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SupraOracles: How blockchain and cryptography are revolutionizing the game economy?

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Given that the top five game coins currently have a combined market cap of $25 billion, the total cryptocurrency market cap is now close to $40 billion.

Supra Symposium | Crypto and Blockchain Games: A Complete Guide

Originally written by Suzytu

There's no denying that the video game industry is one of the largest and most profitable industries in technology and entertainment today. It is estimated that more than one-third of the world's population plays some type of video game. The global video game market is currently valued at between $15 billion and $200 billion by the end of 2021, with some estimates suggesting it could actually be as high as $336 billion.

The global video game market is projected to grow incredibly to $545.98 billion by 2028, with a projected compound annual growth rate (CAGR) of 13.20% over the next seven years.

Crypto and blockchain gaming is probably the fastest growing and most exciting trend in the video game and blockchain industry. The crypto game industry generated about $321 million in revenue in 2020 and exploded in 2021, with the market value of some game tokens ballooning into the billions. Crypto revenue in 2021 is difficult to determine, but is likely well over $1 billion, given that the top five game coins currently have a combined market cap of $25 billion, while the total market cap of crypto coins is currently close to $40 billion.

In this article, we will cover a variety of information about the current state of the crypto and blockchain gaming industry, covering topics including:

1. How do crypto games transfer profits to players

2. The world's top game currency

3. The importance of game guilds

4. Massively multiplayer online role-playing games and blockchain games

5. Cryptocurrency and NFT in traditional games;

6. Dynamic NFT and prophecy machines in crypto games

How do crypto games transfer profits to players

Video game economics has traditionally been a one-way street. Players buy games, buy subscriptions, and buy in-game items, and all profits and revenues go to the game's creator. However, blockchain and crypto games are trying to change this economic model, allowing players to reap substantial financial rewards by engaging in consistent games.

With the rise of games like Axie Infinity and the release of in-game tokens, currencies and NFT, many individuals in low income countries have replaced their full-time income with income from playing crypto games, and some very lucky market participants have even become millionaires.

2021-2022 Top game coins and tokens

As of January 2022, the top game coins and tokens by market capitalization are:

1. Decentraland: $6.5 billion

2. Axie: $6.38 billion

3. The Sandbox: $5.56 billion

4. Planet Gala: $3.52 billion

5. Flow (Dapper Labs): 2.95 billion dollars

In the next few sections, we'll take a closer look at each game token, the gaming platform they represent, and what makes them so popular with gamers and investors.

Axie

While this article focuses on a broad range of crypto gaming topics, we would be remiss if we didn't first discuss Axie Infinity, the world's most popular blockchain-based gaming money-maker.

The Pokemon-influenced Axie allows players to breed animated pet characters called Axies that can engage in peer-to-peer (P2P) combat. Axies can make money by selling, trading, collecting and pledging. The Axie game world contains two tokens, Axie Infinity Shard (AXS) and Smooth Love Potion (SLP). AXS are the primary tokens in the game, while SLP tokens earned by winning battles or completing missions are needed to nurture Axie.

While Axie is ERC-721 NFT, they can sell and trade AXS in-game, which can be easily converted into Bitcoin, Ethereum, or DOLLARS on many major trading platforms. In recent months, some Axie prices have been incredibly high. Axie #643, for example, sold for nearly £230,000 ($309,000) and is currently selling for a staggering $623,328. Several other Axies sold in August and September for about $230,000. Axie also allows users to buy land; A plot was sold in November 2021 for $2.3 million, one of the largest virtual land sales ever recorded.

Incredibly, the profits Axie players make have led some players, especially in developing countries like the Philippines, to quit their jobs to play Axie full time. Many players report making between $300 and $350 per week from the game, far more than the average salary in many countries.

But getting started with Axie can be expensive. It usually costs $1,000 or more to nurture their first Axie, so many members of the established Axie community have started funding players' first Axie by offering scholarships. Sponsors who may not have the time or interest to play full time act more like investors, putting in start-up money while taking a cut of the player's profits based on pre-determined deals.

Decentraland

Decentaland, which operates on the Ethereum blockchain, is currently the largest game coin by market capitalization and the largest online virtual land game in existence. The game allows users to use its builder tools to create original art, challenges and scenarios, and allows them to participate in events and prize competitions.

