> For the complete documentation index, see [llms.txt](https://capinfra.gitbook.io/cap_infra/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://capinfra.gitbook.io/cap_infra/market-challenges-and-strategic-opportunities/the-sustainability-crisis-of-gamefi-1.0.md).

# The sustainability crisis of GameFi 1.0

The core of the first generation of P2E games, including Capverse 1.0, was the "Play-to-Earn" and "Invite-to-Earn" model. Players earned in-game points (such as LAND) through gameplay (such as combat and completing quests), and then exchanged them for governance tokens (such as $CAP) with market liquidity, essentially resulting in an unlimited supply of tokens.

The fundamental flaw in this model lies in its endogeneity of economics. Token generation originates from gameplay, while its value depends entirely on market expectations of future new player inflows. This creates a fragile, reflexive cycle:

* The more players there are, the more tokens are generated (inflation).
* To maintain prices, more new players (new buyers) are needed to absorb this inflation.
* Once new player growth slows, selling pressure will outweigh buying demand, causing the token price to spiral downwards and destroy the game's economy.

Its fundamental flaw lies in the fact that without the injection of real external value, the economy cannot achieve a sustainable closed loop.

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