GameFi and NFT: Why GameFi beat regular NFT collection
In the first quarter of 2022, in-game NFTs outsold regular AI-generated collections. Analysts at BDC Consulting have studied this phenomenon, as well as various sources of the NFT utility on and off the GameFi platforms.
At the end of 2021, at the beginning of 2022, an interesting trend of the superiority of GameFi over conventional NFTs created by artificial intelligence began to be traced. Gaming assets began to take the lead in terms of sales, but lag behind in dollar terms. The GameFi sector has become one of the main catalysts for the development of the NFT industry. If in 2021, the majority of sales on OpenSea and other marketplaces came from character collections such as Bored Apes Yacht Club, for example, then in 2022 they were surpassed by gaming NFTs.
By 2022, over 4 million playable NFTs have been sold, and only 2.7 regular digital collectibles. Main reasons: high liquidity of gaming tokens and a large number of participants in the market (almost a million active wallets interact with games on the blockchain, especially in the Play-to-Earn segment) At the same time, interestingly, the average price of a gaming NFT is much lower than the price of NFTs from popular collections, so the total dollar sales of gaming assets are 10 times lower.
Another interesting trend is the slowdown in the emergence of new gaming NFTs. Although GameFi's total assets in circulation are very large, but compared to regular NFT characters in the arts and metaverse segment, supply growth in the first quarter was only 5%. But already in the 4th quarter, supply increased by 22% by 2021.This may mean that users are mainly buying and selling NFTs of already existing popular projects and pay less attention to the assets of new games.
Ways to make money on GameFi:
After analyzing and comparing the game mechanics of Splinterlands, Alien Worlds, MOBOX: NFT Farmer, Bomb Crypto, Axie Infinity and others, the experts found that game NFTs usually have no utility outside their ecosystems. Another pattern is that players must first purchase a few NFTs (characters, weapons, etc.) in order to start playing and earning tokens. Also, in most cases, higher rarity NFTs will bring higher rewards, be it quests, stakes, etc.
- Participation of NFT characters in battles and quests in order to earn game tokens.
- Improvement and "pumping" of NFT characters and accessories to make them stronger and more profitable; usually such an upgrade requires payment in tokens.
- Creation of new NFTs inside the game.
- NFT bet for passive income.
- Merging or crossing NFT to get new characters that are rarer and more valuable.
- Burning NFTs in exchange for game tokens.
- Buying, selling and renting NFTs on internal and external marketplaces.
- Buying packs or bundles of NFTs (in this case, it is often not known in advance which assets are contained in the bundle). NFTs rarely have out-of-game utility, but when they do, they are used in the following ways:
- Application in GameFi partner projects (example - Splinterlands and Waka Flocka Flame); NFTs can serve as entry tickets to a sort of exclusive club.For example, Samurai Army in-game assets from G2 Esports give access to AMA sessions, a merchandise store, esports tournaments, and more.
- NFT can also be used in multiple games released by the same developer and on the same block chain.
5 Key NFT advantages in GameFi
In the latest part of the study, BDC Consulting analysts identified four factors that enable NFT to add value to GameFi projects, giving them an edge over traditional mobile and PC games.
- NFT in games makes the process of owning and disposing of gaming assets easier and more fun, and also offers many options for earning and using. The idea of earning while playing is not new, but NFTs, as independently existing blockchain objects owned by owners, allow the introduction of new methods of earning. For example, players can place bets or sell them on external marketplaces.
- In traditional games, the purchase of in-game items is an irreversible investment tied to a specific application. In GameFi, by contrast, players control their investment through NFT ownership. Such assets can be sold, transferred to other decentralized applications, or even created new valuable NFTs based on them.
- Reward for owning NFTs. In-game assets can also have long-term value outside of the game, such as a pass to a VIP group or an event. In this case, owners can continue to benefit from their NFTs even if their market price drops or if the user stops playing the game.
- Developers can increase the appeal of their games by collaborating with other projects and allowing players to use the same NFTs across different ecosystems (eg MOBOX: Splinterlands).
GameFi is becoming an important driver for the adoption of blockchain technology in society as many users understand the concepts of NFT and tokenization through games. Non-fungible assets already have a higher utility than regular in-game items, and they may find even more use in GameFi and the metaverse in the future.