Some crypto enthusiasts believe that turning in-game items such as weapons or character skins into Gaming NFTs is the future of the gaming economy. In such a case, the tokens will create true ownership with the ability to resell unnecessary in-game items. Some even claim that token items or even characters will be transferable between games. Today it sounds a little unrealistic and far from the real state of affairs in the gaming industry.
But here’s an example for you – Loot (for Adventurers) project, which made a splash on the market in 2021 and does not lose its relevance. And the thing is that Dom Hofmann created 8,000 tokens with the names of traditional RPG items. It did not provide guidance on what each item should look like or even how it should function, but instead allowed the community to develop their own interconnected designs, games, stories, and artwork around items.
An interesting concept towards Gaming NFTs, isn’t it? In this review, we will analyze the principles of this type of NFT, the most striking examples on the market, and what are the prospects for this market sector.
What is Gaming NFT?
Gaming NFTs are a type of non-fugibles tokens that have a clear purpose in the Web 3.0 gaming industry. Mostly, tokens are in-game items, characters, skins, settings, maps, modes, tickets, character collectibles, or any attributes in games on the blockchain. Initially, the pioneers of such games were card games – for example, Gods Unchained or CryptoKitties on the Ethereum network.
Integration with the blockchain required a certain type of token, which was NFT – the ability to store the metadata of the wrapped hero or attribute and is suitable for trading on the secondary market.
The cost of such tokens is determined both by the popularity of the project and by the rarity and uniqueness of the item. And these parameters are most often determined by the metadata in which the characteristics were laid down.
Main idea and advantages of Gaming NFT
The main idea of Gaming NFTs lies in their use as a game object. Almost immediately, with the advent of games on blockchains, tokens began to be used for a wrapped hero from the format of a regular picture, as, for example, on Steam. This allowed the creation of a decentralized basis for the community, thanks to which GameFi, Play-to-earn, Play-to-move, etc. projects. developed a full-fledged secondary market with multi-million-dollar turnover.
So, what are the benefits of Gaming NFTs?
- Thanks to these NFTs, blockchain games have a better infrastructure than most traditional games. They assume a complete economic model of the project, thanks to which the project develops both internally and externally in the secondary market.
- These NFTs offer a way out of a single project. For example, when entering into a collaboration with other projects, a game digital asset can be used in another project, or it will be the basis for an airdrop. Traditional games, on the other hand, cannot offer a way out of their own project, since they are primarily centralized and cannot be managed by the community or community representatives in any way.
- These NFTs are also transparent. In centralized projects, the in-game item is not subject to analysis; users do not know how rare it is and, in general, whether there is a limit in its release. And game digital assets provide the user with information about the quantity, thereby determining the rarity; allow the owner to freely receive information about the game item and its application thanks to the transparent blockchain system.
- This is the dream of any gamer – to play and earn. The Play-to-earn format of games can offer this to its users. The player can recoup the cost of the game by selling NFTs on the secondary market or through third-party mechanisms of Gaming NFTs (such as staking, selling and leasing characters, “pumping” heroes for a fee, and others). It is for this reason that blockchain games such as Axie Infinity in 2021, and then StepN (the next format is move-to-earn) in 2022, made the effect of an exploding bomb: their audience was in the millions of people, and their sales were in the millions of dollars.
History of Gaming NFTs
Gaming NFTs and related projects emerged in late 2017/early 2018, led by the CryptoKitties project, which has become a revolutionary for the blockchain market. And the mechanics were quite simple: it was proposed to breed kittens, each of which was a unique NFT on the blockchain, but most importantly, they could be traded openly. There were other projects, but compared to the current ones, at the stage of their inception, they had meager functionality, most often without a special economic model. Only tokens had value.
Already with the development of the NFT market itself and the subsequent surge, projects with a proper economic model were born. In them, the functionality fell not only on the NFT, but also on the mechanics, tokenomics and DAO, which also came to these projects for the purpose of decentralization and for the sustainability of the economic model.
Then the boom of Gaming NFTs was the Axie Infinity project from Sky Mavis in 2021. The mechanics are generally similar to CryptoKitties and the Pokémon series, but the player is also encouraged to fight in PvP battles. At some point, the popularity and profitability of the game was so great that the players (mostly Filipinos) quit their offline jobs and devoted themselves to the game. Thus, at its peak, the project earned $2.4 billion. But in the spring of 2022, a global hack occurred – about $620 million was stolen from user accounts. This was a loud sunset for the project and the collapse of the entire tokenomics.
After Axie Infinity at the beginning of 2022, the whole world (yes, everything is so global!) learned a new game format – move-to-earn thanks to the StepN fitness app. In the Gaming project, tokens were virtual sneakers, and users in the real world ran or walked and earned a utility token that could be converted into fiat. As a result, the unique audience exceeded 2 million users, and the creators themselves received a net profit of 3-5 million dollars a day. But here too, after the explosive launch, a crash occurred – in June 2022, all Chinese users were first blocked, after which everyone began to withdraw money from the project and, accordingly, the entire economy collapsed.
