10 Red Flags Checklist
Part of our mission is to educate people about all aspects of play-to-earn games. Here is a checklist of 10 red flags we recommend you look out for when doing research and potentially joining a new play-to-earn game. If the answer to a question below is ‘no’ for a game, then that’s a red flag.
Some games launch their token first, and the ‘game’ a few weeks later. They do this so they do not need to invest their own money to program the game. Instead, they use the money from the private and public token sale, to program the game, or even sometimes start from scratch developing a game after the token launch. They hire about a dozen developers who need to rush the programming of a new game in a very short amount of time. Can you imagine the amount of miscommunication, time pressure and mess going on inside such a large, brand new team, and the amount of bugs/exploits resulting from it?
Because some teams rush programming a game after the token launch, as explained in the first point, they do not have the time to test the game. As a result, many bugs appear while players have invested and are already playing the game. In some cases, it opens an opportunity for hackers to find exploits and run with the investments of the players.
To give you a couple of examples: There was a game that wrote in their whitepaper that they had “simulated and mathematically tested” their game, with “stochastic environment simulation software”. Then a few days after launch, they wrote an announcement that they had to change their whole economic rules, because they forgot to take into account a benefit for people to create large groups of NFTs. Even if they did a stochastic simulation… Shouldn’t the results of their simulation have predicted this? Moreover, it was game-over for everyone a week later. There’s also been countless cases where projects who launched without their game ready have faced constant delays, causing dumps on the market which potentially lost their investors money and severely damaged their projects growth. Too many projects just write anything in their whitepaper to attract buyers, but in reality it’s all bull****. We recommend you check if the actions of the development team are aligned with what has been promised in writing. If not, it's a red flag.
Many games have many grammar mistakes in the whitepaper and/or a whitepaper that is very hard to understand for new players. Some websites look like their grandmother has written it.
Many P2E games are hosting large presales of their in-game NFTs before the game is even live. This means players’ money is given to the development team instead of being injected into the economy, which is extremely damaging. It creates huge selling pressure from the beginning (from NFT generated rewards) and takes away the majority of the early buying pressure as people don’t need to buy the token to mint NFTs.
Many P2E games are now being developed off-chain. This means they are hosting projects on private servers where players do not have ownership over their in-game assets. As a result, game functionality can be stopped at any moment, players can be blocked from withdrawing their earned rewards, important data can be destroyed, and there’s zero transparency for players as no transactions are recorded on the blockchain.
A potential warning sign for new projects is when teams refuse to verify their identities and choose to remain anonymous. As no one knows who they are, it is impossible for them to be held accountable for their actions in cases where they perform scams and potentially run off with investor funds instead of fulfilling their promises.
In many games the developers are unreachable, hiding behind excuses and not communicating directly with their community through Discord or Telegram. Obviously, that's a red flag, because the players have no insight into what is actually happening with the game, and/or hiding makes it easier for the developers to disappear. Also, research how the team has communicated in the past, especially in stressful situations, because this might give a good prediction of how they will communicate in future.
The reward pool for P2E games will most likely contain the most amount of tokens. The ownership of this wallet should be managed extremely responsibly, using the protection of a multi-signature wallet that requires authorisation of at-least two or three trustworthy individuals who should have completed a KYC with a professional auditing company.
Some other play-to-earn games have hidden functions in their smart contracts that allow devs to mint endless amounts of tokens, or change the sell tax to high numbers and effectively create a ‘honeypot’, stopping people from selling their tokens. Also, if the team has not taken any specific precautions against exploits, then it’s obviously a risk to invest.
When you research a game, and you can answer all of the above questions with “yes”, then it’s a good sign. Do the research yourself, and you’ll find that Crypto Legions scores 10/10 on the above checklist.