GameFi to Disrupt Blockchain Gaming
VYSYN Weekly Release #90: GameFi introduces fresh earning opportunities prompting monetization rethink
As NFT and DeFi trends show no signs of slowing down anytime soon, the market is waking up to another trend – GameFi. This innovative sector of the digital asset industry is disrupting the massive billion-dollar gaming industry while providing exciting earning opportunities for online gamers worldwide.
This week's edition of the VYSYN Release will give a comprehensive overview of the GameFi sector and what is fueling the current GameFi trend. We will also highlight some of the top projects that are driving the trend and how they might evolve in the future.
GameFi opens new doors
Gaming finance or GameFi is a unique blend of DeFi, NFTs, and gaming. It combines the potential of these three to create a virtual environment where players are incentivized for gameplay. Also dubbed the play-to-earn model, GameFi projects reward players with digital assets that can be used to purchase more in-game assets and converted to real-world stores of wealth.
Most of these games are integrated with DeFi tools, including loans, farming, tools for issuing new tokens, algorithmic stablecoins, and more. They also contain in-game assets that represent real-world, valuable NFTs that players can trade on marketplaces for popular currencies or fiat. These NFTs can come in the form of avatars, lands, costumes, and they offer holders proof of full ownership of the items. Several large institutional investors have made massive bets on GameFi. In September 2021, Huobi Group launched a $10 million fund to accelerate GameFi development efforts.
There are interesting innovations happening right now with decentralized platforms giving gamers the opportunity to earn more money than ever. For instance, Nakamoto Games, a play-to-earn gaming ecosystem offers different gaming experiences for gamers and game developers, instead of a single game.
The ecosystem allows gamers access to several games on the platform while developers gain access to a vast array of tools for launching their games. The platform is designed to enable all participants to generate income while playing or developing and launching games. The Nakamoto ecosystem is powered by its native token, NAKA. There are several other play-to-earn projects that are driving the GameFi trend and attracting millions of gamers worldwide. Let's look at three of them.
Axie Infinity is perhaps the largest and fastest-growing GameFi project in the industry. Axie Infinity is a Pokémon-inspired play-to-earn game that allows players to collect, breed, and battle with furry characters called Axies. Unlike Pokémon though, these Axies represent one-of-a-kind NFTs. Developed by the Vietnamese company, Sky Mavis, Axie Infinity runs on the Ethereum blockchain with the help of Ronin, a side chain that reduces transaction delays and gas fees.
Users must purchase Axies to play and can breed their Axies to attract higher market values. The platform currently boasts a rare and expensive collection of NFTs and several earning opportunities. Due to its high earning potential, households in the Philippines and Indonesia adopted it as a full-time job during the pandemic.
Gamers complete activities in the Axie universe and are rewarded with Smooth Love Portion (SLP), the platform's native ERC-20 utility token. SLP is used to breed more Axies and can be traded on exchanges. The game also allows players to earn Axie Infinity Shards (AXS), another native ERC-20 token. The AXS tokens serve as governance tokens and give players the right to vote for key decisions. AXS is currently trading at $52.03.
GameFi projects pioneering the Metaverse
Decentraland is an Ethereum-based decentralized virtual world where players are allowed to create micro-worlds and trade virtual properties. The project offers players virtually everything that is obtainable in the real world, from fast transport systems, art galleries, and digital skyscrapers to hotels, casinos, and movie theaters.
Decentraland allows users to build and develop their virtual lands on the platform, dubbed LAND. There are 90,601 plots of LAND and each one is a unique NFT. Once purchased, players can create virtual cities with the LAND NFTs and form large communities with other players.
In 2021, a Tokens.com subsidiary purchased a digital plot of land on Decentraland for a whopping $2.4 million. Recently, the largest bank in the United States, JP Morgan, revealed that it had established a lounge in Decentraland, dubbed Onyx Lounge, making it the world's first bank to enter the metaverse.
Players have the freedom to choose whatever they wish to engage in on their LANDs. They can also involve themselves in in-world transactions and monetize the content and applications they build. Every transaction carried out in the virtual world is powered by Decentraland's native token, MANA. The token facilitates the purchase of LAND, estates, avatars, and other in-game assets that players need to develop their virtual worlds. With a market cap of $4.47 billion, MANA is currently trading at $2.43.
Gods Unchained is a tactical, free-to-play card game that integrates unique elements of NFTs into traditional card gaming. Players can amass cards either by purchasing them from other players or winning player-versus-player (PVP) battles where the winner is determined by the quality of cards and the gaming skill of players.
Every time a player wins, they receive experience points that move them to the next level and a pack of cards to add to their collection. Each card is an NFT based on the Ethereum blockchain, an ERC-721 token, that allows players to have full ownership of their in-game assets.
Players can choose to trade their cards on the platform’s native marketplace or the open market. Those who choose to sell their cards within the game ecosystem will be paid using the platform’s native token, GODS. The ERC-20 token is also used to create an NFT and make purchases on the platform. GODS is currently trading at $1.27.
A few barriers, but a rosy future for GameFi
GameFi is currently one of the hottest trends in the digital asset industry and several investors are clamoring to get in. While supporters believe that GameFi is the future of gaming, these projects are still struggling with widespread acceptance.
One of the major hindrances to wider adoption is the high entry barrier to most projects. Although several genres of blockchain games are constantly being developed, the biggest appeal of these projects is the prospect of making money. However, to participate in these games, players have to spend large amounts of money to purchase in-game assets.
For instance, Axie Infinity requires players to purchase three characters before they can play. This can cost anywhere from $100 to $1,500. Rare characters often cost much more. Hence, most users find themselves making exorbitant purchases to play these games, and the rewards do not come easily.
Another roadblock to mainstream adoption of GameFi is the stringent regulations placed on the sector by the authorities of some of the biggest gaming markets. The Japanese government is convinced that GameFi projects are a form of illegal gambling. South Korea prohibits the conversion of game assets to cash, and China has imposed a blanket ban on all digital asset transactions.
While these concerns are valid, analysts and GameFi proponents have opined that the sector is still in the earliest stages of its development. Hence, there is enough room for growth. With the influx of large institutional investors into the space, analysts are optimistic about the future of gaming going down the GameFi route.
About VYSYN Ventures
VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocation, versatile marketing support, and tech assistance.