Axie Infinity turned its games into a multi-billion dollar economy, helping thousands of players in the Philippines and other low-income countries weather the effects of pandemic mitigation measures. The main factor for success: strong property rights.
Players can take in-game materials from the game and trade them on third-party marketplaces such as OpenSea. The freedom to set prices and trade easily has sparked a veritable tsunami of economic activity both inside and outside the game.
This 30-page report from Cointelegraph Research analyzes the top five games and how they’ve changed since Second Life, with comparisons to Galaxy Fight Club, The Sandbox, Planetarium, Immutable x, SolaDefy, Decentral Games, X World Games Co-branded with Animoca.
The formation of a new economy
The report delves into the differences between virtual economies of the past (like Second Life or World of Warcraft) and modern blockchain-powered games like Axie Infinity or DeFi Kingdom.
Developing a well-functioning marketplace, including open standards for in-game currency and game materials, used to be completely beyond the scope of any development studio. However, blockchain provides the building blocks of the economy for game developers. The technology allows developers to launch tokens or define game materials as non-fungible tokens (NFTs) within an hour. This provides users with strong property rights and the ability to bring out-of-game characters and items to third-party marketplaces and even other games with little additional development cost.
Download the full report for free here.
With the addition of decentralized finance (DeFi) technologies, players have unprecedented financial opportunities, which has led to lightning-fast adoption of these games.
The report then compares the top five blockchain games Alien Worlds, Axie Infinity, Bomb Crypto, DeFi Kingdom and Splinterlands. Each of these games has different gameplay and offers players different rewards. Daily active users, transaction volume, deposit balances, and gameplay—as well as token economics as an economic incentive for the in-game currency—are compared.
However, no report would be complete without covering the dark side of blockchain gaming. Environmental concerns, wealth gaps, legality and tax implications are all legitimate concerns surrounding these new economies. This is especially important as sheer success makes these games increasingly attractive to players and game developers.
During the peak period in 2021 and early 2022, GameFi games accounted for more than 35% of all Polygon transactions. However, if possible issues are not addressed, the long-term viability of the entire blockchain gaming space will suffer, as critics and regulators will use these arguments that hinder development or make it harder for players to participate.
Get ready, fight!
The report draws optimistic conclusions about the future of blockchain gaming and the potential unleashed by economic freedom. Lower transaction costs, stronger property rights and open standards have broken the planned economy of the previous game market.
Blockchain technology opens up a world of new opportunities for developers and players. If environmental and regulatory issues can be addressed, 2022 will be GameFi’s best year yet.
This article is for informational purposes only and does not represent investment advice, nor does it represent investment analysis or an invitation to buy or sell financial instruments. Specifically, this document is not a substitute for personal investment or other advice.