Blockchain and crypto are continuing to make their mark across a range of industries, from personal insurance to algorithmic trading. In this article, we’ll discuss another exciting use case – the gaming industry.
Gaming has always been a very important area of technology. The market is projected to reach a size of $314.40 billion by 2027, and it continues to grow at a rate of more than 10% every year.
Since their very inception, video games have caught the attention of the masses.
Much has improved and changed in the world of gaming over the last few decades. Today’s realistic, 3D animated games are nothing like their rudimentary 2D predecessors.
The open-world concept has completely revolutionized gaming by adding a social angle to it. The use of virtual and augmented reality has transformed the present gaming scenario into a futuristic, sci-fi story.
If you think the gaming industry is reaching its technological maturity, you are wrong. We are now standing at the threshold of the next big innovation in gaming – blockchain-based games. For the first time, the model will no longer be pay-to-win. The new play-to-earn model is all set to rule the world of gaming. Let’s find out how.
GameFi – Gaming and Finance
The relationship between gaming studios and end-users has always been unidirectional. Users would pay the companies to get access to the games they have developed. They would continue to pay the company through in-game purchases, subscriptions, and so on.
Gaming studios had no role in creating an ecosystem that would give monetary incentives to the users. GameFi has completely changed this unidirectional flow of resources.
The word “GameFi” is a play on the word DeFi, which means decentralized finance. DeFi is a characteristic development on the blockchain, and so is GameFi. The underlying principles of both ecosystems are closely connected. Both seek to do away with the intermediary authority. In DeFi, these are the banks and governments. In GameFi, they are the gaming companies along with the banks.
GameFi has given rise to the idea of play-to-earn.
The widely popular blockchain-based game Axie Infinity made headlines for people earning $10 to $15 from the game every day. While the amount may seem small by US standards, it is a substantial amount of money for countries with weaker currencies. In the Philippines, people earned their living from Axie Infinity amidst the Covid-19 pandemic.
Let’s understand the play-to-earn model to see how it is fast becoming the future of gaming.
Play-to-earn vs Pay-to-win
Play-to-earn and pay-to-win are two operational models for video and online games that determine how a game generates revenue. In traditional video games, the gaming studios own all the assets in the game. Users who want to play these games have to pay the studios in order to access the contents of the game. However, payments do not stop after the initial purchase. There are numerous places in the game where you can spend money to get more perks.
The most important thing to note here is that everything you buy within the game is still not yours. You do not have ownership of any in-game assets. If the gaming studio decides to take the game down tomorrow, you lose all your money, and there’s nothing you can do about it.
The play-to-earn model is the complete opposite of this. In blockchain-based gaming, the games are often improved and developed by members of the playing community. They get paid in governance tokens, which are a type of cryptocurrency you can trade and make money from. Apart from that, the in-game items are in the form of NFTs. When you buy an in-game asset, you are essentially buying the NFT. You can trade or sell these NFTs to make revenue within and outside the gaming ecosystem. For instance, Wizardia is a blockchain-based video game where players fight to survive and explore the metaverse. Represented by NFTs, these magical beings can be freely traded in a Wizardia online marketplace.
The play-to-earn model does not give complete authority to the game developers. These are user-generated games that are also regulated by people within the community. It is a breakthrough idea that democratizes the process of creating games and earning money from them.
Why Blockchain-Based Gaming is Gaining Traction
On the surface, it might be difficult to understand why people want to switch to blockchain-based gaming or GameFi. The current gaming scene is very strong, with leading companies like Ubisoft and EA turning into multi-billion dollar companies. What could have caused this spark of innovation amidst a flourishing market?
There is no single answer to that question. Gaming, on the whole, has become more and more social. For example, some of the most popular games today are Fortnite, Call of Duty, FIFA, and so on. All of these games bring a social angle to the gameplay. The well-known game Minecraft is based entirely on an open-world concept, one that needs multiple players playing the game at the same time.
However, games created by big tech companies will always have a certain amount of centralization. The game developers take data from millions of people and then aggregate it on one platform. However, people are now more privacy-conscious than ever. The idea of giving away all your data to a big tech brand does not sound good to many, especially when Facebook, Google and other companies are already doing the same thing. Apart from the play-to-earn model, this is one of the major driving forces behind the growth of blockchain-based gaming.
Web 3, Metaverse, and Blockchain-Based Gaming
Metaverse opens a new world of possibilities for blockchain-based games. Since the core idea of the Metaverse is a realistic representation of an open-world, blockchain-based games provide the perfect use case. We can already see that happening on metaverse platforms like Decentraland and Sandbox.
Gaming is just one of the many components of the Metaverse. However, it can be one of the most impactful use cases. More people will be drawn to the Metaverse through blockchain-based games. If and when the Metaverse becomes mainstream, blockchain-based games will proliferate very quickly.
The core idea of Web 3 is based on decentralization and bringing more people together at the same time. With big corporations like Meta gearing up for the Metaverse, we will soon see a massive transition to blockchain-based gaming.
Games That are Spearheading The Revolution
When talking about blockchain-based games, we must begin with Axie Infinity. This game single-handedly brought blockchain-based gaming to the mainstream and made the play-to-earn model popular. Players have to create, raise and breed the in-game creatures called Axies, which are nothing but digitized NFTs that users can trade and sell. Players also get Smooth Love Potion (SLP) tokens which they get to cash out every two weeks.
Moboxis another blockchain-based game that is gaining in popularity. Mobox integrates yield farming with an open-world, NFT gaming model. Mobox is backed by the largest crypto exchange in the world, Binance. It is well-known for its smooth gameplay and smooth learning curve.
Sorarebrings the experience of fantasy leagues to the world of blockchain-based games. It is a fantasy football game where users collect digital cards of players to create teams. Sorare has partnered with Major League Soccer (MLS) to make their games realistic and relevant. Ubisoft, one of the biggest gaming studios in the world, backs the development of Sorare.
Conclusion
Ubisoft recently added NFTs to their existing games. While the reaction was largely negative, it shows the general trend in the industry.
EA Sports also called blockchain-based games ‘the future of our industry’.
Mobile gaming giant Zynga is also planning its entry into the world of play-to-earn games. If the current scenario is any indication about the future of gaming, blockchain-based games are set to take over the industry.
