 bull-market, but via in a sustainable, non-ponzinomic, trust-minimized way.

Furthermore, due to the aforementioned ability to tap-into crypto’s pool of global liquidity, this could help games like Words3 grow their prize pools to millions, or perhaps given the size of DeFi and the gambling industry, billions.

The Power of Stake-To-Play

As you can see, Stake-2-Play is an exciting design trend in onchain gaming.

We’re seeing games like Words3, Rhascau, and others implement early iterations of S2P that while needing refinement, show the power of the mechanism.

I think when combined with the open, composable, permisionless nature of onchain games, it could catalyze growth and unlock a suite of new applications (and perhaps professions).

These were I just ideas I thought of myself, I’m sure there are so many others I haven’t even begun to conceptualize.

All in all, I’ll be watching closely to see how S2P evolves and is used over the coming months.

And of course, I’ll certainly be staking-to-play myself.

Thanks for reading!

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Have a great weekend and see you all on Monday!

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