However, the game's main strategy is to allow users to buy and sell virtual land on their markets as NFT. Each owner controls the exact content published on its lot, and each lot is identified by x and Y coordinates, just like real-world property. In addition to land, users can buy property, a wearable avatar, even a name, and other paraphernalia.

Decentraland NFT assets have been valued at record highs in recent months, with one virtual asset sold for a record $2.4 million in November 2021. As with most secondary market NFT sales on Decentraland, this sale was primarily completed on OpenSea's Decentraland Collection in the NFT marketplace, with nearly 100,000 NFT lands and items currently listed for sale.

Unlike many blockchain games, Decentraland is managed (decentralized, autonomous organization) through daOs. Additionally, Decentraland controls MANA tokens, whose smart contracts have been discarded and allow (in theory) full community governance.

According to Decentraland's website:

"Decentraland DAO owns the most important smart contracts and assets that make up Decentraland -- land contracts, estate contracts, wearables, content servers and marketplaces. It also has a large MANA Wallet which enables it to be truly autonomous and subsidises various operations and programmes across Decentraland."

Decentraland DAO allows token holders to vote on a wide range of in-game issues, including:

1. Dates and details of land auctions

2. What new wearables are allowed and banned

3. What upgrades can be allowed to land and manor

4. Which members can join the game's management committee, called the Security Council?

Sandbox

The Sandbox is second only to Decentraland in popularity when it comes to virtual lands in virtual worlds. Like Decentraland, players can purchase virtual land, however, The Sandbox differs in its overall gameplay as it emphasizes The use of physics and elements to create in-game items and experiences. Users can create original objects using elements and materials such as glass, sand, water, soil, lighting, lava and even mechanical equipment.

The Sandbox's popularity also benefits from a wide range of celebrity partner endorsements, including The Smurfs, Deadmau5, and Snoop Dogg, who invest in cosmic lands, host private meta-universe parties, and regularly put his own original NFT into The game.

Perhaps most importantly, the sandbox is not just its own virtual meta-universe, but a platform where players can build their own video games in the sandbox without any coding or prior technical experience. Every game creator can monetize their game, as well as create and market their own digital assets within the game.

In addition to raising funds through its popular SAND token, sandbox has attracted significant institutional investment. SoftBank led a $93 million funding round for Sandbox in November 2021. Like Decentraland, The Sandbox is built on top of The Ethereum blockchain.

Gala planet

Planet Gala is not a game. It is a platform built on the Ethereum blockchain and designed to make it easy for game developers to create advanced blockchain games. Games currently in development for Gala include:

The Walking Dead: Empire: a popular survival show based on development. It is a personal survival MASSIVELY multiplayer online role-playing game based on the popular TV series Ember Games. Legacy: Business simulation game built by 22cans for PC and Mac. Echoes of Empire: A 4X space strategy game created by gaming giant Ion Games. Mirandus: Fantasy RPG created by Gala herself.

Gala currently operates on a semi-decentralized model, where anyone with Gala's permission can become a licensed node operator and receive a local Gala token as well as a limited edition Gala NFT. Like the sandbox, Gala has seen significant outside investment in recent months. In December 2021, Gala announced a $100 million fund with C2 joint Venture to help develop new games on the platform, with a focus on monetizing games.

While Gala currently runs on the Ethereum blockchain, it is transitioning to its own proprietary blockchain, GalaChain, which will reportedly offer "virtually free" transactions across the entire Gala gaming ecosystem.

Flow

A bit like Gala, Flow is not a game, but a custom blockchain designed for cryptographic and NFT game development. It has excellent performance and is designed specifically to make games and protocols attractive to millions (or even billions) of users who regularly buy, trade, and interact with NFT.

Unlike traditional blockchains, Flow divides its consensus algorithm into four distinct roles, which is ideal for even beginners, as long as they have a reliable Internet connection.

According to Flow's website:

"Verifiers can join Flow in one of four roles:

1. Collector node improves efficiency

2. The verifier node ensures correctness

3. Speed and scale of implementing nodes

4. Consensus nodes ensure decentralization"

Flow currently supports some of the largest NFT markets and products, including NBA Top Shot Marketplace, CryptoKitties, and Digital collectibles from Dr. Seuss and UFC.

