Upcoming GameFi and crypto monetization models in gaming
February 20, 2023. We are currently experiencing a transition in gaming; the industry is exploring new Web3 possibilities — increasingly integrating cryptocurrency in their monetization models. No longer are current rewards systems or digital game assets such as land, weapons, or avatars, limited to just being collectibles within the game itself. They are starting to acquire real-world monetary value as well as cross-expansion or cross-game compatibility. This means that a player can earn digital assets with inherent monetary value while playing, and can trade or sell those game assets to another player, in order to be used in a game expansion, another level, or even another game on a different platform.
These new game rewards are usually received as NFTs or cryptocurrencies if supported.
Whilst the trend has mainly been spotted in P2E games (Play-to-earn), it is starting to gain a presence also in betting/casinos, arcades, e-sports, and multiplayer games in general.
According to Market & Markets, the global blockchain gaming market was USD 4.6 Billion in 2022 and is expected to grow to USD 65.7 Billion by 2027. This market is generated merely by thousands of crypto gamers, which is still a tiny fraction of the 3.09 billion active video gamers worldwide. The takeaway? There is still plenty of untapped potentials to be found for Web3 in the GameFi industry.
Cryptocurrencies and NFTs are without a doubt, unlocking new ways to interact with games. This is not meant to replace the current solutions but should coexist as an alternative to such options. Several major game developers (such as Square Enix, Ubisoft, Nintendo, Tencent, Electronic Arts, Epic Games, and Take-Two Interactive) are already starting to experiment with blockchain for their in-app purchases.
Some examples of the most trending GameFi are briefly described below, setting the bar for game creators in defining the revenue streams in their games:
Decentraland is a shared virtual world or metaverse that is user-owned and runs in Ethereum. Their business model resides in driving demand for their native token, MANA.
The main purpose of the game is to purchase digital real estate and to create, interact with others and play games within this virtual world.
These interactions are enhanced with decentraland apps (dApps), in-world payments, and peer-to-peer communication tools. There are 3 native tokens from 3 standards:
- ERC-721 or NFTs: This is the case of the tokens LAND and Estate. These tokens are used mainly for creating avatars, and land parcels, among others.
- ERC-20: Used in MANA. This token can be used as a digital currency
- C-721 token: Represents merged parcels of digital land
The game currently has less than 1000 active players (defined as a unique wallet address interacting with the decentraland smart contract) per month, but the company is still valued at 1 billion.
The trading volume of MANA in the past 24hrs was $179,957,974, at the moment that this article was written, according to coinmarketcap.
Axie Infinity is a battle game where players can buy, trade, and battle with creatures called Axies. Sky Mavis, the game creator, charges a transaction fee of 4.25% for all in-game purchases including land purchases, monster NFT trading, and monster breeding.
In the game, players compete with each other using complex strategies and tactics to attain top rankings or be rewarded with coveted resources. They may also complete quests, defeat bosses, and unlock in-depth storylines.
The game uses ERC20 and ERC-721 tokens.
Their main token is the Axie Infinity Shards (AXS). AXS is ERC20. It can earned, bought and sold on exchanges like Coinbase. You need some AXS to play the game, but you can also trade AXS for cryptocurrencies.
The game has around 397,440.92 active players with AXS having a transaction volume of 3,418,205.84 USD in January 2023.
Similar to Decentraland, The Sandbox is a virtual world or metaverse based on the Ethereum blockchain. Players here interact with each other and can build, own, and monetize their gaming experiences.
The Sandbox makes money by issuing and selling tokens, as well as other digital assets. They currently support 3 different tokens standards:
- ERC-20 token: SAND is their utility token for all kinds of transactions inside the metaverse.
- ERC-721 (NFTs): LAND which represents real estate owned by players.
- ERC-1155: This is used mainly for user-generated content and can be traded in the marketplace.
They currently have around 200,000 active users each month and generated a trading volume of $ 169.24M USD in the last 24-hours.
Gala is a series of play to earn games built on Ethereum. They offer a wide range of games such as real-time strategy (RTS), multiplayer online battle arena (MOBA), role-playing game (RPG) titles, and more. They build Web3 games where the blockchain technology is almost imperceptible to their players, so there is no technical knowledge requirement for players to begin playing.
Both ERC 20 tokens and ERC-721 (NFTs) are used.
They have over 1.3 million monthly active users and have reached $408.55M trading volume in a 24-hour window.
WAX provides its users with access to thousands of decentralized apps (dApps) and a range of unique marketplaces. In addition to general NFT marketplaces, It gives access to a set of dApps with an interesting tokenomics background. Most games fall into the play-to-earn category.
In the first two weeks of trading, their native token BRWL moved around $431 million in volume.
In this game, players travel through space in search of precious NFT-based gems. Unlike many of the other games in our list, Star Atlas is built in Solana and the NFTs can be earned, traded, and new non-fungible tokens (NFTs) created.
Their business model is focused on a five-phase release of NFT assets sold to players through their marketplace. Its annual revenue is currently $19.8M per year and they average around 1000 monthly active players.
In Summary, the table below displays an overview of market capitalization of the above GameFi tokens.
Source: CoinMarketCap. February 20, 2023.
In the future, we look forward to popular games such as Minecraft, Call of Duty, Super Mario, or Fortnite implementing cryptocurrencies for their incentive mechanisms.
How Slash powers up GameFi
Slash helps game companies, developers, and gamers, in general, to transact payments in most ERC-20 tokens across major DEXs, allowing players to use earned tokens with sufficient liquidity in one game to purchase gaming assets from another game.
A case example would be: a player earns passive income in the form of ”A-tokens” from the arcade game “A-game”, while watching advertisements, or by unlocking new levels through ordinary gameplay. This same player can then use those “A-tokens” to purchase, swap or trade for player attributes (such as life, power, skills, etc) in “B-game”, which is another game on a different platform that also supports those tokens.
Some other example cases where gamers can transact cryptocurrencies with Slash would be:
- In-app purchases: Players can pay for subscriptions or in-game purchases with more than 1400 tokens in an anonymous manner.
- P2P transactions: Players can perform peer-to-peer transactions such as selling, auctioning off, trading, or renting their game assets (Lands, avatars, powers) to other players.
- Passive income: Players could potentially receive passive income from staking (earning rewards for holding certain cryptocurrencies). Which may help with purchasing new games or subscriptions.
Slash is appropriately positioned to help upcoming GameFi improve its monetization models through integrating Web3 solutions. Advantages to kickstart your GameFi with Slash include:
- As a game provider you will be able to offer a broader range of payment methods, even within cryptocurrencies, and your players will be able to perform in-game purchases without issues such as a particular currency not being supported in a particular country.
- Anonymity. This is a great solution for game providers if a payer does not want to make an in-app purchase because they do not want to reveal their bank or credit card information. They could instead just provide their wallet address and maintain their anonymity.
- No hidden fees or chargebacks. Payments are completed in one transaction.
If you are creating or developing a new game and would like to know more about how cryptocurrencies can improve your monetization models and incentive mechanisms, get in touch with the Slash team directly at discord Slash Web3 Payments
Or, follow us in Twitter: https://twitter.com/SlashWeb3
Written by
Passionate about tech & web3.
Contact: t.mateo@slash.vision
Edited by
Fluent in English, Chinese, and Japanese. Relatively new to Web3 but thrilled by its potential applications.
Contact: dawn@slash.vision
Global BD at Slash. In web3 since 2017 and inspired by innovative blockchain tech.
Contact: issei@slash.vision
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