Games x NFTs: The Biggest Game-Changer Since Mobile?
The Largest Sector in the Entertainment Industry is Getting a Power-Up
Video games are the biggest sector in the entertainment industry by a growing margin, worth $98B in 2020, and forecasted to roughly triple that by 2030. Compared to the linear growth trends of streaming content, box-office releases, and music, games have experienced exponential growth over the past few decades; a trend that doesn’t show signs of slowing any time soon. Games are also poised to be one of the top (if not the top) applications of blockchain technology by most of the population, and much of that will be built with NFTs.
In this article, we’ll be diving into:
The major trends in the video game industry moving forward, and the studios that are already developing with NFTs today.
How NFTs and P2E are already disrupting current industry models.
Which gaming genres are best suited to the blockchain, and which projects and studios you need to be paying attention to.
Though I tried my best to balance the amount of relevant content with respect to the reader’s time, there was a lot I felt I needed to include in this article. That said, please feel free to jump around to the sections that most interest you. 🙂
The Game Industry is Growing: NFTs Are the Next Tipping Point
With NFTs, for the first time ever, gamers have digital property rights - ownership of the virtual assets they acquire in games (not just an entry in a studio’s private database). Initially, a lot of NFT “games” were experiments that primarily focused on cryptocurrencies, gambling, and/or collectability (i.e. CryptoKitties). Today, we’re seeing projects like “Axie Infinity” utilize the benefits and value that crypto and NFTs offer to enrich their communities (“Play-to-Earn” a.k.a. P2E), but more importantly, that strive to create a fun experience first (“Play-and-Earn” 😎).
Together with VR/AR, I see NFTs in games at the phase that mobile games were in the early-mid 2010s: tons of cool experimentation, a serious lack of talent in the sector, and big studios failing to respect the disruptive potential (and threat) unlocked by a nascent technology (for present day context, smartphone/tablet-based games represent more than 40% of industry revenues and more than two-thirds of growth).
“…like previous major technological shifts such as offline to online, premium to free to play, and console to mobile/everywhere, I think NFT's will disrupt gaming just as much, if not more.”
-Robby Yung, CEO of Animoca Brands (NonFungible.com 2020 Report)
Game Studios are Already Placing Bets
Lightspeed Ventures, a tech-focused venture capital firm with outsized investments in the gaming industry, reported that almost all game publishers in contact with them were exploring how to use blockchain tech in their projects. Even before all the mainstream coverage NFTs have gotten this year, a few notable established studios were already early movers into the space:
Microsoft’s Azure Heroes, a collectible NFT project that gamifies participation in the technical community, was built in partnership with Enjin, one of the biggest NFT-focused companies in interactive entertainment (whose management includes Alex Soloman, a former key Microsoft marketing executive).
Ubisoft’s Start-Up Lab has been very active, minting partnerships with Sorare for its sports-based One Shot League ⚽, and with Sky Mavis as a validator node on the Ronin network, a dedicated Ethereum side-chain for mega-hit NFT game, Axie Infinity.
Video game industry veteran, Atari, has partnered with several companies in crypto (specifically those on Ethereum) for projects like their virtual casino in Decentraland. 🃏
IBM (the first name that comes to mind when we think of video games, I’m sure 😶) has provided enterprise blockchain services for some years now, but also promotes how blockchain and NFTs can be used for video games. It was also granted its patent in 2020 for "Gaming consensus protocol for blockchain.”
Gallium Studios, founded by visionary industry veteran, Will Wright (creator of Sim City and The Sims), has plans to use NFTs in their upcoming game, Proxi.
In addition, many studios that started off in crypto (or recently fully pivoted) have seen huge attention and growth this year.
A number of crypto/NFT focused start-up studios led by former executives from AAA game studios have been popping up. Notable examples include Gala Games, created by Eric Schiermeyer (co-founder of Zynga), and Mythical Games, led by CEO, John Linden (former Studio Head at Activision and executive at Niantic Labs),
Animoca Brands, one of the most ambitious companies in crypto gaming, has formed partnerships with industry notables like Atari, and has received investments from the likes of Square Enix (Final Fantasy, Kingdom Hearts). In 2018, they acquired The Sandbox, a Roblox-like blockchain-based virtual world game, which currently has collaborations with Skybound Entertainment (The Walking Dead) and Snoop Dogg. 🤯
Other blockchain-native game studios such as Dapper Labs (NBA Top Shot), Enjin, Immutable (Gods Unchained), and Sky Mavis (Axie Infinity) have all secured multiple multi-million dollar financings this year.
