John Gilbert

The inherent value to owning in-game assets is hard to measure. <a href="https://www.vice.com/en/article/3abaw5/gamers-dont-want-nfts" target="_blank" rel="noreferrer noopener">Critics</a> have argued that the technology doesn’t provide inherent utility because the growth is rooted in speculation. 



And if gamers can transfer assets to other players without using blockchain, then does a certificate of ownership on a blockchain have any value to the gamers who just want to use the asset?&nbsp;



According to Canaan Linder, CEO of <a href="https://www.stardust.gg/" target="_blank" rel="noreferrer noopener">Stardust</a>, blockchain offers something that publishers don’t: the open invitation to build upon user and developer generated content. While users may have the ability to transfer ownership of assets in closed ecosystems, publishers are unwilling to provide that type of ownership that grants full creative freedom. This type of utility has the potential to offer more than hype.



His company created a seamless, low-code solution for developers to integrate NFTs into their games for millions of mainstream players. Blockworks sat down with Linder to learn why the gaming industry as a whole could still benefit from blockchain.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: What are the biggest challenges that game developers face, and how can blockchain technology address them?&nbsp;



Linder: The gaming industry has primarily been focused on mobile gaming in the past 10 years with a lack of innovation and a reliance on user acquisition through advertising. Blockchain represents a novel innovation in the gaming industry – the first in years. This innovation comes at an incredibly serendipitous time, the recent changes to IDFA (Identifier for Advertisers) by Apple have made user acquisition more expensive for all games. This has resulted in declining margins for developers, who are now looking for ways to innovate and provide value to players through more rewarding and entertaining experiences..&nbsp;



NFTs (non-fungible tokens) offer a way for game developers to give value back to players in order to keep them engaged. Instead of paying for user acquisition through advertising on Facebook and Google, game developers can utilize NFTs to incentivize and retain players, giving that value back to them and creating a new model for user acquisition. Going even further, NFTs allow game developers to work together to increase the total utility in the gaming ecosystem, building composable ecosystems that every developer and player can contribute to.&nbsp;



Blockworks: What are some ways that NFTs can give value back to the player?



Linder: Digital assets today are valued only by the utility given to them by a single developer, and that item can only be used in that ecosystem. With NFTs, players truly own their items, and can take them outside of the game into any other ecosystem, application, or game. This true ownership that the player has means they can have full control over what they do with that item, whether they sell it, use it in another ecosystem, or even destroy it to forge a more powerful item in another game they want to play.&nbsp;



This increased utility not only brings more value to players, but the items themselves. I have personally spent thousands of hours in League of Legends and Fortnite (yikes), and the ability to bring those items, skins, and rewards into other games, use them in other applications, even potentially attach them to my resume as I applied to Riot out of college, is incredible. 



Blockworks: What types of web2 games could benefit from this type of integration?



Linder: MMOs are a great example of a category that could benefit from NFTs. I grew up playing Runescape, and there are many elements in the game that NFTs could supercharge. MMOs such as Runescape are centered around virtual economies, extremely rare items, and grinding for resources – all elements where NFTs can improve the player’s experience and Lifetime Value (LTV).



Blockchain and NFTs are all about interoperability and composability, where game’s and item’s functionality can be extended by others. Runescape has a long history of players wanting to contribute their innovation to the game, look no further than RuneLite, an open source Runescape client as an incredible example of this. Opening up Runescape’s economy to blockchain and NFTs, players and developers can now contribute to Runescape by creating secondary marketplaces, different DeFi products, other games that leverage Runescape items, and an infinite amount of innovation all driven by NFTs.&nbsp;



Blockworks: Is gaming Interoperability a must have for this industry?



Linder: It’s important to realize no one’s hair is on fire because they don’t have NFTs in-game today, but like all 10x innovations, blockchain and NFTs represent a new form of growth that we cannot even comprehend. Pointing to other innovations, such as the internet, tablets, and smartphones which were not initially seen as necessary, what is seen as a must-have today will be very different to how we see it in 20 years from now.



