Decentralization empowers consumers, making them participants
The rise of play-to-earn gaming and GameFi has been tremendous in the past few months, but this growth is nothing compared to what is to come. Play-to-earn gaming and its economies will not only dominate the metaverse, but will also strongly impact our physical world. Consumers will no longer be money bags for evil corporations, but they become participants in a wider ecosystem filled with opportunity.
In Q3 2021 games have been the driving force behind the 25% growth quarter-over-quarter for the blockchain industry. Axie Infinity on the Ronin sidechain, CryptoBlades on Binance Smart Chain, and Alien Worlds on the Wax blockchain are among the most prominent titles. The blockchain gaming sector averaged over 754.000 unique active wallets per day during that quarter.
That’s still very little when compared with the traditional gaming market. For example, game platform Steam has around 20 million active users at any given moment of the day. Nonetheless, gaming activity on the blockchain increased 140%. This means getting in the play-to-earn space now secures your spot as an early contributor to this growth. One thing that stands out here, is that there’s not one particular blockchain that rules the scene. The top games each run on different blockchain networks, making the potential to monetize greater than ever.
The play-to-earn gaming industry is setting itself up for hyperbolic growth. In the near future it won’t matter on which blockchain a project launches, as its economy is always decentralized across multiple networks. Furthermore, as transactions become smoother, faster and cheaper, users will have an improved experience and possibly won’t notice their game runs on a blockchain. Simply choose a game that is fun and innovative to you, and find your niche as a play-to-earn gamer in this booming market.
NFTs are bad. Why should I care about this?
Proof-of-Work networks like Ethereum and Bitcoin cost a lot of energy, and that makes transactions so expensive. The carbon-footprint of these networks has an impact on nature, yes. But not every NFT is on Ethereum, and not every NFT switches owners 5 times per week. Alternative blockchain solutions like Polygon, Wax, or IoTeX offer cheaper, faster, and less polluting solutions for transferring value from one wallet to the other. It’s no surprise that the most successful play-to-earn gaming opportunities are not on Ethereum.
Blockchain solutions like Polygon and IoTeX allow users to transfer, claim, or sell tokens or NFTs fast and smoothly. All this with just a fraction of the costs, without the negative impact on our ozone layer. People claiming that every NFT is an artwork, and that every NFT pollutes the planet, are simply misinformed. NFTs have turned digital proof-of-ownership into a reality, a concept every blockchain enthusiast has long advocated for.
So here we have an ecosystem that gives gamers ownership over digital assets: in-game currencies or game assets. Ownership means that these items are A) limited in supply and B) marked as unique by an on-chain token number. This also means that the token owners can swap their items on the marketplace, give them to a friend or sell them for profit. In traditional gaming, the giant game enterprises own and manage your purchased assets. Why should gamers give up their freedom to control what they earned and paid for?
Everybody adds value
We have now described an ecosystem where users can own digital assets and do with them whatever they please. In games like Axie Infinity, Alien Worlds, and Starcrazy, players need to use their NFTs to earn tokens. In turn, they willuse these tokens to improve, or have a chance of improving, their NFTs. Simply put, as long as people earn tokens, these tokens will have value. How much value will depend on the market and functionalities of these tokens. Traditional games creators require their game assets to remain in-app, making their value useless in the real world. This is not the case with NFT gaming. Because these tokens exist on the blockchain, everybody can use them across platforms. Therefore, functionality can also come from other sources outside of the developer’s reach.
NFT gamers could be playing Starcrazy, and earning GFT tokens by sending their NFTs on a mission. Or they could be battling other gamers in Axie Infinity in an effort to win SLP tokens. Other users could offer services in exchange for those tokens. The opportunity for innovative growth here is endless.
In August, Coindesk reported that some shop owners in The Philippines accept SLP tokens, underlining the power of cryptocurrencies. Some players in the Philippines even made their living from playing Axie Infinity alone. Imagine the potential if more gamers followed this lead across different games. This is just one example of how the economy of an NFT game will have an impact on the economy in our physical world.
Do you see the pattern here? The value of a play-to-earn game transcends. Those gold pieces in a video game can become bread on your table. This also means that the value of a game is no longer determined by the profits of its owner: the game company. Instead the value of a game can be determined by its owners: the community.
Axie Infinity’s SLP and AXS tokens have a combined market cap of roughly $8 billion. In addition, the Ronin sidechain holds at least $1 billion in Axie NFTs, $264 million in Land NFTs, and $11.7 million in Land Item NFTs. All calculated against the floor price. That brings the total value of the ecosystem to at least $9.2 billion. This value grows with the community, and thanks to the play-to-earn economy everybody participating can benefit.
A report by Accenture from earlier this year stated that the global video game industry had a value of more than $300 billion. That’s all coming from consumers paying for subscriptions, microtransactions, boxed games, and downloadable content. But according to the End User License Agreement (EULA), gamers generally lease assets until the company pulls the plug. There’s no ownership. No shared direction for growth. Just a company making money.
Now on the other end of the business model spectrum, we have play-to-earn gaming. Here 2.4 million gamers in developing countries and across the globe participate in a gaming economy, while creating more than $9.2 billion in value. Now that’s one game. In traditional gaming 2.4 million sold copies of a game is a small success at best. But when gamers can create a vibrant economy through participation, then only 200.000 active players could have an enormous impact. Not only into the pockets of CEOs and investment companies, but also generating value for everybody involved in every aspect of the game’s ecosystem.
Play-to-earn isn’t only life-changing for people in developing countries, but it’s also revolutionizing the way developers have to think about their economy. Play-to-earn is breaking the third-wall of your computer screen and directly affects the player on a personal level and their relationship with the developer.
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