The data/speed constraints and rising costs of Ethereum’s mainnet has forced almost all NFT game projects to seek alternative blockchain solutions. Projects willing to (arguably) trade some decentralization and security for speed and cheap transactions have been adopting networks such as Binance’s BSC, Dapper Lab’s Flow, WAX, and Solana. Back on Ethereum, layer-2 scaling solutions like Polygon’s POS and Sky Mavis’ Ronin sidechains (somewhat secured by Ethereum), and more recently, rollup chains like ImmutableX (created in partnership with StarkWare and their expertise in zk-rollups/zk-STARKs technology 💻), have also seen similar exponential growth from developers and players.
With so much growth and innovation taking place, you might be asking why incumbents like EA and Riot have yet to announce anything related to NFTs. It makes sense when we consider that player-owned blockchain-based game assets run counter to their profitable, extractive monetization models. Adopting NFTs would force studios to give up the centralized control they hold over their projects, and even share revenue with their communities - not exactly a strong incentive! As such, don’t expect to see many crypto/NFT-based games available through app stores (Steam went so far as to ban blockchain-based games from its platform, and Apple is unlikely to give up their 30% cut) or consoles any time soon (distribution via web browser or direct download will likely be required, for now).
On the flip side, this could also create greater opportunities for profitability, creativity, and marketplace traction for indie creators to thrive in a censorship-free, less crowded ecosystem. However, once users get a taste of true ownership of their in-game assets, it’s predictable that demand will force incumbents to either adopt NFTs (late), or lose out to competitors that do.
Many of the companies mentioned in this article (including Atari and Ubisoft) are members of the Blockchain Gaming Alliance (BGA), an organization of game and blockchain companies that aims to:
Raise individual and businesses awareness about how blockchain can transform games and improve or disrupt existing business areas.
Accelerate adoption by acting on existing barriers to innovation and by catalyzing efforts into creating actionable industry standards and best practices.
How Crypto/NFTs Benefit Both Players and Game Studios
Players can enjoy the off-chain speed and complexity they have come to expect from mainstream games, and benefit from flexible, secure on-chain ownership of their digital assets, made possible via crypto/NFTs. Examples of tokenized game items could include anything unique or semi-fungible that persists with a player’s account, such as avatars, weapons, inventory items, land plots, and achievements.
In cases where game studios have multiple games and/or collaborate with partner studios to support the same NFTs, players benefit from additional utility of their assets, and studios could gain new users as a result of the crossover).
Adds another revenue stream for creators (in addition to ads, game sales, and in-game transactions) and can even be used to prefund a project.
Studios could earn a cut of secondary sales, regardless of whether the NFT is sold in-game or on an exchange. Royalties on secondary sales could be used to fund further development of the game, which incentivizes both players and developers to grow the community.
Having certain components of games secured on the blockchain can be used to combat piracy, especially for unauthorized user accounts and counterfeit in-game assets. Tamper-resistant, publicly auditable data and history could also prevent cheating - something teams need to consider when high-value digital assets are at stake.
Offers distributors a technical solution for one of the industry’s toughest problems to address: revenue leakage (players buying assets for a multi-platform game in a competitor’s marketplace). The big guys would much rather keep developers, users, and all their assets locked to their ecosystem (i.e. Steam, PlayStation Store, etc.), which results in barriers to interoperability (NFTs fix this 🔨). Though not yet part of any NFT standard I’m aware of, automatic cross-platform “duties” required to unlock assets on secondary platforms could be programmed into the smart contract.
Things could get really interesting when PvP (player vs. player) games with NFTs go mainstream. Imagine e-sports tournaments where digital assets with real value are on the line are escrowed in a smart contract that effectively liquidates the loser’s account on the winner’s behalf (kind of like in Ready Player One when a player loses coins when they take a loss or “zeroes out” (hard reset) if they die in the Oasis).