Interoperability represents a new and exciting innovation for the gaming industry, built on a technology that hasn’t fully yet been matured or seen to its full potential. Every other huge innovation has these same characteristics in its first few years, early, not easy to understand, but gives the potential for real and exciting change. Gaming must embrace this interoperability based mindset with blockchain technology, it is the future of the gaming industry.



Blockworks: How does this permissionless environment translate into value for the users?



Right now interoperability between games is largely limited, but this permissionless ecosystem has generated a layer of utility outside of the gaming world. For example, a player may be able to use an NFT as collateral to borrow money from a lender through a decentralized finance (DeFi) platform. In this case, the NFT serves as a way to secure the loan, with the lender holding onto the NFT as collateral until the loan is repaid. While NFTs right now are usually gaming items, they could be any other collateralized good, such as a home, car, or painting.&nbsp;



A small, but great, example of interoperability is a verified profile photo on twitter, where NFT collectors can show off their NFT as a validated digital good. I know for certain I will be buying the NFT that has the ability to show up as a skin in Fortnite.&nbsp;



Blockworks: Why other types of opportunities can these gaming NFTs offer?



Linder: Right now, NFTs are locked into gaming environments and have very little crossover with other applications. We’ve seen interoperability with gaming NFTs as verified profile badges on twitter, but not much more than that.



Starbucks Odyssey is Starbucks’s blockchain reward program, with NFTs, Starbucks can partner with games to offer free coffee for anyone who gets to a certain level, or the Warriors can partner with Fortnite to give unique fan experiences to anyone who finds a Steph Curry jersey in game. This interoperability hasn’t existed today in an open and permissionless environment, and with blockchain, the level of innovation will not only increase in gaming, but will for every business that interacts with this open technology.&nbsp;



Blockworks: What are the biggests challenges for developers wanting to integrate these NFTs into their games?



Linder: One of the major challenges that game developers currently face in the web3 space is user onboarding. The onboarding process for web3 games currently is cumbersome and confusing, it must be a one-click experience. While many solutions in the market today say they are better, they still take forever and offer foreign non-game like user interfaces, with high friction for the end user. Games that have the lowest “time to fun&#8221; are much more successful, and user interface design is one of the key components in onboarding a player into your game.&nbsp;



<a href="https://www.stardust.gg/">Stardust</a> offers game developers the ability to create custodial wallets for players, allowing them to pick up and use in-game items without necessarily understanding that they are interacting with NFTs or blockchain technology. This makes it easier for game developers to contextualize NFTs into their games and helps to keep players engaged – which is a must-have for acquiring millions of users.



This interview has been edited for brevity and clarity.



This content is sponsored by <a href="https://www.stardust.gg/" target="_blank" rel="noreferrer noopener">Stardust</a>.



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Q&A: Does the Next Generation of Gaming Actually Need Blockchain?

Ornella Hernandez

<div id="highlights-block_62db1b3366d1a" class="highlights">
 <ul>
 <li>The company intends to leverage 5% of its platform fees to initiate a buyback and burn program of its green metaverse token (GMT)</li>
 <li>The price of GMT has increased by nearly 23% in the past 30 days</li>
 </ul>
 
</div>



Move-to-earn blockchain-based application Stepn recently <a href="https://stepnofficial.medium.com/stepn-announces-q2-profits-initiates-quarterly-gmt-buyback-burn-32ad0b764de9" target="_blank" rel="noreferrer noopener">generated</a> $122.5 million in profits in the second quarter through its platform fees — which have made up a growing chunk of revenue, more broadly.&nbsp;



The company said in a <a href="https://stepnofficial.medium.com/stepn-announces-q2-profits-initiates-quarterly-gmt-buyback-burn-32ad0b764de9" target="_blank" rel="noreferrer noopener">Medium post</a> it intends to leverage 5% of the proceeds to initiate a buyback and burn program of its green metaverse token (GMT), a governance token that acts as a store of value. The announcement informed users that the buyback and burn process may take a few weeks to complete to avoid causing sudden GMT price volatility.



In the meantime, Blockworks’ Empire podcast hosts spoke with <a href="https://www.linkedin.com/in/yawn-rong-4b4b1861/?originalSubdomain=au" target="_blank" rel="noreferrer noopener">Yawn Rong</a>, co-founder of Stepn, about the company’s rapid growth and its efforts to shift from Web3 to Web2 to remain sustainable.



