Mar 17, 2022
How the Metaverse, GameFi, & play to earn revolutionizes the gaming industry.
Last year, Axie Infinity sparked perhaps the single most enormous narrative in crypto and proved the concept for Play-to-Earn games. Consequently, there’s now been an explosion in P2E games trying to replicate Axie’s success. As the ecosystem multiplies, filtering noise from innovation will be an increasingly important and difficult. P2E is Video games and virtual worlds that gamers play for crypto token rewards. Some games require an investment in tokens or NFTs, while others allow people to earn crypto by playing.
As with any market in a land-grab moment, most projects will wind up falling by the wayside. In our view, though, this is just the beginning of a new era of games. Projects like Illuvium, Crypto Unicorns, and Ember Sword bring AAAcaliber graphics and gameplay. Furthermore, we have yet to see the “GamingChain” competition, with prominent ones currently being Immutable X, Ronin Chain, Solana, and Polygon.
Scaling unlocking new gameplay
While valuations are sky-high, there could be a perfect storm of L1/L2 scalability plus an awakening from the broader entertainment industry.
Immutable X: IMX is riding on the gaming and zk rollup narratives that will be key in 2022. Fast, secure, cheap transactions. Lots of teams are building on it now. It’s probably only a matter of time before a major successful app is deployed on it. Immutable has created Immutable X, a Layer-2 scalability protocol for NFTs on Ethereum, the second-largest blockchain network. This means it enables transactions at a much faster rate than Ethereum, requires low computing power, and has a lower environmental impact.
New incentives remixing
Play-to-earn is just a subset of a growing sector focused on building robust token economies around gaming, leveraging web3 infrastructure and even DeFi primitives to create unique incentive systems that attract players via both entertainment and financial motives.
Axie kicked off a storm with P2E [play-to-earn], but many don’t realize P2E is just one aspect of the broad narrative of financialized games. There are several aspects from DeFi that can be pulled into crypto gaming to make it both lucrative and enthralling because, let’s face it, trading and speculation is basically a game in and of itself.
Gamer income
This past year was also defined by the rise of play-to-earn gaming guilds that connect players and provide them with in-game assets they can play with to earn real income.
Are regulators looking at GameFi?
At this point, regulators are still trying to catch up with earlier waves of crypto developments. They have already signaled they have concerns about the freewheeling world of DeFi, and could release additional rules this year. It’s not a stretch to think that games with DeFi-like features will have to abide by the same rules — and probably sooner rather than later if success stories like Axie Infinity are anything to go by.
Liquidity in the crypto gaming market
Given how crypto games are heavily dependent on the game market, it is also essential to address the liquidity levels in these markets. In its most basic form, liquidity refers to the maximum amount of assets that can be bought and sold at any point in time within the game market. The more the liquidity, the healthier the market; hence liquidity is a helpful indicator of any marketplace.
The crypto game market can comprise NFT and FT assets to increase liquidity. While FT assets can be scaled to have high liquidity marketplaces and thereby be used for utility/consumables assets in the game, NFT assets can be used more for their rarity, usually having high value but low volume transactions.
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