Non-fungible tokens (NFT) have arguably gone from being an obscure part of the crypto and blockchain space to being more prominent in popular culture. As cryptocurrencies and decentralization seem to permeate the discussion across social, political and economic boundaries, the obvious hype surrounding NFTs seems to be an incentive for greater acceptance of digital currencies.
In the NFT space itself, gaming has often been cited as a possible use case for commercializing digital collectibles. Now, in the area of play-to-earn NFTs, there seems to be a growing coincidence of gaming, blockchain and the virtual economy.
Within this confluence, projects like Axie Infinity are seeing significant growth by combining player satisfaction with playing games with the opportunity to earn monetary rewards in the form of cryptocurrencies. With this popularity comes an increase in the token rating for these NFT games, which in turn leads to even more customer bases.
NFT play-to-earn gaming could be the next big economic activity in the crypto matrix. The significantly growing popularity of the model could lead to the market being mentioned in the same breath as other components of cryptocurrency trading such as mining, staking and trading, at least in terms of value creation potential.
$ 1 billion Axie Infinity
On August 9, Axie Infinity (AXS) surpassed an all-time volume of $ 1 billion, cementing the game’s position as one of the most important projects in the current bullish NFT era. Between July 9th and August 9th, the NFT game reportedly recorded approximately $ 780 million in revenue from over 1.4 million transactions.
Data from Similarweb shows that the Axie Infinity website was among the top 1,200 sites in the world at the end of July, with online traffic to the site increasing nearly five-fold in the past six months. In a tweet on August 6, Axie Infinity announced that it had exceeded the 1 million daily active players mark.
This 1 million user milestone announcement offers a glimpse of Axie’s growing popularity in a short space of time. Just as the Axie token price has increased 18x since early June, the game’s user base has also increased 1,000% over the same period. The growing attraction of the play-to-earn NFT gaming wave is so great that AXS and other similar tokens have countered the trend of falling crypto prices that has existed since mid-May.
Axie’s significant growth over the past two months has made the NFT game one of the most valuable crypto projects in the industry. At the time of writing, AXS is among the top 40 cryptocurrency investments by market capitalization, with price action trends pointing to a possible move above the $ 100 mark in the near future – a move that will improve the token’s year-to-date performance north of 18,700 %.
The microeconomics of play-to-earn
Many crypto and blockchain use cases are often faced with the problem of “mainstream adoption” – the way in which their novel protocols and operations generate widespread interest inside and outside the masses of the cryptocurrency space. For non-fungible tokens, play-to-earn gaming could be key to reshaping the narrative surrounding digital collectibles and blockchain games.
For one, the ability to earn rewards in the form of crypto for playing games likely creates economic incentives for would-be users, be they casual or hardcore gamers. There is even data to suggest that titles like Axie Infinity are becoming some kind of occupation for the younger demographic, especially those who live in countries hit by the current economic downturns due to COVID-19.
Related: “I’m a Miracle”: An Interview with an Axie Infinity NFT
Back in May, Cointelegraph reported that an Axie Infinity player from the Philippines was able to become a homeowner with the proceeds from the NFT game. The Philippines accounted for nearly half of all global web traffic on the platform in July, with the site ranking 33rd of the most popular in the country according to data from Similarweb.
Axie Infinity was developed by Sky Mavis, a Vietnam-based game studio, and is popular across Southeast Asia. The NFT gaming title also has considerable patronage from South America, particularly Argentina and Brazil.
Since the summer of 2020, play-to-earn NFT games seem to have had a life of their own, which is attracting the interest of more gaming guests. This steadily increasing interest, coupled with the NFT mania of the current time, has probably contributed to catapulting such blockchain gaming titles to even greater heights.
In an interview with Cointelegraph, Dragos Dunica, co-founder of the decentralized application analysis platform DappRadar, commented on the confluence of decentralized finance (DeFi) and gaming and said:
“Right now we’re seeing a convergence of DeFi mechanics and game mechanics to encourage interaction and usage. The most popular titles create environments in which users not only own a unique NFT, but can also use it for rewards within the same platform. “
According to Dunica, the current trend is the beginning of a “real revolution” in gaming and distributed applications (DApps) that is likely to flow into mainstream games. “The idea of in-game items as tradable NFTs, for example, will be a real game changer,” added Dunica.
Data from DappRadar’s Axie Infinity dashboard put the game at around $ 1.4 billion with more than 3.1 million sales. The gaming platform has also garnered over 416,300 retailers since its inception.
Non-Fungible Transformation: A New Virtual Existence
The popularity of blockchain-based play-to-earn games is also likely to offer another window into how NFTs appear to be transforming digital interaction. Craig Russo, Director of Innovation at NFT Vault and Marketplace Protocol PolyientX, told Cointelegraph:
“Play-to-earn is an area of high potential in the NFT space and we are already seeing some great market validations that have seen the price of most game-related tokens rise. Play-to-earn gaming is a very niche, however, and it will require significant forays into the mainstream gaming ecosystem before the level of adoption can rival that of non-blockchain gaming segments like eSports. “
Both Russo and Dunica stated their expectation that NFT games, especially the play-to-earn variant, will become an integral part of the evolving metaverse of the nascent metaverse. “
According to Russo, NFTs and the wider DeFi space have the potential for wide-ranging interaction:
“A user’s ability to earn cash flows in the token economy by putting work into a game will be a fundamental driver of this new virtual existence. I am particularly interested in the cross-talk between NFTs and DeFi, which will fuel the next major growth turning point for the NFT market. “
He said projects like Ape In, an NFT-driven virtual world, are already focusing on a “consumer-friendly” approach to DeFi by introducing features like staking out game characters. For Russo, such moves to improve NFT liquidity will help convert non-fungible tokens into more productive assets and further expand their on-chain utility.
Related: Blockchain games have struggled to compete with traditional titles … until now
For Dunica, the transition to a digital lifestyle is happening at an accelerated pace, telling Cointelegraph, “The idea of spending time in a virtual environment isn’t as strange as it used to be.”
Given the growth of platforms like Axie Infinity and the property retention potential offered to gamers, NFT games to earn could therefore provide the channel for the “first use case for true mass adoption in the blockchain space.”