Rong said Stepn wants to first and foremost promote a healthier mind and body lifestyle by encouraging daily exercise via token incentives. While solana (SOL) is needed to purchase sneaker NFTs, for now users can only earn the green satoshi token (GST) while walking, jogging or running.&nbsp;



GST can then be converted into GMT or USD Coin. The more conversions, however, the more it drives down the price of GST, resulting in less potential earnings.



Once Stepn enters its next phase, which might be in the next six months, according to Rong, users may be able to earn GMT and trade on a “completely functional” decentralized exchange (DEX) and marketplace. Additionally, Stepn has an apparel and water brand in the works.



The upcoming buyback program may likely end up reducing the supply of GMT through scheduled burning. Additionally, the stability of the price of GMT will be dependent on the number of Stepn users, and the number of new daily accounts has been in decline since May, <a href="https://dune.com/0xpineapple/StepN" target="_blank" rel="noreferrer noopener">according</a> to data from Dune Analytics.



Rong told Blockworks that about roughly 30%, or 210 million, GMT tokens have been completely burned. And they will continue to burn GMT until “we feel it is the time for people to earn the GMT.”



The dual token system is meant to have GMT earning counterbalance GST earning. GST has an infinite supply — it serves as an inflationary reward token that bears the brunt of the selling pressure from users cashing out the rewards. GMT, on the other hand, has a supply of 6 billion tokens and accrues value based on in-app user transactions and in-game utility functions.



Mike Dudas, founder and general partner at early stage venture capital fund 6th Man Ventures, which invested in Stepn, shared its faith in the app via a Stepn Telegram chat. “They have a roadmap and token model that aims to ensure balance over time in the ecosystem,” Dudas said, adding it&#8217;s “very easy to call something new a ponzi scheme.”&#8217;&nbsp;



Dudas appeared to be striking back at allegations from industry participants that the app, just six months old, is a ponzi scheme or even a rug pull waiting to happen. Dudas added it’s more difficult to defend a product when “public discussion isn&#8217;t really nuanced,” and the company won’t share the entirety of a roadmap “with hundreds of potential copycats waiting to pounce.”&nbsp;



Ryan Mullins, CEO of NFT (non-fungible token) sneaker game Aglet, told Blockworks he is skeptical of how sustainable the Stepn model is.&nbsp;



“Once the hype dies down and the new influx of players isn&#8217;t there anymore, it doesn’t work anymore,” adding that he views it less as a game and more about rewarding a healthy lifestyle.



On Friday, Stepn <a href="https://stepnofficial.medium.com/open-letter-recent-changes-d671fc28945e" target="_blank" rel="noreferrer noopener">released</a> a posts to address the introduction of “health points” to increase the lifespan of sneakers, and even admitted that these mechanic changes didn’t help the price of GST.



Nor did they yield instant results.



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Stepn Founder Wants To Promote Healthy Body and Mind, but Skeptics Question the App’s Sustainability

Shalini Nagarajan

<div id="highlights-block_62d9721d45f72" class="highlights">
 <ul>
 <li>Haseley told Blockworks his play-to-earn project Undead Blocks is different from other Web3 games</li>
 <li>Bear markets are upsetting for people — so gaming is a distraction, he said</li>
 </ul>
 
</div>



Venture capitalists are heavily eyeing <a href="https://cms.blockworks.co/tag/gamefi/" target="_blank" rel="noreferrer noopener">GameFi</a> — they’ve funded the sector more than any other crypto-related investment this year. <a href="https://twitter.com/MessariCrypto/status/1545950954960220161" target="_blank" rel="noreferrer noopener">Messari</a> found more than $1.2 billion of funding poured into 128 companies in the first quarter of this year alone.



Blockworks spoke to <a href="https://www.linkedin.com/in/grant-haseley-116a2398/" target="_blank" rel="noreferrer noopener">Grant Haseley</a>, founder of Web3 game <a href="https://www.undeadblocks.com/" target="_blank" rel="noreferrer noopener">Undead Blocks</a>, about his kill-to-earn zombie shooter game that went live in May. He said an effective play-to-earn game is one that engages most players with entertainment value, rather than one that uses earnings as the primary gameplay motivator.