Shopping for Tokens
There’s no doubt in my mind that NFTs will be foundational to the gaming industry, and core to the P2E model (covered in the next section). However, so too are fungible tokens that hold some utility to the game and/or community itself. A combination of both fungible and non-fungible tokens will likely be utilized in creative and unique ways by each project, and on that note, let’s take a look at some of the innovation we’re seeing today:
Atari Token ($ATRI), Atari’s token on Ethereum, aims to be an interoperable payment channel for all games on its platform.
Gala Games, mentioned previously, uses $GALA for in-game transactions for games on its platform. It can be earned by hosting files on IPFS for games in its ecosystem (peer-to-peer game resources). Gala Games have an array of diverse projects and partnerships in development, including one of the first P2E FPS games I’m aware of.
Game Credits is a rewards-based loyalty protocol that aims to help creators issue NFTs and build audiences by use of $GAME, a stake-able social token specifically targeting gaming communities. Its primary utility is to buy curated NFTs in its ecosystem.
Enjin, one of the biggest NFT/gaming companies in the space, has several blockchain-based projects and tools available for game developers and their players. $ENJ, Enjin’s first Ethereum-based token, is the foundation for NFTs minted with the Enjin SDK (currently available for Unity, Godot, and Java). You can see Enjin-based NFTs in action in games such as “Lost Relics” and from developers like BlockPegnio. $ENJ was also the first gaming token approved in Japan.
This year, they also announced Efinity, their own cross-chain NFT blockchain built using Polkadot’s Substrate framework, and its native token, $EFI. More information on Enjin, their historic contributions to the NFT space, the Efinity blockchain, and JumpNet (GraphQL/QR tools), are just a click and a scroll away in the ERC-1155 🌐 section in my earlier article on “EIPs and ERCs for NFTs”:
Immutable has been on an absolute tear this year with the release of their Ethereum layer-2 NFT-focused scaling solution (ImmutableX), updates to their NFT game library, and two new tokens: $IMX (ImmutableX) and $GODS (Gods Unchained).
Virtual world games (a.k.a. “Metaverse” games) use NFTs heavily for unique in-game items and virtual land, but many also have platform tokens that are used as in-game currencies, resources, and/or governance. Examples include Decentraland ($MANA), The Sandbox ($SAND), and Somnium Space ($CUBE).
Axie Infinity, is the most widely adopted P2E NFT game this year according to most metrics. It can be thought of as a mix of Pokémon (turn-based collectible MOBA, breeding, virtual pet) and soon, Animal Crossing/Startdew Valley (social/sandbox building game), with a core built on creating an excellent user experience, solid tokenomics, and of course, NFTs.
Each Axie is an NFT with various traits (a.k.a. genes) which affect its ability to battle and breed. Axies inhabit Lunacia, an open-world builder/social experience, for which ~90,000 virtual land plot NFTs with terrain ranging from desert to tundra were distributed in a pre-sale earlier this year.
There are also (currently) two fungible tokens in the Axie Infinity ecosystem, with hints of more on the way as new gameplay elements are developed.
$AXS (Axie Infinity Shards), the main token for the game, is earned by players through various in-game interactions, and as passive yield by staking surplus $AXS on the Ronin network. The $AXS token itself is used as in-game currency for marketplace purchases, and soon, as a governance token with partial voting and revenue rights for the platform itself. 2.5% of every marketplace sale in $ETH and $AXS is sent to the community treasury, which helps fund ongoing development of the game,
$SLP (Smooth Love Potion) is an in-game token awarded through Axie battles - 3-on-3 PvP/PvE matches in which Axie abilities are represented by cards (four abilities per Axie with variable energy costs; kind of like Slay the Spire). Both $SLP and $AXS are required to breed new Axies (the former is burned 🔥 and the latter is transferred to the community treasury). Breeding is limited to seven times per Axie, with increasing $SLP requirements after each, er, session 💗. Each successful breed yields an egg which takes five days to hatch into a new Axie (which inherits a randomized combination of genes from both parents).
