• Ready Player Earn: The intersection of NFT gaming and the virtual economy

  • The growing popularity of NFTs is driving the adoption of play-to-earn NFT games to new heights.

    Nonfungible tokens (NFT) have arguably moved from obscurity in the crypto and blockchain space to greater prominence in popular culture. Indeed, as cryptocurrencies and decentralization permeate the conversation across social, political, and economic lines, the apparent hype surrounding NFTs appears to be incentivizing greater adoption of digital currencies.

    Within the NFT space, gaming has frequently been mentioned as a potential use case for the commercialization of digital collectibles. There appears to be a growing convergence of gaming, blockchain, and the virtual economy within the scope of play-to-earn NFTs.

    Within this nexus, projects like Axie Infinity have seen significant growth by combining the enjoyment gamers get from playing games with the opportunity to earn monetary rewards in the form of cryptocurrencies. With increased popularity comes an increase in token value for these NFT games, which drives even more patronage.

    NFT play-to-earn gaming could be the next significant economic activity in the crypto matrix. Because of the model’s rapid growth in popularity, the market may soon be mentioned in the same breath as other components of cryptocurrency commerce such as mining, staking, and trading, at least in terms of value generation potential.

    $1-billion Infinite Axie

    On August 9, Axie Infinity (AXS) surpassed $1 billion in all-time volume, firmly establishing the game as one of the most important projects in the current bullish NFT epoch. The NFT game reportedly generated $780 million in sales from over 1.4 million transactions between July 9 and August 9.

    According to Similarweb data, the Axie Infinity website was ranked among the top 1,200 sites in the world as of the end of July, with online traffic to the site increasing nearly fivefold in the last six months. Axie Infinity announced on Twitter on August 6 that it had reached one million daily active players.

    This one-million-user milestone announcement provides insight into Axie’s rapid rise in popularity. The Axie token price has increased 18-fold since early June, and the game’s userbase has increased 1,000% during the same time period. Because of the increasing allure of the play-to-earn NFT gaming wave, AXS and other similar tokens have defied the crypto price decline trend that has been in place since mid-May.

    The NFT game has become one of the most valuable crypto projects in the industry as a result of Axie’s significant growth over the last two months. As of this writing, AXS is ranked among the top 40 cryptocurrency assets by market capitalization, with price action trends indicating a possible move beyond the $100 mark in the near term — a move that would bring the token’s year-to-date performance to more than 18,700 percent.

    The Microeconomics of Earn-to-Play

    Many crypto and blockchain use cases are frequently confronted with the “mainstream adoption” problem — the path by which their novel protocols and operations will garner widespread interest from both within and outside the cryptocurrency space. Play-to-earn gaming for nonfungible tokens could be the key to reshaping the narrative surrounding digital collectibles and blockchain gaming.

    In May that an Axie Infinity player from the Philippines was able to become a homeowner using the proceeds from the NFT game. According to Similarweb data, the Philippines accounted for nearly half of total global web traffic to the platform as of July, with the website ranking as the 33rd most popular in the country.

    For starters, the ability to earn crypto rewards for playing games likely creates economic incentives for would-be adopters, whether casual or hardcore gamers. There is even evidence that titles like Axie Infinity are becoming a sort of occupation for the younger demographic, particularly those living in countries affected by the current economic downturns caused by COVID-19.

    Axie Infinity is a popular Southeast Asian game developed by Sky Mavis, a Vietnam-based gaming studio. The NFT gaming title is also popular in South America, particularly in Argentina and Brazil.

    Since the summer of 2020, play-to-earn NFT games appear to have taken on a life of their own, attracting the attention of more gaming enthusiasts. This steadily increasing interest, combined with the current NFT craze, has most likely contributed to such blockchain gaming titles reaching even greater heights.

    Dragos Dunica, co-founder of decentralized application analytics platform DappRadar, commented on the convergence of decentralized finance (DeFi) and gaming in an interview with ULTCOIN365, stating:

    “We are currently witnessing a convergence of DeFi mechanics and gaming mechanics to drive interactions and usage. The most popular titles are creating environments in which users can not only own a one-of-a-kind NFT but also leverage it within the same platform for a reward.”

    According to Dunica, the current trend marks the beginning of a “true revolution” in gaming and decentralized application (DApps), which will most likely spill over into mainstream games. “The concept of in-game items as tradable NFTs, for example, will be a real game changer in the future,” Dunica added.

    According to DappRadar’s Axie Infinity dashboard, the game’s total lifetime revenue is around $1.4 billion, based on more than 3.1 million sales. Since its inception, the gaming platform has attracted over 416,300 traders.

    A new virtual existence as a result of a nonfungible transformation

    The popularity of blockchain-based play-to-earn games may also provide another lens through which to examine how NFTs appear to be transforming digital interaction. According to Craig Russo, director of innovation at NFT vault and marketplace protocol PolyientX:

    “Play-to-earn is a high-potential area within the NFT space, and we’re already seeing some great market validation, resulting in a price surge across most gaming-related tokens.” However, play-to-earn gaming is very niche, and significant inroads into the mainstream gaming ecosystem will be required before adoption levels rival those of non-blockchain gaming segments such as esports.”

    Both Russo and Dunica predicted that NFT gaming, particularly the play-to-earn variety, would become an integral part of the developing metaverse, with Russo stating, “I believe play-to-earn gaming will be one of the major pillars of the emerging metaverse.”

    NFTs and the broader DeFi space, according to Russo, have the potential for broad-based interaction:

    “The ability of a user to earn token economy cash flows by putting effort into a game will be a key driver of this new virtual existence. I am particularly interested in the crosstalk between NFTs and DeFi, which will fuel the NFT market’s next major growth inflection point.”
    He claims that projects like Ape In, an NFT-driven virtual world, are already focusing on a “consumer-friendly” approach to DeFi by introducing features like in-game character staking. Such steps to improve NFT liquidity, according to Russo, will help to transform nonfungible tokens into more productive assets, thereby expanding their on-chain utility.

    According to Dunica, the transition to a digital lifestyle is happening at a rapid pace, and “the idea of spending time in a virtual environment is not as strange as it once was.”

    As a result, given the growth of platforms such as Axie Infinity and the ownership retention potential offered to gamers, NFT play-to-earn games may serve as a conduit for the “first real mass adoption use case in the blockchain space.”

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