Crypto, blockchain, and massively multiplayer online role-playing games

Massively multiplayer online role-playing games (MmorPGs) like World of Warcraft and Runescape, which we mentioned at the beginning of this article, are one of the largest segments in the video game market. For example, World of Warcraft had an estimated 116 million players as of December 2021, while Runescape had an estimated 48 million players between its original and classic versions. However, massively multiplayer online role-playing games (MMORPGs) have yet to catch on in the blockchain and crypto worlds -- but that is slowly changing.

Some of the most popular blockchains for massively multiplayer online role-playing games currently on the market include:

SolChicks

SolChicks is currently the most popular blockchain game for massively multiplayer online role-playing games. It works a bit like Axie Infinity, in that it allows players to cultivate, train, and buy playable NFT, and fight them for rewards, which they can then sell. Players can also engage in multiplayer online battles (team to team) to maximize potential rewards.

SIDUS

Sidus is a browser-based sci-fi action game that allows players to take part in galactic adventures and plunder the galaxy for rewards. Players will be able to train and level up with NFT's regiments, and will be able to compete with teams in multiplayer battles and one-on-one duels.

Players can also create new in-game items and trade and sell them, as well as cultivate and train wildlife, farm resources, and even participate in the Star Council.

Worldwide Webb

Worldwide Webb is a game based on a virtual world of pixel art. Unlike other games, it allows players to import their NFT and use it as a playable avatar. The game is currently interoperated with popular projects such as CryptoPunks, Cool Cats, ApeGang, HeadDao, CryptoToads, and CyberKongz. As with Decentraland, game players can purchase land in the game on OpenSea. Players can also participate in interactive NPC quests.

The importance of game guilds

Since the development of massively multiplayer online role-playing games such as World of Warcraft and RuneScape in the mid-90s, game guilds and clans have become an increasingly popular way for players to join forces to take advantage of economies of scale in games, undertake group tasks, and earn more in-game currency to buy various upgrades.

However, prior to the advent of crypto and blockchain games, game guilds and clans were generally limited to one game and (with rare exceptions) didn't generate any real-world profits. Still, over the past year, crypto game guilds have exploded, even getting funding from real-world venture capitalists.

For example, in 2021, large venture Capital funds like Andreessen Horowitz (A16Z), Pantera Capital, and DeFiance Capital have led multiple seed rounds for gaming guilds. Yield Guild Games, for example, raised an astonishing $22.4 million, while GuildFi raised an equally surprising $6 million in seed funding.

Like traditional game guilds and clans, crypto game guilds allow members to increase their economic status in the game, but this time it involves real money. In many cases, guilds fund new players' activities, allowing them to purchase necessary in-game tools and upgrades in exchange for a percentage of in-game revenue.

In addition, one of the major differences between traditional and crypto guilds is that these new guilds aren't limited to just one game; Instead, they fund and support players to play various blockchain-based games to diversify their investments and maximize potential profits.

As we mentioned earlier, a good example of guilds funding new players is the popular sponsorship ritual in the Axie Infinity game, where guilds help new players get expensive Axie (digital creatures) by renting guilds.

Some analysts believe that guilds, rather than games themselves, will be the real power players in the new crypto gaming metasemes, as their endorsement (or lack thereof) of the major guilds can make or break a game. This leverage could help ensure that crypto and blockchain games remain fair and profitable for players, especially when it comes to token economics. For example, if the game's creator were to hoard tokens or unfairly manipulate NFT's in-game prices, the guild might switch to a different game, potentially taking thousands of loyal players with it.

In addition to having a major impact on the emerging crypto game industry, some of the most popular crypto game guilds, including Merit Circle, YGG and GuildFi, have started publishing their own tokens. Some even created DAOs to decentralize guild leadership and potentially prevent guild "whales" from dominating the guild, creating a more inclusive environment for new players.

YGG, the largest union, has a market value of $461m, according to CoinGecko. While this is much less capitalized than the largest crypto games themselves, this may change in the future as guilds become larger and more popular.

Cryptocurrencies and NFT in traditional games

Many traditional gaming companies are looking to jump on the bandwagon after seeing the stunning success and growth rates of crypto and blockchain games. Recently, the chief executive of Electronic Arts (EA), a big game publisher, told investors in the game that collectable NFT was "an important part of the future of our industry". With over $100 billion in in-game virtual goods purchased in 2021 alone, it makes sense that many video game companies have decided to convert these goods into NFT to increase their scarcity and facilitate the creation of secondary markets.