Play-To-Earn (P2E): The Next Great Trend in Gaming
Trends in Game Monetization: Pay-to-Play (arcade, console) ↝ Free-to-Play (freemium, mobile) ↝ Play-to-Earn (crypto, NFTs)
In successful blockchain-based P2E games, players have the opportunity to earn income at all levels of gameplay; not just at the professional e-sports tier (i.e. games with a big player base that are only financially lucrative for a small percentage of players, such as DOTA2 and League of Legends). In crypto gaming, the tournament scene is very strong in games like Sorare and Axie Infinity and does look to be attracting the attention in the e-sports space, but it’s not the only (or primary) profitable opportunity in most P2E models.
The tactics of grinding and farming to accumulate in-game assets to sell for fiat currency has been a long-running practice in classic MMORPGs like RuneScape, EVE Online, and World of Warcraft, but is usually done in the shadows (technically, game assets can only be exchanged in-game; secondary markets are prohibited). The open economies of crypto/NFTs allow players to freely buy, sell, and trade their digital assets anywhere, making a true P2E model attainable and legitimizing such gold farming tactics.
“DeFi is the gamification of finances; P2E is the financialization of games.”
It’s worth noting the the revenue from P2E is usually denominated in tokens with values based on in-game utility and speculation, and rarely in fiat currencies, stablecoins, Bitcoin, etc. (for today, let’s leave the “what is money” debate to the Bitcoin maxis and gold-bugs 😅). In-game tokens and NFTs are more like commodities and useful/luxury goods (programmable with less agency oversight) with values based on their in-game utility (i.e. $SLP for breeding Axies and Axie NFTs themselves, which typically range between 0.05-0.3 $ETH each currently) or social demand (i.e. though functionally identical, rarer mythic/origin Axies trade at a premium to their pleb counterparts).
In developing nations with less advanced economies, P2E crypto/NFT games (especially mobile apps with low technological barriers of entry) have been able to provide a kind of universal basic income (UBI) to anyone with a device, an internet connection, and time. So far, P2E seems to be best-suited to mobile platforms, since the player base for such games seems to be growing the fastest in Asia where mobile penetration is higher than in the west.
👉 Extra Credit: Check out Play to Earn Online Magazine, one of the best sites for news and resources on P2E 📰
Play as Work: Games as Banks and Schools
Industry sub-sectors like e-sports and P2E value a player’s time and blur the line between work and leisure (Proof-of-Workers?) - they are poised to disrupt labor markets, education, and banking in the coming years. By building on these concepts and fostering an open culture of shared ownership with players, studios of the future like Sky Mavis, makers of Axie Infinity, benefit from community-driven development, talent, and grass-roots marketing, while players can meaningfully participate in the upside success of a project.
Players “working” in the P2E ecosystem are incentivized to complete tasks to earn rewards, similar to forms of gamification already being built into financial management and educational apps. Why wouldn’t this crossover continue to the point that our leisure activities become fulfilling, productive uses of our time that don’t just provide us with entertainment, but with financial and educational rewards as well? We could very well see people earning side incomes from P2E games as commonly as with ride sharing and food delivery soon, if not already.
During the events of 2020 😷, people worldwide lost their jobs and struggled to make ends meet - those in developing nations where government support programs and remote working options were limited, like the Philippines and Venezuela, were particularly affected. Consider also that a very high population of people in these nations are either unbanked, or under-banked.
Over the past year or two, hundreds of thousands of people in the Philippines played Axie Infinity to earn meaningful income, and in some cases, were making more than triple the national minimum wage. Many players effectively used their Axie Infinity wallets as bank accounts (probably with a smoother UX than most financial apps). The following short documentary shows a glimpse of the positive impact P2E games had for people hit hard during the recent economic downturn. 👇
P2E Gaming Guilds
In a P2E ecosystem, engaging with the game can start to feel like a work commitment, and not everyone is willing or able to put in the time needed to see a meaningful return on their assets. This has given rise to a familiar but evolving concept in the gaming world: Gaming Guilds. P2E gaming guilds function much like traditional guilds in games like World of Warcraft, but with a greater emphasis on creating financial value for members. They primarily invest in yield-bearing game assets (the price of which may be out of reach to otherwise willing participants) that are then lent out players who use them in games to generate yield (termed “scholarships”).
