Blockchain and the Future of Gaming
Non-collateralized NFT rental could change gaming forever.
Fair Disclaimer:
I am extremely bullish on crypto in the long run and I see that a lot of the piping and groundwork for bringing crypto to the masses as being built first for gaming. This same infrastructure layer will eventually be used to support massive DAO’s with all the current functionality of the traditional centralized legal organizational structure. It will also grow the adoption rate at which users learn and understand Web3.
Examples of this infrastructure are the layer 2’s built with gaming in mind, such as the ronin network built for Axie Infinity (https://axieinfinity.com/) which enables low cost transactions. The guilds built on top of Axie have developed necessary mechanisms for tracking performance and rewarding key contributors of remote work across a decentralized ecosystem. Other third party tools such as MetaLend (https://metalend.tech/) allow players to take collateralized loans backed by their assets.
Gaming will be the launchpad for true mass adoption for several reasons. The greatest of these reasons is that it provides immediate utility to the most consumer facing objects of Web3, NFTs. NFTs must be functional if they are to continue to capture consumer attention. People must have a way of interacting with their digital property for them to warrant holding and trading for extended periods of time.
So if functionality is the goal, then token gated experiences must be built. I believe that eventually real world experiences will be token gated in the long run, such as exclusive coffee shops which require member tokens, gyms and concerts/events. But this is the late game. Token gated experiences will originate from digital native experiences. This means games, social media platforms, and apps.
A Better Way to Access
If NFT assets are required to enter into experiences, but those experiences are intended for the masses, then the best way to reduce the barrier to entry is by making the borrowing and lending of such assets as seamless as possible. Games often generate significant income by selling these tokens in limited quantities, gaging early interest and raising capital along the way.
Early owners of the gaming assets are rewarded with a return on their investment once the demand for the game, and its token gated experiences, rises in relation to the supply of those assets. This creates a difficult dynamic between games that wish to introduce their game to as many people as possible and their early supporters. Games often want growth and exposure, while early players and owners want their digital items to retain value. In order to open up access to those game features, without creating a dilutive supply of those early assets, a game must employ some type of lending feature.
Lending features are not an entirely new phenomena. This model was pioneered by Gabby Dizon in YGG, starting with Axie Infinity. Axie Infinity found massive success in attracting new users largely due to the ability of YGG’s guild operations. The spike in demand for in game assets, which could now be lent out to scale returns for early investors attracted other investors, retail and institutional. Although this helped the game early on and benefitted early guild owners, it did not provide the same scale of return to early gamers playing Axie Infinity. Early gamers could not take advantage of the same model at scale because many of them did not have access to the same tooling.
Although the lending and borrowing of these assets was passively supported via Axie founder’s investment into such an activity, it was not made publicly available to all gamers. This shows a deep gap in the game developers incentives. Although they saw value in borrowing and lending, enough to invest in it personally, they did not invest in it in a way that would have provided greater return to early gamers who believed in the game from the beginning.
Is there a happy medium?
Growth rewarding early gamers justly can coexist within an open metaverse built with borrowing and lending as a tool readily available to all. This is the point of Kingdomly. We want to make the blockchain gaming world more available to all, empowering gamers to lend out their assets easily and at scale to other gamers across the globe.
Others are attempting to build out this tool, but their methods vary from ours. Most lending and borrowing protocols require the borrower to send capital as collateral greater than or equal to the total cost of the asset. This is a good start, but still alienates many key demographics of blockchain gamers. Although many blockchain gamers hope to someday have the financial means to purchase game assets across any game they find intriguing, this is not the case. The demand is there for adoption of these games, but the means to pay is below the barrier of entry. Therefore, lowering the barrier to entry without lowering the value of the game assets is essential to creating great game economics.
Kingdomly will not require collateral equal to the assets lent on our protocol. We plan on facilitating the lending and borrowing via a different mechanism than others currently employed. You can read more about what makes us different in this article here!
We believe a non-collateralized borrowing and lending feature is fundamental to blockchain games. If people are promised ownership over their assets, they must also be provided tools in order to properly exercise their ownership. A few tools we would like to build in the future in addition to seamless non-collateralized borrowing and lending:
- Collateralized loans
- Referral/Royalty Token markets
- Cross game asset swaps and marketplace
In Conclusion
We hope this vision we are sharing aligns with your view of what a profitable and inclusive blockchain gaming ecosystem looks like. Please check out our twitter, our discord and our site to learn more!