However, integrating NFT into traditional games is still in its infancy. Recently, gaming giant Ubisoft announced that it would start bringing NFT to its popular Ghost Recon game. These NFTS, called "digital", will initially be released as game items, including equipment, weapons, and vehicles. Each item has its own unique serial number, and each player can only own one of each item, which may increase its scarcity over time.

Ghost Recon's NFT will be built on Tezos, a proof-of-equity blockchain, which Ubisoft hopes will allay concerns about the impact of NFT minting and transfers on blockchain environments like Ethereum, which has yet to fully transition from proof of work to its planned proof of equity model. While these NFTS can be resold, they are not dynamic and do not affect gameplay, which may reduce their popularity as NFTS directly affect gameplay in many (if not most) blockchain and crypto-native games.

Zynga, creator of the popular social media game Farmville, is also planning to enter the NFT market and has announced plans to sell thousands of NFTS by 2022.

While some traditional gaming companies are riding the wave, others are more cautious. Valve recently banned blockchain-based Games on Steam, Xbox and Epic Games (the founder of Fortnite) announced that they have no plans to include NFT or cryptocurrency in their future products, citing concerns about game players being exploited.

These concerns are not entirely unfounded. For example, fans of the popular online game Neopets began protesting the game's release NFT in October, urging players to boycott the game until the project was canceled.

Whether NFT releases increase excitement or provoke a backlash from game players may depend largely on how they operate within the gaming ecosystem. If NFT, tokens, and cryptocurrencies are considered to increase financial incentives for users, such as in the game model where a game like Axie Infinity makes money, they might be considered a net benefit to users. However, if NFT launches at an exorbitant floor price, and if game players have little chance to monetize these products, they may be seen as greedy cash grabs by video game developers interested only in increasing profits.

Dynamic NFT and prognostic machines in crypto and blockchain games

If there's one thing that almost all blockchain and crypto games have in common, it's NFT. Most of these NFTS are static, meaning they stay the same over time. However, dynamic NFT, that is, NFT that may change over time or external circumstances, is likely to begin to become more popular. For example, Ubisoft's NFT placement, mentioned above, is actually dynamic NFT and changes nature each time it is transferred or sold to a new user.

In addition to being influenced by in-game factors, in-game dynamic NFT can also be influenced by external real-world events. These may include news events, token prices, weather data, political events, or other factors. For example, the NFT in a military strategy game may change depending on the strength of the real world army or other similar factors. Because blockchains are often closed systems and external data is difficult to access, these dynamic NFT's often rely on prognoses, third-party software providers, to bring real-world off-chain data into the blockchain. The prophecy machine can be centralized.

However, prognosticators won't be the only software product used by the fast-growing crypto and blockchain gaming industry. Just as blockchains and cryptocurrencies have influenced the gaming market, gaming in the blockchain and cryptocurrency world is likely to spawn more new blockchains, protocols and software products to meet the rapidly growing needs of this vibrant industry.

Related reading:

1. Gaming Industry Nearly Twice as Large as Reported, at $336B.

2. Video Game Market Size, Share & Trends Analysis Report By Device (Console, Mobile, Computer), By Type (Online, Offline), By Region, And Segment Forecasts, 2020-2027. & have spent Grand View Research.

3. Gaming: Cryptocurrency in the Gaming industry. TripleA.

4. Shen, M. (2021, Dec.) Crypto VCs Are Making a Big Bet on Gaming Guilds. Why? .

5. (2021, Dec.) Gaming Coins. CryptoSlate

6. Peters, J. (2021, Dec.) Ubisoft is bringing NFT gear to Ghost Recon. The Verge.

7. (2021, Nov.) Top 10 Most Expensive Axie Infinity NFT Ever Sold.NFT's Street.

8. Shumba, C. (2021, Nov.) A plot of digital land just sold for $2.3 million on Axie Infinity, as the real-estate race heats up across the metaverse. Markets Insider.

9. Howcroft, E. (2021, Nov.) Virtual real estate plot sells for Record $2.4 million.

10. Decentraland DAO: The virtual world in your hands.

11. Leblanc, W. (2021, Dec.) Gala Games Announces $100 Million Blockchain Fund Alongside New Play-To-Earn Games From Peter Molyneux, Will Wright, And More.