A Closer Look at What Makes a Guild: YGG
Yield Guild Gaming (YGG) is a gaming guild DAO (decentralized autonomous organization) and the current leader in the P2E guild space. Members include players, studios, and investors (those willing to lend their game assets to players), all aligned with the goal of earning income through P2E crypto gaming (kind of like the relationship between managers and players on e-sports teams). The DAO’s token, $YGG, is used for voting on governance decisions and represents a claim on the community treasury (for more information on DAOs, be sure to see the DAOs section in my previous article:
YGG is actually a hierarchy of sub-guilds (sub-DAOs that share a treasury and typically focus on a single game), and though most compete in Axie Infinity, there are also some that participate in The Sandbox, F1 Delta Time/REVV Racing, and League of Kingdoms, with plans for upcoming games including Ember Sword and Guild of Guardians.
The revenue generated by players on borrowed assets usually comes in the form of fungible tokens that have in-game demand (i.e. Axie Infinity’s liquid experience points, $SLP). These are then used to service the loan - around 20% goes to the community managers (asset lenders/recruiters/trainers) and 10% to the guild’s coffers (adding value to $YGG); the remaining 70% stays with the player (not bad!).
To become a member, one simply has to hold some $YGG tokens, and ideally, get involved with the community. Co-founder, Gabby Dizon, and the team are very welcoming to those wanting to learn more in their Discord server.
Virtuous Meme or Pyramid Scheme?
(Time to play devil’s advocate 👿) Despite the growth of Axie Infinity and its ability to defy gravity this year, P2E likely can’t scale indefinitely. There are several potential flaws in the current model:
Demand for in-game tokens will eventually dry up due to fewer players entering the ecosystem, existing players losing interest, and an oversupply of tokens that exceeds demand (in the case of Axies, there is no limit to the total number Axies that can be bred, and $SLP is the only financial incentive drawing in new players).
The first two issues are applicable to any long-running mainstream title. In successful cases, developers are always working to keep gameplay fresh and to support community growth (user generated content and modding are often key). As for the issue of token saturation, gameplay mechanics can theoretically be tweaked to balance supply and demand, but must be done delicately lest players feel cheated.
Games like Axie Infinity adopt elements of pay-to-play and create a barrier of entry to new players. Though in a somewhat plutocratic way, the P2E community has shown resourcefulness - gaming guilds and scholarships have only attracted more player interest. Many P2E games in this article are also free-to-play, and may even provide bonus resources to help new players get started.
Players are forced to spend their time doing menial, repetitive tasks instead of enjoying the game. What we consider to be fun is fairly subjective, and hasn’t stopped players from spending hours grinding to level up or farm in-game assets in the past. However, I strongly agree that in order for a P2E game to fulfill its role of being both financially rewarding and entertaining, good gameplay must be prioritized over grindiness, ideally with a tangible correlation between improving as a player and earning rewards.
Is P2E perfect? Of course not. Do I think it’s better than the current models and is probably doing more good than harm? Absolutely. The team at Sky Mavis are surely onto something big, and given the consistency of their deliveries, the passion and engagement within their community, and the brilliant minds and significant capital backing them and studios like them, I have faith that the industry as a whole will find ways to address these concerns moving forward. 👌
The P2E Ecosystem Today
Earning an income from playing games has gone from being unthinkable or even shunned in the past, to a celebrated pursuit today. With the rise of P2E games, this social view will only get more traction, as more and more creative uses of both fungible and non-fungible tokens are implemented. Here are some of the noteworthy projects on my radar today:
Sorare is an officially-licensed (European) football ⚽ fantasy-league NFT game, with over 130 clubs signed up. Players can win prizes (additional player cards and/or $ETH) by participating in tournaments tied to the real-world performances of players.
F1 Delta Time and REVV Racing are the top licensed motorsport NFT games in the sector, and are among the titles that make up the Animoca Brands REVV motorsport library (all feature virtual racecar NFTs and the stake-able $REVV token). 🏁
Zed Run is a long-running horse racing game in which players own, breed, and race unique NFT horses. 🏇 The game runs on the Polygon network (low fees, fast transactions), and the parent company, Virtual Human Studio, secured a partnership with NASCAR in summer 2021. The project also recently announced upcoming support for cash-money tournaments.
