As cryptocurrency and DeFi continue to impact the world, several industries are working hard on ways to innovate with decentralized technology. The gaming industry is one of the latest to integrate blockchain, crypto, and NFTs, especially with the growth of the metaverse. The technology has transformed the way gamers trade in-game assets, characters, rewards, and so much more by integrating DeFi, NFT technology, and fundamental blockchain concepts.
The new play-to-earn (also known as ‘GameFi’) concept allows users to convert their in-game assets and rewards to real money that can be spent in the real world. The GameFi world has grown significantly, and it is predicted to have a huge impact on the worldwide gaming market, which is expected to reach $314.40 billion by 2026. Reputable investment firms are interested in investing in GameFi initiatives because they perceive it as a viable entry point for new consumers into the worlds of blockchain and Web 3.0. During Electronic Arts’ recent earnings call, CEO Andrew Wilson suggested that while the market for NFTs and play-to-earn was still early, it did point to the future development of gaming. “The play-to-earn or the NFT conversation is still really, really early…there’s at some level, a lot of hype about it. I do think it will be an important part of the future of our industry on a go-forward basis,” Wilson added.
Solana Ventures, FTX, and Lightspeed recently announced the formation of a $100 million joint GameFi fund. This fund will be intended to invest in GameFi initiatives that utilize the Solana blockchain. BigONE would like to discuss the current condition of the GameFi industry with our users in this article and how the play-to-earn model can help onboard the next 1 billion people to blockchain and the metaverse.
The Rise of ‘Play-to-Earn’ Games
Play-to-earn games have disrupted the traditional gaming market by allowing users to earn money for completing pre-determined objectives while playing games. According to a study, more than 75% of online gamers wished to exchange their virtual assets for a currency that could be utilized across multiple platforms. The ‘play-to-earn’ model has altered the structure of the gaming industry. Players can trade and exchange their virtual assets on various exchange platforms.
Prior to the advent of the Play-to-Earn model, in-game tokens and assets had no real-world value. Because the reality is that the commercial first movers in gaming had their own proprietary currencies. What makes GameFi so attractive to the new wave of gaming developers is that it can be automated without any centralized intervention. This means that the play-to-earn model has long-term attractions, allowing game developers and players to invest time and money, knowing the underlying blockchain platform won’t change without community consensus. “Today, only a tiny fraction of online users and gamers even have a crypto wallet, and almost no brands and games issue NFTs. But irrespective of multi-month dips in the blockchain/crypto/NFT economy, we see more of these groups embrace blockchain-based experiences each month. This produces a virtual cycle that drives more users to register a wallet, mint an NFT, or integrate crypto assets”, concluded metaverse expert Michael Ball. In other words, the incorporation of cryptocurrency allows users to add value to their in-game assets. Traditional games were only for entertainment and thrills; the play-to-earn model introduced the benefit of earning money while still having fun.
Axie Infinity’s Leading Role
The ‘play-to-earn’ games have become a popular entry point for users new to the cryptocurrency space, thereby promoting the adoption of blockchain technology. The third quarter of 2021 saw a rapid increase in GameFi revenue thanks to Axie Infinity’s gross income of $781.6 million. The Axie Infinity token also reached an all-time high of $155 after starting the year with a value of $0.54.
The metaverse-powered gaming project enables players to breed, raise, and trade cute digital pets called Axies. The idea of the game is to get small love potions (SLP) to create new Axies. In turn, SLP is itself a crypto token that can be sold on an exchange, with top players earning up to 1,500 SLPs a day. As a further revenue stream, the game also allows you Axie can also be sold as an NFT, plus other in-game items. The monthly trading volume of all Axie Infinity NFTs is around $170 million. Finally, there is another cryptocurrency from the game called the Axie Infinity shard (AXS). Holders of AXS can vote on governance, allowing Axie Infinity players to vote on proposed upgrades, and players can also use it to stake in the community treasury.
What’s more, the business’s core revenue and the performance of AXS are closely correlated. “The interplay between own Axie’s revenues and AXS price is noticeable,” wrote Jeremy Ong and Jayden Andrew, analysts at crypto-focused research firm Delphi Digital. “This makes sense given the majority of revenues come from Axie breeding fees paid in AXS to the treasury, which significantly decreases the circulating supply of AXS – causing a supply-side squeeze.” Data intelligence firm IntoTheBlock noted that the number of Axie Infinity token holders has grown by 400% since November 2020 – up from zero to over 16,000 addresses.
The rapid growth of the GameFi sector has piqued the interest of various investors, who want to profit by contributing funding to develop ‘play-to-earn’ games, most notably the Solana-based GameFi fund. While Facebook’s name change to Meta and its vision for a metaverse future is also driving the gaming market. It appears that AngelONE, the crypto venture investment arm of BigONE Exchange, has gone a little ‘meta’ itself by listing Enjinstarter (EJS), a GameFi launchpad dedicated to growing “a thriving ecosystem for blockchain gaming.” The aim of Enjinstarter, built on Enjin’s jumpnet blockchain, is firmly grounded in the play-to-earn global community, designed to introduce new ways for players to earn crypto in a fun, engaging way. The Enjinstarter listing successfully raised 100% of its target on November 8. AngelONE partner Susu Gu, said that supporting GameFi projects such as Enjinstarter was nothing new, as it fell into their mission to find quality investments for crypto investors. However, the success of games such as Axie Infinity, coupled with the long-term vision of a gaming-led interoperable metaverse, had prompted investor interest. “While this will, in turn, bring in more funds into this field, as the $100 million joint GameFi fund shows, it’s not a return to the days of ICOs in 2017 and 2018 where a white paper and a website was enough to attract funding.”
Chairman of BigONE Exchange, Anndy Lian, said that with so much money invested in GameFi projects, it would soon evolve from a sector to an industry in its own right. “Not surprisingly, there are companies attempting to jump on the GameFi bandwagon to cash on it. At BigONE we believe that GameFi is not a passing fad but integral to the way the gaming-led metaverse will evolve by providing a better gaming experience for players due to its increased level of security and the opportunity to make money.” Lian added that despite the recent Naavik study detailing the slowdown in the average earnings of players, the game was likely to lock in long-term user retention so long as it could continue to deliver GameFi earnings to players.
The GameFi space is ever changing. New challenges and new projects pop up daily for example DeFi Kingdoms, a game built on the blockchain, designed with useable NFTs has been a strong contender to Axie’s supremacy. Or game platform enabler like PlanckX who is able to help traditional games get into the play-to-earn space.
I am hopeful to see more growth in 2022. Let’s review this in December to see if it comes true.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.