The non-fungible token (NFT) sector of the cryptocurrency ecosystem made waves in 2021 that made headlines even on mainstream news outlets. Celebrities, musicians, sports teams, established auction houses and even fast food restaurants were involved in the creation and / or sale of unique digital items.
Leading NFT marketplaces like OpenSea are seeing record-breaking trading volumes while projects like CryptoPunks and Pudgy Penguins are exchanged tens of millions of dollars in value every day. However, it can be difficult to know which projects can hold or increase their value over the long term, and which are likely to fizzle out when the hype subsides.
NFT projects that fit into the growing crypto metaverse and offer multiple ways to get involved and generate returns, such as play-to-earn and staking functions, have gained prominence and caught the attention of average investors as well institutional actors.
Here are some of the best metaverse-enabled NFT protocols that have the potential to have long term staying power, as well as pointers on how to spot those diamonds in the ruff in an increasingly dense field of NFT projects.
Play-to-earn platforms attract the masses and generate income
Axie Infinity has emerged as one of the breakout protocols in this bull market cycle as its gameplay play style allows users to have fun fighting in-game characters called Axies while earning an income.
In contrast to the free-to-play model of apps, which are filled with in-game purchases intended to charge a user’s bank account, funds spent on platforms like Axie Infinity offer the opportunity to earn an income or a Achieve adequate returns as decentralized financing (DeFi) and economic principles such as staking, inflation and scarcity are integrated into the game model.
The Axie Infinity ecosystem recently exceeded one million active daily users and has processed a total of $ 1.373 billion in total, according to CryptoSlam.
The protocol has seen the highest adoption rates in areas of the world like Malaysia and Venezuela, where people’s economic struggles bring in the 150 to 200 Smooth Love Potion (SLP) a gamer can earn each day – valued between 23.70 and 31st , $ 60 at the time of writing – an attractive daily source of income.
55 axes, 18 scholars. $ 5,000 monthly passive income. Only at @AxieInfinity $ SLP $ AXS #AxieNiJumong #AxieStipendium
– Mr M (@BlackMambaBitco) August 6, 2021
With the Venezuelan government introducing a monthly income of $ 2.40 at the exchange rate estimated by the country’s central bank, a daily income of $ 23.70 could potentially support a family for up to 10 months.
Because of these factors, NFTs in the Axie Infinity ecosystem have a stronger opportunity to hold their value over time and maintain higher levels of liquidity than many of the random NFT projects that are simply glorified JPEGs.
Tokens that generate NFTs offer collector benefits
Another project that offers a unique blend of DeFi, gameplay and NFTs is Aavegotchi, a platform based on the Aave protocol that allows avatars to be combined in-game with other cryptocurrency assets that are then used as DeFi collateral and earn staking rewards.
Aavegotchi avatars, known as gotchis, are rare and new ones are only minted in a limited number each year and published by auction or raffle.
HAUNT 2 IS CONFIRMED #AavegotchiDAO successfully welcomed 15,000 new Aavegotchis to @ 0xPolygon this August!
Old and new Frens have the opportunity to get hold of a Haunt 2 portal via # Bid2Earn auctions and #NFT raffles.
GET HYPED! https://t.co/xt5IU3AZ0B pic.twitter.com/Do6ad1NEiT
– Aavegotchi HAUNT 2 AUG 26-29 (@aavegotchi) July 27, 2021
Users who put the native GHST token on the log will receive rewards in the form of FRENS, which can be used to purchase raffle tickets that are entered into draws for in-game items such as wearables, consumables, or Gotchi summoning portals.
These items can then be combined with gotchis to increase their rarity and value, or sold on the marketplace as another source of income for token holders.
The ability to lock other tokens or assets in a gotchi adds another level of value and rarity to any avatar. To extract additional assets, gotchis are destroyed in the process, leading to an increase in scarcity.
At the time of writing, 7,760 portals have been opened and 432 gotchis have been sacrificed, according to Aavegotchi Stats, leaving a circulation of 7,328 gotchis of varying characteristics and rarity levels.
Cross-asset staking and gameplay complete the metaverse
One final project that is new to the scene but still attracts attention is Illuvium, an open world fantasy fighting game based on the Ethereum (ETH) blockchain.
While this project is still in development, the price of its native ILV token rose 1765% between June 22nd and August 13th as the excitement mounts ahead of its launch.
One of the catalysts behind the price hike was the introduction of ILV staking, which allows token holders to earn between 43.44% and 86.88%, depending on how long tokens are blocked.
Illuvium has also offered cross-asset staking via flash pools, which enables Axie Infinity (AXS) and Synthetix (SNX) owners to earn ILV by staking their tokens on the protocol.
One method the team used to raise awareness of the project was to create unique NFTs that represent some of the best crypto influencers, and the team also has a steady stream of teasers and updates on characters and NFTs which will be found in the game.
We’re going to just leave this here … we know you are all waiting for more UI leaks, here’s the latest sneak peek! pic.twitter.com/8AFzvx7Rr0
– Illuvium (@illuviumio) August 19, 2021
Developing an AAA-rated game on the Ethereum blockchain has been a coveted goal of the gaming community for years, but network restrictions have made it impossible so far.
If Illuvium can achieve its goal of creating a highly interactive and visually engaging game that will attract users from the traditional gaming community, assets and NFTs within the ecosystem have the potential to maintain or increase in value over time.
Gamers spend hundreds of hours and thousands of dollars a year on some of the most popular free-to-play games that include the ability to purchase rare items, which gives them an edge over their competitors, but little value remains in the end left over of the day in exchange for all that time and expense.
NFTs enable a new paradigm in gaming where the time spent playing and the loot acquired can be converted into real value that lasts over the long term. Projects that adapt and integrate with the growing decentralized crypto metaverse are in a prime position to drive adoption and value.
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