The former Goldman Sachs analyst turned Web3 game developer wants the <a href="https://cms.blockworks.co/play-and-earn-is-fixing-gamefi/" target="_blank" rel="noreferrer noopener">play-to-earn</a> concept to evolve into “play-to-have-fun.” It’s a big misconception that games compete against each other, he said, adding that founders of Web3 games interact and have working relationships with one another because each project generates more users for the ecosystem.



GameFi companies on his radar include Mythical Games, Blowfish Studios, <a href="https://cms.blockworks.co/tag/the-sandbox/" target="_blank" rel="noreferrer noopener">The Sandbox</a> and Big Time.



Blockworks: When and why did you enter the GameFi sector?



Haseley: I’ve been in crypto since about 2015, and I observed how we went through a <a href="https://cms.blockworks.co/category/defi/" target="_blank" rel="noreferrer noopener">DeFi</a> explosion that pivoted over to GameFi.



<a href="https://cms.blockworks.co/tag/axie-infinity/" target="_blank" rel="noreferrer noopener">Axie Infinity</a> was the game that brought it mainstream, but I didn&#8217;t really like their tokenomics model. I figured it was <a href="https://cms.blockworks.co/axie-infinity-active-users-nft-prices-continue-to-decline-after-bridge-reopening/" target="_blank" rel="noreferrer noopener">going to flop</a>. People were just selling the secondary currency called SLP because they didn&#8217;t believe in it. They wanted to cash out.



I figured that I could build a better tokenomics model, and I just needed a fun game to play. In the last year, we’ve raised about $5 million to develop Undead Blocks. It&#8217;s a zombie shooter, similar to Left 4 Dead, Call of Duty – Zombies or Resident Evil. But I’ve been in play-to-earn for the last year-and-a-half now, and if anyone tries to tell you they&#8217;re an expert, they&#8217;re wrong. 



We&#8217;re so early. I&#8217;m in New York, and if you polled 100 people, I bet you one would know about what play-to-earn gaming is.



Blockworks: What has changed in GameFi between when you started working in the same and now?



Haseley: Most of the scammers are gone, and that’s good. I think a lot of them got wiped out by the crypto crash. Around late 2020 and early 2021, people were inside, the pandemic was still ongoing, and there wasn&#8217;t a lot to do. People were creating <a href="https://cms.blockworks.co/tag/NFT/" target="_blank" rel="noreferrer noopener">NFT collections</a> left and right.&nbsp;



Anything you touched turned to gold. You had these whitelist giveaways. You had these groups calling themselves play-to-earn experts that were minting NFTs (non-fungible tokens) with no game-development experience. They don&#8217;t know how to develop a game, but that was the buzzword. The cool thing to say was: “We&#8217;re an NFT group and we&#8217;re building a play-to-earn game.”



Now you&#8217;re starting to see less and less of that. It’s begun to consolidate toward more traditional gaming studios. At Wagyu, which is developing Undead Blocks, we’re working with an actual game studio to develop the game. But you&#8217;re not seeing as much fluff out there from NFT collections. That consolidation is necessary so people can identify games and projects that have real gameplay.



<h3>What crypto winter?</h3>



Blockworks: Why is GameFi doing comparatively well among crypto subsegments at a time of macro uncertainty?



Haseley: This whole “crypto winter” is just incorrect. I think from a DeFi (decentralized finance) perspective, I would probably agree. But GameFi has never been hotter.



If you have a working product in a working game, you&#8217;re not going to have trouble raising funds and capital. You&#8217;re seeing some of the largest venture capital firms in the world wanting to develop these games because they see that this is the next pivot and next area of opportunity. A16z recently raised <a href="https://a16z.com/2022/05/18/games-fund-one-building-the-future-of-games/" target="_blank" rel="noreferrer noopener">$600 million</a> and Immutable launched a <a href="https://cms.blockworks.co/immutable-earmarks-500m-fund-for-gaming-web3-development/" target="_blank" rel="noreferrer noopener">$500 million fund</a> to pay game developers, so this isn’t going away anytime soon.