Today, this segment of the NFT market is without high-profile hype projects, but any economic sector is becoming like this – serious projects require deep analytics, a strong team, and the sophistication of all technological processes.
Who buys Gaming NFTs?
First of all, Gaming NFTs are interesting for fans of games. At the present time, there are quite a variety of projects GameFi, Play-to-earn, etc.:
- These are projects within the metaverses (such as The Sandbox, Decentraland which provide traditional game environments and mechanics for communication and shopping),
- Card games (such as Gods Unchained, Splinterlands),
- Space simulator (eg Alien Worlds),
- Some projects focus on physical impact with the environment, for example, in Walken and StepN you need to walk to earn game points and upgrade your character in the case of Walken or sneakers in the case of StepN.
Thus, in most cases, any user will be able to find a game on the blockchain for their lifestyle or interests. Thus, Gaming NFTs are of interest not only to users from the NFT space, but also to an ordinary person who is far from not only tokens, but also from cryptocurrencies in general.
Best Gaming NFTs Collection
There are various game projects appearing on the market that use this technology, but we will look at already familiar projects in order to better explain the specifics.
The best collections of Gaming NFTs are:
- Crypto Kitties,
- Axie Infinity,
- Alien Worlds.
CryptoKitties is a blockchain game from Dapper Labs that was launched in 2017. In the game, you can sell, buy, collect and breed cats. The project is built on the Ethereum network and has a sustainable economic model, but it does not have its own token.
- Trading volume on secondary markets over 9.7k ETH,
- Floor price 0.0028 ETH.
- The most expensive token from this collection – Dragon was sold for 600 ETH (about 1717k dollars at the time of sale).
Axie Infinity from Sky Mavis is somewhat reminiscent of Pokemon Go – you need to grow a creature after purchase, you can also breed them. Each creature or Axie is a separate NFT. The project also has a sustainable economic model based on the SLP utility token. Rare Axies with special traits can be worth thousands of dollars. The project has its own marketplace.
- The trading volume of this collection in the secondary markets is more than 27,452 ETH.
- The most expensive token – Angel was sold for 300 ETH (over $137k at the time of purchase).
The Alien Worlds project on the WAX blockchain is a community decision. Blockchain differs from the Ethereum network: there is no commission, transactions are carried out using RAM – this is a kind of random-access memory on the blockchain. The project is represented by a cosmic metauniverse with seven planets. On each planet there are several dozen lands that users can own. There is a DAO, which includes all users who have at least 1 token of the project. The utility token is Alien Worlds Trilium. At the same time, the project does not have its own marketplace, and the tokens themselves can be purchased on the Atomic Hub.
- Trading volume on secondary markets is over 216,904,000 WAX (over $43.5 million).
- The most expensive token, Grassland on Neri, sold for 423,354 WAX ($104k).
What are the prospects for Gaming NFTs?
Gaming NFTs can only be used in the gaming industry. At the moment, NFTs of this type are of little use in such huge projects as RockStar Games, Wargaming, Ubisoft, etc. Since at the moment most games in the traditional format outside the blockchain do not have the necessary infrastructure for a full-fledged secondary market and the introduction of blockchain technology. And the giant developers themselves treat this technology with caution and distrust.
The fall and hack of Axie Infinity can be regarded as a key factor in the fall of the market in 2022. Then, at the end of 2022, Gaming NFTs accounted for approximately 3% of the entire in-game purchase market. In the long term, it becomes increasingly likely that one or more games will find the right gameplay to match the new item ownership model that tokens are broadcasting. For example, Otherside by Yuga Labs, which is followed by the entire market, has every chance of this. Thus, it is possible to increase this share to 8% in the next 5 years.
Gaming NFTs are currently in their development phase, and there will certainly be a moment in the foreseeable future when this type of NFT will become a full-fledged gaming tool for large gaming companies. The inclusion of Gaming NFT in the gaming infrastructure will attract a huge number of people, primarily with blockchain technology and Web 3.0.
Opinion of NFTmetria
Gaming NFTs can serve as a full-fledged tool for the transition of the gaming industry to the blockchain using Web 3.0 technology. Along with this, gaming companies will be able to assemble a full-fledged decentralized society that will focus on improving the project.
But the progress of Gaming NFTs slows down the centralized management of game projects such as GTA, World of Tanks, Call of Duty and others. And the giants of this industry, such as Activision, EA and Epic Games, are still cautious about this prospect and are in no hurry to introduce such technologies into their products. This is why the adoption of gaming tokens has been so slow and often without much investment from gaming companies.
Gaming NFTs can also act as a designation of a user as a fan of a particular project, provide privileges and rewards. Although at the moment this type is not widely implemented in the gaming industry, in the foreseeable future, most gaming items will be located on the blockchain using Gaming NFTs.