Video games NFT – how the industry can make use of them?

Maciej Zieliński

28 Apr 2021
Video games NFT – how the industry can make use of them?

NFTs - this is definitely their year. During last months NFTs were discussed all over the world. The gaming industry seems to be their natural environment. Yet how can video games make use of NFT? 

NFT stands for Non Fungible Tokens. But what does it mean? Among various blockchain token types we differentiate between fungible and non-fungible tokens. 

Examples of the first kind are Bitcoin or Ether. Fungible means that a single token is indistinguishable from others in the same ecosystem. Just like in regular currency. Thanks to that they can be used for payment transactions.

Definition:

NFT’s non-fungibility means that each and every token in the system is unique. NFTs don’t have a standard value and often do not allow for an equal exchange (NFT for NFT). Each token represents unique information of ownership or identity.  

In the blockchain world, NFTs are digital assets that represent a unique or rare digital or real item. Sounds familiar? 

NFT in video games

Gaming industry is a powerful branch fueled by its consumer’s passion. When gamers launch their favorite title, they immerse themselves in a new, alternative world. A quick look at the most popular games of the last decade, like League of Legends, Fortnite, or Counter-Strike, is enough to see how modern gamers care about their characters, skins, and other in game items. They treat them as an extension of their creative self. What’s important: how much are they willing to pay for these.

The will to build a collection of unique items is nothing new. The video games showed us how far beyond the real world this phenomenon can reach. But do the purchased items really become their property? Do these items differ somehow from the ones possessed by others, are they really rare? Often the answer is not so simple. During last few months, NFTs showed us that they may change that.

NFT games"NFT" Search Frequency. Source: Google Trends

NFT games

The first and most popular NFT standard is ERC-721. Its first commercial use was an NFT game, CryptoKitties, that allows the players to buy, collect, and sell virtual kitties. Since the game’s debut in 2017, Dapper Labbs made over 40 million USD off of it. CryptoKitties were first game of this kind which started a whole new trand.

It seems like collectible blockchain games are the perfect environment for NFT. They allow the players to buy unique items, and to keep full ownership of the purchased assets. That’s why we have seen a rapid growth of projects of such type during the last year.

The effect of NBA and aforementioned Dapper Labbs’ collaboration - NBA Top shot - is a great example of nft collectible game. On this platform, basketball fans can buy and sell video clips - “moments” from last season’s games that are blockchain NFTs.

CryptoSlam estimates that up to this date total value of all transactions at NBA Top shot reached over 370 million USD. NBA Top shop is clearly one of the most popular NFT games, which enable fans to own NFTs connected with their favorite form of entertainment.

NFT video game

NFT’s potential reaches far beyond only collectible games. Let’s take for example multiplayer games like the aforementioned LOL or Fortnite. Possessed skins and champions are of great importance to the players. NFT allows the buyers to claim ownership over unique digital products.

What if it was implemented for rare and difficult-to-obtain game items they purchase? What if also in these cases the players had full control over ownership rights which they can trade with other players? The same could be applied for limited editions of character skins.

Potential use of NFT in video games:

  • Championship cards and video game titles
  • Limited items granted for participation in events.
  • Game codes 
  • Rare weapon, in-game items, or characters skins
  • Commemorative recordings of the most interesting moments from e-Sport.
  • Subscription tokens

Immutable X

Released in April 2021, the Immutable X platform became the first Layer 2 solution dedicated to NFT tokens. Behind its creation is an Australian team Immutable, responsible for the NFT-based card game - Gods Unchained. The platform allows for trading and selling unique items that players have acquired in the form of ERC-721 tokens. According to its creators, it is Immutable X that will allow for mass adoption of NFT in games.

Layer 2 for NFT games

In 2020, Immutable in collaboration with StarkWare developed a solution that allows you to enjoy the security and other benefits of the Ethereum network without paying high fees. Until now, it has been gas fees that have been an indispensable part of creating and trading NFT for games, which experts believe has hampered further development of the technology. 

Immutable X was built on top of the scaling Layer 2 technology created by StarWark. Thus, the platform became the first Layer 2 solution dedicated to NFT. This allows game developer to take advantage of the security provided by Ethereum without having to pay gas.

NFT in gaming industry - summary

NFT market is one of the fastest developing branches of DeFi world. Recently we can observe a true boom among NFT marketplaces. Thanks to blockchain technology new possibilities emerge and when it comes to video games whole industry may use them.

Last year’s experience shows that even the biggest gaming companies are not afraid to stray from the trail and introduce innovations. NFT can become one of them. Obviously, a wider use is only a song of the future, but all signs point to it happening quicker than we may anticipate.

Do you want to know how NFT would work in your project? Consult our experts at Nextrope for free. Contact us at contact@nextrope.com.

Tagi

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Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Nextrope Partners with Hacken to Enhance Blockchain Security

Miłosz

21 Nov 2024
Nextrope Partners with Hacken to Enhance Blockchain Security

Nextrope announces a strategic partnership with Hacken, a renowned blockchain security auditor. It marks a significant step in delivering reliable decentralized solutions. After several successful collaborations resulting in flawless smart contract audits, the alliance solidifies the synergy between Nextrope's innovative blockchain development and Hacken's top-tier security auditing services. Together, we aim to set new benchmarks, ensuring that security is an integral part of blockchain technology.

Strengthening Blockchain Security

The partnership aims to fortify the security protocols within blockchain ecosystems. By integrating Hacken's comprehensive security audits with Nextrope's cutting-edge blockchain solutions, we are poised to offer unparalleled security features in our projects.

"Blockchain security should never be an afterthought"

"Our partnership with Hacken underscores our dedication to embedding security at the core of our blockchain solutions. Together, we're building a safer future for the industry."

said Mateusz Mach, CEO of Nextrope

About Nextrope

Nextrope is a forward-thinking blockchain development house specializing in creating innovative solutions for businesses worldwide. With a team of experienced developers and blockchain experts, Nextrope delivers high-quality, scalable, and secure blockchain applications tailored to meet the unique needs of each client.

About Hacken

Hacken is a leading blockchain security auditor known for its rigorous smart contract audits and security assessments. With a mission to make the industry safer, Hacken provides complex security services that help companies identify and mitigate vulnerabilities in their applications.

Looking Ahead

As a joint mission, both Nextrope and Hacken are committed to continuous innovation. We look forward to the exciting opportunities this partnership will bring and are eager to implement a more secure blockchain environment for all.

For more information, please contact:

Nextrope

Hacken

Join us on our journey to deliver top-notch blockchain tech and a safer future for the industry!