If we&#8217;re in a bear market and people are upset they&#8217;ve lost money, they want a distraction and to have fun. Gaming allows you to do that. People are going to want additional ways to make income, and play-to-earn gaming is the next pivot for them to be able to do that.



Blockworks: Do players need to have a particular interest in cryptocurrencies to play these games?



Haseley: No. I&#8217;ll give you a reason why. On Undead Blocks, we&#8217;re giving away money for free as we’re fully sponsored — liquidity is being brought in through sponsorship. Polkastarter Gaming, which is a massive launch pad, is giving us $10,000 for example. We&#8217;re running a free-to-play tournament where people can come in and earn crypto just by playing the game. Having these sponsored tournaments for us is bringing in those Web2 gamers that never wanted to get into crypto or NFTs because we’re giving them a reason to play.



You don&#8217;t need to know anything about crypto if the game is fun, and that&#8217;s what you&#8217;re starting to see with other game studios like Mythical Games, Blankos Block Party or Gala Games developing the “Last Expedition,” which is another shooter. These games are going to look so realistic that people won&#8217;t know anything about crypto but still be interested.



Blockworks: Has Undead Blocks released yet?



Haseley: Our beta is out, it&#8217;s fully live and it&#8217;s free to play to the public. Anyone can go on our website, they can download, they can play the game, they can give us feedback. If you get a chance to play it, what you&#8217;re going to see is this doesn&#8217;t feel like a Web3 video game.&nbsp;



Traditionally, there are two factions of Web3 video gaming where they either are just web-browser based games that are decentralized yield farming that aren&#8217;t very fun, or they&#8217;re these AAA gaming studios that promise and sell you a dream but never give you a fun game. Our beta is fully functional, and our full game experiences go live in about two months. But you can earn right now.



Blockworks: How many current players does Undead Blocks have?



Haseley: We just crossed 10,000 downloads, and about half of them have been playing at least once a day. They&#8217;re all practicing for upcoming tournaments. We&#8217;re over 5,000 daily active users. That number is going to increase exponentially as the word spreads to Web2 gamers that they can come and earn for free with no NFTs required.



This interview has been edited for length and clarity.



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Q&A: Web3 Game Founder Says GameFi Has ‘Never Been Hotter’

Sebastian Sinclair

<div id="highlights-block_62c7b13a99f39" class="highlights">
 <ul>
 <li>Konvoy Ventures, which previously backed ailing crypto gaming developer Sky Mavis, has launched a new fund aimed at budding games studios</li>
 <li>Web3 tech, platforms and other various techologies will be the target of the fund, Konvoy said</li>
 </ul>
 
</div>



Early-stage investment firm Konvoy Ventures said Wednesday it has rolled out a multimillion-dollar fund for budding gaming companies focused on a number of verticals including Web3.



Dubbed Konvoy Fund III (KFIII), the new $150 million fund will focus on pre-seed, seed and Series A funding for those companies creating assets across multiple industries including education and healthcare, according to a statement.



Following the launch of KFIII, Konvoy said its managed assets would rise to $270 million. Despite a <a href="https://www.bloomberg.com/news/newsletters/2022-06-17/web3-fans-say-it-was-never-about-the-money" target="_blank" rel="noreferrer noopener">declining interest</a> for Web3 tech, Konvoy is hoping its latest fund will help connect investors to projects both in the budding blockchain sector as well as traditional games studios.



&#8220;The pandemic was an adrenaline shot to the gaming industry because more and more people turned to games as a source of entertainment and also a way of staying social with their remote communities,&#8221; Konvoy Managing Partner Jason Chapman said in the statement.



The venture capital firm launched its second fund in 2020 — worth around $65 million — in a bid to capitalize on growth in the gaming sector.



Founded in 2017, Konvoy focuses mainly on the North American, European and African markets with plans to expand further into Latin America, India, South Korea and Southeast Asia, it said.



