BLOCKCHAIN PLAY2EARN AND THE METAVERSE:
FINANCE, FUN, AND FACEBOOK
In the past few years, gaming has shifted from being considered the reserve of super-fans who stay up all night grinding on their shooter or fantasy games, to being a mainstream daily pastime of millions of people around the world.
The industry is growing at an exponential pace, expanding its appeal and presence, with the frenzied uptake of blockchain gaming: the new crypto-charged Play2Earn model. Gamers are jumping at the chance of earning De-Fi rewards — instead of walled-garden tokens, stuck inside the game — for achieving objectives in their favourite fun pastime. Payments are made securely, using cryptowallets, and assets are stored transparently on the blockchain; soon, they will be used across other games or ecosystems, or even converted into fiat currency.
In 2020, the total global gaming market was valued at $175bn, more than the movie and music industries combined, and is predicted to grow to $219bn by 2024. (Newzoo Global Games Market Report, June 2021).
The meta-what?
Players are pivoting towards a more proactive role — rather than being simply participants, they can now create and even govern their own “metaverses”, or virtual worlds. Unsure what the metaverse is? Think finance + A.I. + social: we will spend increasing amounts of our lives trading, working and playing in a virtual immersive, expansive and interactive environment.
One definition of the metaverse, by Matthew Ball, is that it has to span the physical and virtual worlds; contain a fully fledged economy; and offer “unprecedented interoperability” — users have to be able to take their avatars and goods between metaverse worlds, no matter to whom each part belongs.
It must also “be populated by ‘content’ and ‘experiences’ created and operated by an incredibly wide range of contributors”.
The metaverse is the continuation of the internet’s evolution; the next generation. For today’s teenagers, this will be their reality. It’s Ready Player One — almost.
And now the big guns are jumping on board: Mark Zuckerberg announced this week that Facebook will invest $50m in a new fund “to partner with organisations to responsibly build the so-called metaverse”, and the Facebook CEO said recently, “You can think about the Metaverse as an embodied internet, where instead of just viewing content — you are in it. … In the coming years, I expect people will transition from seeing us primarily as a social media company to seeing us as a metaverse company.” (The Verge, July 2021). It has already been coined “the Zuckerverse”.
Ownership = individual empowerment
A key part of the new gaming ecosystem is NFTs (non-fungible tokens), verifiably rare collectible items which are owned digitally and held on the blockchain. Whereas before, gamers could not take their skins and weapons out of the game where they bought or won them, now they can own them, and use them in another game or trade them. Newzoo forecasts that 77% of 2023 spending in gaming, or $168bn, will be on in-game items.
The NFTs market has boomed in the past few years, exploding from $41m in 2018, to $338m in 2020, and $2.5bn in the first half of this year alone; in addition, private investment in NFTs and gaming in H1 2021 (January to June) was $1.2bn, according to The Block. During the same period, crypto gaming companies specifically closed 24 investments of $476m, with three of them — Forte, Animoca Brands and Mythical Games — representing 75% of the total (Invest Game).
Another great opportunity for both players and investors is to take part in the governance, and in some cases share in the financial success, of their metaverses, by buying tokens in a DAO (Decentralised Autonomous Organisation). These set the rules of engagement, such as voting rights, and terms of smart contracts for in-game transactions recorded on the blockchain. Indeed, it has been said that blockchain and NFTs are turning gamers into investors.
In the future, as well as Facebook, and established AAA gaming developers, it is highly probable that entertainment, tech and social behemoths with the requisite financial might and tech know-how, such as Microsoft, Netflix and Snapchat, will move into the metaverse space. Doubtless the hype will continue to surround new ventures — watch this space!
The Sandbox — a UGC world
One of Animoca’s best-known games is The Sandbox, a virtual social world in which users build their own games and experiences. This is the biggest gaming category — user-generated content, in a creative environment where gamers are not working towards an end game. They are simply exploring and enjoying the Sandbox’s metaverse, in a deeply immersive way.
The Sandbox has over 40 million downloads and 1.2 million monthly active players. Now it is making a much-anticipated move into blockchain, on the Ethereum platform. The new game will be 3-D, multiplayer and multi-platform.
Users will be able to buy plots of land as NFTs using Sand, the utility token of the game, which will also have a governance function. They can rent out their land, and can also sell assets in secondary markets.
Celebrities are muscling in on the metaverse too — Snoop Dogg is creating his own world in The Sandbox, with NFTs including player avatars, plus a limited ‘Snoop Dogg Private Party Pass’ that gives users VIP access to concerts, events, Q&As and dedicated NFT drops.
From music to fashion — the metaverse lends itself perfectly to digital style, with wearables, collectibles and avatars used in blockchain games. Couture houses such as Dolce&Gabbana, Balmain and Gucci have all released NFT pieces. On Decentraland, users can make and sell their own clothing. Plus it’s sustainable — no fast fashion here.
Axie Infinity — a breeding ground
But the crypto game that has been on everyone’s lips for the past few months is Axie Infinity (Sky Mavis), a Pokémon-inspired game where little creatures called Axies fight against each other and are bred using two tokens: SLP and AXS. Axie has around 1.5m monthly users, and produced $244m in the last month (to 24 September). Yes, you read that right — in one month. After generating more than $2bn in total NFT transactions, some believe the game has now peaked, as the price of SLP has dropped by 75%.
The idea is simple enough, but they need players all the time, in order to battle and breed Axies and keep the game going. The sweet spot is a previously untapped workforce — “scholarships” run by Yield Guild Games, a DAO that invests in NFTs, have on-boarded users in third-world countries like the Philippines, Thailand and Brazil. A “manager” buys three Axies for a new player, who then plays with them and splits the proceeds.
The “scholars” earn so much money that they can improve their circumstances and help their families; Axie tokens have created their own local economy.
Axie Infinity holds $200m in its on-chain treasury (fees earned for breeding, marketplace trades, and buying plots of land). Holders of governance tokens (AXS) will be able to stake their tokens, use them for in-game purchases, and participate in key governance votes. In the future, AXS stakers will receive dividends from a community treasury, which will in turn be governed by stakers once the network has been decentralized.
NEW GAMES — SETTING THE STAGE FOR THE METAVERSE
Mirandus will be launched next year by Gala Games; $500,000-worth of assets of this epic fantasy RPG were snapped up in three minutes, offering an interesting investment opportunity. Galactic grand strategy game Star Atlas, also due next year, will see 80% of future minted ATLAS tokens rewarded to players who perform outstandingly in the game.
Guild of Guardians (Immutable) is a blockchain fantasy RPG game for mobile. When the in-game tokens (Gems) are used to buy assets, they will be added to the reward pool and distributed to the community, contributing to the guild. So far, 120,000 payers have signed up, and YGG has identified this as a potential revenue stream, creating a “metaverse economy”.
The sky (at least, the A.R. sky of the metaverse) is the limit for blockchain gaming — as ever with any up-and-coming tech space, the key is to watch out for drops, so you can snap up assets from the hottest new games before their prices shoot up into the stratosphere.
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