Ethereum (ETH) Price Drops: How This Affects the P2E Space

Ethereum is still carrying the most highly valued NFT collections and high-rate trades.
  • ETH bullish predictions envision prices touching $5,000 in the best-case scenario.
  • P2E games switch to other networks, still use ETH as liquidity source.
  • OpenSea is the leading Ethereum-based distributed app.

Without Ethereum (ETH), probably there would not be the play to earn model as we know it. Despite the arrival of new networks, it was Ethereum that brought the wide adoption of blockchain tokens and made blockchain games possible. 

This week, crypto markets took a beating, with Bitcoin (BTC) retreating instead of going for a more definitive rally. ETH market prices dipped to $3,227.37 from a recent rally above $3,500. ETH took a hit just as bullish expectations reappeared, and some went as far as to predict a trek to $5,000. 

ETH is getting more scarce as more coins are withdrawn from exchanges in the past few days. 

https://twitter.com/glassnodealerts/status/1511931776754761732

ETH total supply nevertheless reached 120M coins, despite burning more than 2M coins in fees since August 2021. Additionally, more than 11M ETH are locked in the ETH 2.0 smart contract and will be kept there until Ethereum migrates to a new network with proof-of-stake. ETH 2.0 may be faster and invite P2E games again with a more favorable fee schedule

How is the Ethereum P2E Ecosystem Doing

Ethereum not only provides a platform to run the tokens for P2E games, but also the liquidity to give value to those tokens. The total value locked on the Ethereum ecosystem is more than $121B, with funds spilling into decentralized exchanges and providing liquidity for P2E tokens. 

ETH is not only running on the Ethereum network, but also in various forms of wrapped ETH (wETH), as in the case of Ronin Network. Even though Axie Infinity chose to migrate to a new blockchain, it still used ETH for liquidity in algorithmic trading. 

OpenSea is the busiest Ethereum dApp as of April 2022, with more than 38.89K market participants. This hub is the resale point for multiple NFTs, some belonging to busy games. But the games themselves migrate to other networks and Open Sea also lists Polygon and Solana NFT items. 

Some of the outflows from Ethereum are due to games migrating, as Axie Infinity no longer contributes to the usage of the network. Games do not line up among the biggest gas burners on Ethereum. The most significant activity is observed on a bridge smart contract for wrapped ETH moving to and from Binance Smart Chain.

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