Digital Trading Card Games (TCGs)
Online TCGs (like MTG: Arena or Hearthstone) are made for P2E NFT games - the collectability and familiarity of the genre lends well to many of the properties inherent to NFTs, such as semi-fungible rarities and tradability (I grew up with Pokémon and Yu-Gi-Oh, so I might be a bit biased 🙃).
Gods Unchained is one of the most widely known and longest-running NFT TCG games in the space, and is led by Chris Clay, the former director of MTG: Arena. The game made its debut on Ethereum in 2018, and is now almost fully transitioned onto Immutable’s layer-2 NFT-focused network, ImmutableX. It entered mainstream awareness in 2019 during a controversial Hong Kong censorship incident involving Blizzard’s Hearthstone.
Parallel is a sci-fi themed resource-based NFT TCG set in a future in which humanity has evolved into Parallel factions, each claiming control of a newly habitable Earth. Though a number of packs and cards have been pre-sold, the game itself has yet to be built (pre-selling NFTs to fund a project is becoming an effective strategy). However, based on trading volume and production value shown so far, collectors seem to be anticipating big things from this project. 🚀
By the way, if you want an easy win in Gods Unchained, DM me on Twitter and let’s have a game! 🔥
Familiar RPG elements like crafting, customizing gear, and of course, battling, are levelled-up in P2E NFT games, with several ambitious projects in the space taking on the RPG/action-adventure genre (note that most of the projects listed are not fully released and still in development).
Illuvium aims to be the first blockchain-based AAA PC title, with a team that looks to have the capital and talent needed to be a contender. Free-to-play and P2E, the game is building on ImmutableX and boasts a discord community of over 160,000 members (amazing, considering nothing is even playable yet)!
Set in an open-world RPG, gameplay looks similar to Pokémon or Monster Hunter (battling with creatures called “Illuvials”) with a dynamic battle system based on a combination of player control and auto-battle (I’m thinking something like recent Final Fantasy titles). There is also an NFT land-based resource-farming/city-building mobile game planned, separate from the main game (similar to Factorio or Sim City maybe?). The two games are being built by different teams but will share the same universe, with hints that resources accumulated in the mobile game will have utility in the main game.
$ILV, which had an initial pre-sale and is now available on several exchanges, can be staked to earn a cut of each in-game transaction, as well as to vote on governance decisions in the Illuvium DAO. The project aims to rethink game development, and entrusts the DAO to make key decisions on art, game mechanics, and the use of project funds. There is also an in-game currency ($sILV), which is basically $ILV native to ImmutableX. The game is currently set to launch in Q1 2022 (though there have been delays in the past).
Fun Fact: The creators, Kieran & Aaron Warwick, are the younger brothers of Kain Warwick, the founder of the hugely popular financial derivatives protocol, Synthetix. Smart fam! 😲
Ember sword is an MMORPG set in a stylized fantasy world of quests and lore. It also has a heavy sandbox aspect (building with resources and land), and had a very successful NFT sale earlier this year. Built on Polygon, Ember Sword aims to create a “direct” P2E model, in which earnings are generated in existing cryptocurrencies, rather than in in-game tokens.
Immutable, in partnership with Stepico Games, is set to publish their second NFT-based game: Guild of Guardians in early 2022. From the material leaked so far, the game looks to be a Diablo-like ARPG for mobile. Character and gameplay NFT assets for the game started presales earlier this year.
The in-game currency, $GEMS, is earned for general engagement with the game, and can be used for staking, in-game purchases, and voting on the direction of game development. As you might’ve guessed, it is built on ImmutableX and features gas-free transactions.
Aurory is a single/multi-player JRPG-style game on Solana with a battle system very similar to old-school Pokémon. The art style, though a bit unpolished, is quite whimsical and well-suited to the game.
Genopets is a really interesting one. Built on Solana and currently in private beta, the project describes itself as a “move-to-earn” MMORPG in which a player’s biometric data (tracked via fitness wearables privately using a zero-knowledge protocol) is used in-game. Physical activity is rewarded in the form of $KI tokens 🥋 (“Proof-of-Workout”? 🏋️♂️), which can be used to play mini-games (based on reaction time, memory, and overall cognition), craft/buy NFT items and habitats, and customize and upgrade the player’s NFT Genopet (free to mint).
