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Explained Easily: Why do Blockchain Game Tokens have Value
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Why do some blockchain game tokens fail, and why are others successful? At the end of these article, you would know the answer to this question.
Introduction
Over the years, the blockchain gaming space has seen the rise of several projects. Some of these projects still stand tall like giants, while others have crumbled, living dust and despair in their wake.
There are over 1550 blockchain games dotted worldwide today. With the growing popularity of these games, the numbers will increase in the coming years.
The popularity of blockchain games tokens is because of their gaming finance. Another definition of gaming finance is GameFi. The GameFi word was coined on September 2020 in a tweet by Andre Cronje, the CEO of Yearn Finance.
Gaming Finance (GameFi)
GameFi means the combination of gaming with blockchain technology and its product.
Examples of blockchain technology products are Non-Fungible Tokens (NFTs), Tokens, etc. All blockchain games utilize the GameFi concept. In the sense that there is a virtual world that has its tokens, assets, game avatars, and characters.
NB: Not all games have avatars. Some use characters like animals, toys, etc. It all depends on gameplay.
Blockchain Game Tokens
The tokens and assets in these virtual worlds represent the finance of these games. The tokens are the currencies of these games. Different games have different ways to own these tokens.
- In some games, one can buy these tokens from external exchanges and, at the same time, earn the tokens as rewards for participating in in-game activities.
- These tokens can buy in-game assets like land, avatars, characters, items, etc. They are also used to vote on game decisions and play mini-games in these virtual worlds.
- The assets (Lands, items, etc.) and tokens found in these games are NFTs: Several digital marketplaces support the exchange of game NFTs for fiat or digital currencies.
NB: These marketplaces are internal (present in the virtual world) and external (present outside the game). It all depends on the player’s choice of exchange.
In summary, blockchain games have their economies (buying and selling of game assets) and currencies (native tokens). These blockchain game tokens are helpful to players in and out of these games. Hence the reason they are known as GameFi (Gaming Finance).
What brings about the success of blockchain game tokens?
The success of blockchain game tokens relies on several factors, such as gameplay, players’ incentives and revenues, game community, game economies, etc.
This article will only look at how game economies influence game success.
Game Economies
Economies is a social science focusing on producing, distributing, and consuming goods and services.
Game economies are resource distribution, acquisition, and expenditure systems within the game world.
- In casual video games, game designers manage these resources, and the game economy only exists virtually.
- But in Blockchain games, these resources are managed by players’ activities, and the game economies exist virtually and in real life.
- Virtual economies involve players interacting with fellow players or the virtual environment to get rewards, assets, tokens, avatars, etc. In comparison, real economies include players being able to exchange rewards, assets, blockchain game tokens, etc., in marketplaces for digital and fiat currencies (real-life money).
The economy of blockchain games relies primarily on their tokens because these tokens influence most in-game activities. For this reason, game developers should take extra care while planning the strategy their game native tokens would employ.
Below are two token strategies game developers are utilizing in blockchain games.
- Usage Strategy
- Availability Strategy
Usage Strategy
This strategy involves the in-game uses of these tokens. How valuable are these blockchain game tokens to players in the game during gameplay and in-game activities?
Governance: One of the selling points of blockchain games is players can make decisions that would influence gaming development and operations. Players possessing a certain amount of the in-game native tokens can participate in decision-making.
Voting rights are given to players who hold these tokens, hence why the tokens are called governance tokens.
Some games have two tokens. One of the tokens would have governance power, and the other would possess purchasing power or aid gamers during gameplay. You can find this example in Axie Infinity, where the AXS tokens are the governance tokens, and SLP tokens are for breeding Axies.
Purchasing power: Blockchain game tokens are generally in-game currencies used to purchase in-game assets. These assets are NFTs. They can be land, clothes, avatars, characters, pets, items, weapons, etc.
These assets make gameplay:
- Easy for players.
- Enable players earn tokens from other players.
- Allow players participate in some special in-game events.
Players use these tokens to purchase assets from in-game marketplaces or external marketplaces. Examples of some in-game tokens are MEGA, GHST, Alice, TLM, etc.
In-Game Activities: Some games have mini-games that players can only play by having specific token amounts or depositing tokens. Players can use blockchain game tokens to fund game development or even exchange these tokens with other players for services and assets.
In some building games, players who want access to the properties or lands of other players would have to make payments using the tokens of these games. For example, in Decentraland, players can pay in-game game developers in MANA to be able to play their games.
Availability Strategy
The value of a token is directly proportional to its supply, and this same policy affects game tokens. If players can quickly come across tokens during gameplay, this would affect the supply and lead to these tokens’ devaluation, as experienced in SLP tokens belonging to Axie Infinity.
Below are the ways game developers encourage the scarcity of in-game tokens.
Staking: In blockchain technology, staking means locking up resources (either fungible or non-fungible) to earn rewards. It can be flexible or fixed.
- Flexible staking: Participants can redeem their staked tokens at any time.
- Fixed: Participants cannot redeem their rewards until the agreed period elapses — usually three months to a year.
In blockchain games, players can stake blockchain game tokens to make the game progress, and in return, they get rewarded in tokens.
In some games, players can stake their in-game properties to get tokens back as rewards, while in other games, the reverse is the case. Instead, players stake tokens to earn rewards such as boosters for items upgrade.
In the former, players value the tokens gotten because of the time and resources put into getting them. In the latter, players value their tokens because of the rewards they can earn to make gameplay easier.
Example in, MegaCryptoPolis players can only get the native token by staking their virtual resources (wood, water, etc.) to earn MEGA tokens.
Mining: This is a process of releasing new tokens into the system as rewards to auditors (miners). This process involves the Proof of Work (PoW) and Proof of Stake (PoS) models.
- Proof of Work: In other words, can be described as a reward for work. The rewards are in the form of coins or tokens, and the work done by miners is validating transactions by solving puzzles.
- Proof of Stake: In other words, can be described as a reward for staking. The rewards are tokens, and the participants stake their tokens to earn them.
In blockchain games, players are involved in mining by the PoS model, whereby they stake in-game NFTs (assets) to get tokens. For example, in Alien Worlds, players can mine TLM by locking their in-game NFTs.
Winning in-game activities: Many blockchain games involve players participating in one event or another to level up or upgrade. These activities could range from breeding pets (horses, dogs, cats) to fighting fellow players or monsters. Players earn rewards blockchain game tokens (NFTs or fungible tokens) for accomplishing these events.
Players could also get involved in quests and tasks to earn token rewards. For example, in VulcanVerse, players can earn PYR tokens by winning in-game activities.
In summary, game developers devise many blockchain game tokens strategies by which they can create a functional and sustainable game economy system. Do you want to see the game strategies these developers employ in these upcoming games? Tap the link below.
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