We have had some chop these past few weeks and we took a small hiatus in posting ‘In A Delchain Minute’. Crypto never sleeps of course but you do need to get away from screens every now and again to recharge. Considering that one of the most anticipated TGEs in crypto gaming recently occurred ($Gaimin, the very first project incubated by Coinmarketcap – https://twitter.com/GaiminIo) I thought it useful to talk about one of the most interesting spaces in the crypto market – crypto gaming. Also, Trinity of the Fabled will be out on the 26th of April – this one is very long awaited and should do pretty well https://x.com/TheFabled/status/1775614227836776857.
What has crypto got to do with gaming?
This is a very valid point. Gaming has evolved from board games like chess to high octane first person shooters in the blink of Hal’s eye. There are a plethora of games on the market now that have subscriptions for new maps, weapons and skins (i.e. the colour of in game items) available for purchase. Sometimes a weapon gives a player an advantage (higher damage / greater accuracy ) whereas skins give no competitive advantage, they just look cool. This article goes into the origin of the first in game market places https://medium.com/@ex.corp/history-of-skin-trading-from-penny-loot-boxes-to-inventories-for-100-000-and-much-more-877da7e9b1f7. This market is expected to grow from $73.27 billion in 2023 to $80.88 billion in 2024 at a compound annual growth rate of 10.4% (per https://www.thebusinessresearchcompany.com/report/online-microtransaction-global-market-report). The issue you have with a lot of games is that the in game purchases you make are not readily transferrable and are essentially a sunk cost that is either difficult or impossible to monetise. You play a game for a few months, level up your characters and weapons, beat everything, play the online quests and eventually, inevitable like the tide… you get bored of the game and want to move on to something else. You in game assets are now of little to no value to you.
Enter NFTs
What if your Level 100 Warlock were an NFT though? Your crystals (or whatever ingame currency you had spent your money on) were tokens? Why then when you were finished playing the game you can go onto a decentralized / centralized marketplace and sell your in game assets (characters / weapons / consumables) and in game tokens at the prevailing market rate. Or indeed if a sequel came out and the game developers are not morons, your existing assets from say Fantasy Killer 1 can be imported over into the new released Fantasy Killer 2 and you have your Level 100 Warlock that is identical in stats / powers to one that you would have to grind away for weeks to achieve in the new game, but you will have a different skin (grey beard for instance) to show all players that you are an OG from the first installment. This is what a number of gaming studios are working towards. As why would you bother playing a game, spending your time and money on it when ultimately whenever you are finished with it, the game keeps your assets and you get nothing in return and you have the option of playing similar games that offer these options?
Thesis
The true adoption of crypto will come through gaming applications as millions will play games that are fun and appealing which benefit from blockchain features such as:
– Ownership of assets that can be traded in a secondary marketplace.
– Source of income through incentivisation programs.
– Ease of Access. New phones already have hardware wallets in them for Mobile Gaming (see Saga Phone for Solana).
– Infrastructure has improved greatly to enable smoother User Experience (UX) through many L1 and L2 blockchains that support gaming. In the last bull run (2021) that wasn’t the case so this is now uncharted territory
– Social communities that emerge within these games. Collaboration and strategizing are rewarded.
– Circular in game economies have been fine-tuned with extensive research on tokenomics to balance the token velocity.
The Granddaddy
An article about crypto gaming cannot be complete without a mention of Axie Infinity. Axie Infinity (“AXS”) was the first successful example of this where millions of users were playing a simple NFT game and a new economy was born.
Many much greater AAA games will come and the complexity of blockchain technology will be abstracted away into the background to the point where users will barely notice it. Like how we use the internet now. I have no idea how the internet works in the background, but it works – most of the time!
Source: https://www.coingecko.com/en/coins/axie-infinity.
AXS is a pretty simple game, playing it became a popular activity in the Philippines in 2021 as you could play the game and make some real money – provided of course you got in early and actually sold some of your $AXS. https://www.cnbc.com/2021/05/14/people-in-philippines-earn-cryptocurrency-playing-nft-video-game-axie-infinity.html The above chart is another monument to round trips. Of course the price of $AXS was not helped by the Ronin hack – https://medium.com/uno-re/biggest-crypto-hack-of-all-time-a-breakdown-of-the-ronin-network-hack-ef8d9e25ba6b exploits such as this are possible in the crypto space. Over two years later the price still has not recovered and it is unlikely that it will. There is insurance now available for smart contract failure, cyber security, etc. in the market, like Relm. However, the capacity to write big tickets is not yet there.
The upstarts
There are already a handful of AAA games in the market like $Illuvium, $SIDUS and $Imposters that have first mover advantage and may have a considerable lead in the space once the AAA gaming studios get in on the action. It takes years to develop a game so games that were started a few years ago with seemless crypto incorporation in mind are only now coming to market. As you can see, there are quite a few gaming tokens available already https://www.coingecko.com/en/categories/gaming. None of which have really captured the gaming public’s imagination as of yet. The MCAP of all gaming tokens is some $26 billion USD at time of writing. By way of comparison, $DOGE, a memecoin that has zero utility has a $25 billion MCAP. One breakout game could move the needle all by itself. There are plenty on the way such as $Bloodloop, $Shrapnel, $Metalcore and others. If you are not already in a pre-sale for these specific tokens or tokens in general, do not buy the tokens on TGE, crypto tokens are very volatile on launch, so it is a sure way to lose a lot of money trying to buy a token on launch. There are bot armies waiting to frontrun you. So wait a few days if you are interested in it and pick up your bag then / over time.
The Citadel
There really cannot be a discussion about crypto gaming without mentioning Neo Tokyo (https://twitter.com/NeoTokyoCode) this is a token gated group of VCs, investors, builders and developers all focused on the crypto gaming sector. It was founded by Ellio (https://twitter.com/elliotrades) and Alex Becker (https://twitter.com/ZssBecker) two influential people in the crypto gaming sector. There is presale access for members depending on the level of NFT they hold and the amount of $Bytes they have staked. Basically, anyone who is anyone in the crypto gaming space is already in there. This year they will start doing more in real life events to further develop their reach.
Side note – if you are new to crypto and you start looking at crypto influencers Twitter accounts you may not realise that a lot of the posts there are from impersonators looking to get you to click onto some drainer site. https://twitter.com/MintDefense just launched a social scam detection which looks like this:
It is a very innovative tool and the writer has a personal subscription to them. They have no affiliation whatsoever with Deltec Bank and Trust Group, just a good product. This additional layer of security is a bonus add on to your EVM wallet security provided by the mintdefense team.
Picks and shovels
Of course, the infrastructure for gaming is something to look at aswell, $IMX, $Super, $Naka and $Myria are interesting tokens. They are either gaming platforms (upon which games are built and published) or in $IMX’s case, a layer 2 for NFTs on Ethereum. All will be crucial for the development of the crypto gaming industry. There will be a few gaming winners who will strike gold with their offering to the market. However, it is the platforms that support it, who provide the picks and shovels in a gold rush, who should do pretty well if the narrative finally does take off. 2021 saw a lot of titles launch / raise only to disappear, as failures. Quite a few other projects raised in 2021 and kept building the game / platform and are now coming to market lean and mean, like $Fabled.
As with all niches in crypto there is risk, the entire current offering on the market could collapse in value with a few judicious protocol failures / hacks. However, the odds of a champion emerging from the avalanche of games coming to market are only increasing. One breakout crypto gaming token and this chart goes parabolic https://dappradar.com/rankings/games/charts?range=1y. It is an area to watch with great interest. The writer has been watching and investing accordingly!