Based on market trends, some speculate that NFTs in MMOs obtained “fairly” (i.e. no/low cost via airdrops and contests) through merit, time, and labor, especially those with purely cosmetic utility (i.e. not an NFT, but the “blue partyhat” in RuneScape), will be the most coveted.
Virtual World/Sandbox (“Metaverse”) Games
The scalability and stickiness of virtual world/sandbox games like Roblox is undeniable. If you, like me, believe that user-generated content (UGC) is one of the strongest trends in gaming today and for years to come (akin to UGC in streaming and social media #metaverse), then the value and appeal that NFTs will have in these communities should be clear. After all, who better than the players themselves to know what to create to satisfy their community.
Decentraland was the first (and is likely currently the largest) blockchain-based virtual world platform in the space, and as of this year, is supported on Polygon. A finite number of land parcel NFTs ($LAND) can be built upon using the In-World Builder (which will replace the current Builder once it contains all the same features). Transactions for virtual goods and services can be done using the platform’s $MANA token.
Somnium Space is a VR-first sandbox game available on Steam (for the time being, anyway; Steam recently updated their policies on blockchain based games) that runs on both Ethereum and Polygon. Transactions use $ETH and the $CUBE token.
The Sandbox, a voxel-based virtual world game, is Animoca Brands’ flagship dApp on Polygon. Similar to Roblox, users can create and share their own games and experiences using Game Maker tools (no coding required) and the standalone VoxEdit app. Everything from land parcels to avatars to wearables are NFTs which can be bought and sold using $SAND (also used for staking and governance).
CryptoVoxels is an accessible browser-based virtual world builder on Ethereum widely used by NFT artist to create virtual galleries. Unlike the previous three platforms, CryptoVoxels has no token; all transactions are done using $ETH.
My Neighbor Alice is a cute multiplayer builder game that encourages UGC collaboration to build friendship within the community. The $ALICE token on Solana, earned through various forms of participation on the platform, is used for governance voting, staking, and in-game transactions. Together with NFTs, My Neighbor Alice has a light but very sophisticated in-game DeFi-based economy with features such as lending and borrowing.
Omissions: Alien Worlds (browser-based space economy sim ($TLM) on WAX) and Upland (mobile app property trading sim ($UPX) on EOS) are F2P P2E NFT games with many users, but are click-to-earn games with no UGC. Treeverse, the much-hyped “RuneScape of blockchain games,” while promising, has yet to see much adoption.
Crypto/NFT 4X games are few in number, likely due to the development resources required to create games of such depth, complexity, and scale like Civilization. Interestingly, most of the projects I’ve come across are based on space exploration/conquest, similar to EVE Online.
Star Atlas, a triple-A hopeful building on Solana, is probably the most ambitious and anticipated blockchain-based strategy game in the space 🌌, with elements of flight simulators and RPGs thrown in for good measure. Players start by choosing one of three factions to align with (permanently), which dictates their location, strategy, and crafting ability. In addition to Solana’s $SOL, there are two in-game tokens: $ATLAS, the main currency used for in-game transactions, and $POLIS, used for voting on decisions on game development. Given the scale of the roadmap and unproven team, I am wary of this project’s ability to deliver on everything it has planned. 😔
One of the most interesting (in the geekiest way possible 🤓) projects on my radar is Dark Forest (currently invite-only beta), which computes gameplay directly on-chain (a true blockchain game) on xDai (Ethereum sidechain). Running on a sidechain with negligible fees and quicker transactions is very important to fully on-chain games like this since players are making a transaction every time they make a move (imagine the cost and lag time of doing that on Ethereum! 🤪🔪). xDai uses a technology called zk-SNARKs (extremely complex “zero-knowledge” cryptography), but in addition to cutting down on block space requirements ($$$), it actually enables the game’s innovative on-chain fog-of-war mechanic, in which all transactions a player makes are kept private (i.e. their location in-game), while simultaneously being verifiably legal (using the power of math and cryptographic proofs!).
The breakthroughs to encryption technology in the few on-chain games out there like Dark Forest could see massive applications outside of gaming, particularly in security and finance.
Virtual Pet/Pokémon-Like MOBA Games
The most popular project in the blockchain gaming space today is the virtual pet/MOBA game, Axie Infinity, with several projects looking to follow in its success.
Aavegotchi is series of collectible ghost-themed pixel-art NFTs that owners can interact with and visually customize. Aavegotchis exist in the Gotchiverse Realm: a whimsical 16-bit fantasy world that gives me vibes of Tamagotchi (duh), SNES (aesthetic), Club Penguin (mini-games) and Animal Crossing (social town builder). There are also $REALMS - an NFT land building social game currently being implemented.
What makes this project truly unique is its integration with Aave, one of the biggest DeFi protocols in crypto. Aave’s yield-bearing aTokens (typically USD-denominated stablecoins) can be staked to each individual Aavegotchi (called its “sprit force”) which grows over time, and makes each NFT feel like a gamified savings account (what a fun way to introduce newbies to concepts in finance and crypto 😄). The aTokens can be reclaimed by the owner at any point, but if an Aavegochi’s “spirit force” is ever fully depleted, the NFT is burned 🔥 - an interesting gamified mix of DeFi value vs. an owner’s attachment to their NFT (“is my Aavegochi worth more as money or as a unique NFT?”).
Fun fact: “Aave” means “ghost” in Finnish. 👻 Makes sense!
By the way, if you’re feeling intimated by any of these technical and financial details, don’t be! The Aavegotchi UX is quite intuitive and does a good job of keeping the complex bits hidden from the user.
The NFTs themselves, including all Aavegotchis, wearables, and virtual land, are tokens on the Polygon network (low fees and good for long-term interoperability of the project). The Realm’s in-game currency, $GHST, can be earned through various interactions with the game, and is used to:
stake to generate FRENS, a non-transferrable in-game point system (not a token; the only way to get it is through staking) that can be exchanged for tickets for airdrops and raffles for various items.
A couple useful resources for Aavegotchi trainers:
Chain Monsters, created by indie developer, B-Side Games, is a 3d Pokémon-like MOBA game with NFTs. It started off as a Kickstarter project, and was one of the first games to build on the Flow blockchain.
Axie Infinity: the hit turn-based battle strategy game saw a staggering 2M DAU (daily active users) in October 2021, with total commutative sales nearing $2B at the time of writing this! Details about gameplay and tokenomics were covered above in the Shopping for Tokens section. ☝
Interested in having some fun and maybe even earning some income on the side? Here is a list of helpful resources to give you an edge:
Fun fact: The creators of Axie Infinity all have rich gaming backgrounds and met on the CryptoKitties Discord server, which pioneered NFTs on Ethereum and in a way, the current P2E model. They soon formed Sky Mavis and created Axie Infinity with the goal to improve the gamification of economic incentive-based NFTs and crypto-gaming. Just a few years later, their passion project ileads the entire crypto P2E bull market.
By the way, for a high-level summary of each genre from an NFT collectibles perspective, please see the “2. Video Games 🎮” section of my recent article, “NFT Collectibles Primer 2021, Part 1: The 3 Types of NFT Every Collector Needs to Know” 👇
An Open-World Sandbox of Opportunity
Like the fog of war in strategy games, the crypto/blockchain gaming space is still in its early rounds and largely unexplored. With so many studios building blockchain tech into their games, it feels like the entire sector is at a watershed moment. The opportunity for both players and developers is immense.
Note that we barely touched on the impact that blockchain-based P2E games, NFTs, and social tokens will have on the extended gaming industry - e-sports, live-streaming, and influencer marketing on platforms such as YouTube and Twitch (spoiler: it’ll be huge too).
In closing, consider that Roblox launched all the way back in 2006 and roughly a decade passed before it gained much of an audience. To realize the true potential of tomorrow’s biggest games, the technology has to evolve - it won’t happen overnight. Immersive technologies like AR and VR will continue to improve and permeate the market, and blockchain and NFTs will be just as foundational. 💯📈
As always, thank you so much for taking time to share this journey together with me into the world of NFTs. I hope you found the content helpful, and maybe even fun to read! 😁
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⚠ Disclaimer ⚠ Cryptocurrencies and NFTs are a speculative asset class. Be aware of the risks involved and know that you could lose money. Everything I share references an opinion and is for information and entertainment purposes only. It is not intended to be investment advice. Please consult a licensed professional before making any investment decision.