The Denver-headquartered firm&#8217;s portfolio consists of 33 companies that have collectively raised $450 million in follow-on funding and have backed blockchain gaming developers, including the once praised <a href="https://cms.blockworks.co/tag/sky-mavis/" target="_blank" rel="noreferrer noopener">Sky Mavis</a>, creator of <a href="https://cms.blockworks.co/tag/axie-infinity/" target="_blank" rel="noreferrer noopener">Axie Infinity</a>. 



Konvoy also participated in an $8.3 million funding round for <a href="https://cms.blockworks.co/genopets-raises-8-3m-for-a-virtual-game-with-real-benefits/" target="_blank" rel="noreferrer noopener">NFT game Genopets</a> last year.



The popular Axie has all but fallen <a href="https://cms.blockworks.co/axie-infinity-active-users-nft-prices-continue-to-decline-after-bridge-reopening/" target="_blank" rel="noreferrer noopener">flat on its face</a> in recent months, reflected in the weekly NFT (non-fungible token) sales volume on its platform, which declined by more than 99% since its peak in November — dropping from $753 million to $3 million. Genopets&#8217; native token, GENE, is down more than 77% from its all-time high of $37.79, also a November peak.



Still, Konvoy said the $200 billion video gaming industry, as well as the blockchain and crypto industry, presented a myriad of other opportunities for it to execute its &#8220;proactive and thesis-driven&#8221; approach.



&#8220;This new fund will not only allow us to focus on additional geographic regions but also new types of companies and technologies,&#8221; said Jackson Vaughan, another of Konvoy&#8217;s managing partners. &#8220;If there’s one main learning from this period [the pandemic], in which the world has undergone unprecedented disruption, is that there is such an enormous opportunity ahead of us.&#8221;



Konvoy said it plans to expand its team to 15-20 people by the end of 2023 and will seek to deploy more capital to around 30 early-stage companies over the next two and a half years.



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Konvoy Ventures Launches $150M Fund To Back Web3, Gaming Firms

<div id="highlights-block_627bd33e60997" class="highlights">
 <ul>
 <li>GameFi is considered a sector of Web3 because ownership is decentralized between builders, investors and players</li>
 <li>Gaming NFTs are simply a record of game asset ownership on a public blockchain</li>
 </ul>
 
</div>



<h3>GameFi explained&nbsp;</h3>



GameFi, as the name suggests, is the intersection of gaming and finance. It&#8217;s considered a sector of Web3 because ownership is decentralized between builders, investors and players. These two industries found each other on the blockchain through an exciting ecosystem of in-game tokenomics and gaming NFTs (non-fungible tokens).&nbsp;



In this context, gaming NFTs are simply a record of game asset ownership on a public blockchain such as Ethereum, Cardano or Solana.&nbsp;&nbsp;



The decentralization of GameFi allows game assets (or NFTs) to be transferred out of and between games. This transferability gives the assets value outside of the gaming ecosystem. And because the ownership status of an NFT is tracked on the blockchain, they can be bought and sold as collectibles on third-party exchanges.



This evolution in gaming isn&#8217;t about game mechanics. Rather, it&#8217;s about moving game monetization closer to the ultimate vision of Web3. Many big GameFi builders hope these games will become blockchain marketplaces where the free market gives value to in-game assets within a player-owned ecosystem.



Learn more: <a href="https://cms.blockworks.co/can-gamefi-still-unlock-the-metaverse/">Can GameFi Still Unlock the Metaverse?</a>



<h3>So what are the real world benefits of gaming NFTs?</h3>



It&#8217;s not just about digital collectibles. Gaming NFTs bridge digital worlds by introducing a new era of game asset collecting. It is the technology that will facilitate a unified metaverse, and Web3 gaming will bring several benefits that traditional gaming lacks.



Ownership: In traditional gaming, in-game purchases are non-transferable investments locked within a single gaming world. Gaming NFTs bestow ownership of in-game assets to players. That ownership is more meaningful as it&#8217;s not restricted within the game publisher&#8217;s walled garden.



Provable scarcity: The scarcity of gaming NFTs can be proven via the immutable records of the blockchain. This is important when you consider that rarity and authenticity are valuable traits in the minds of collectors. Furthermore, gaming NFTs cannot be tampered with or duplicated due to the immutable record generated on the blockchain upon digital asset issuance.



Interoperability: The traditional online gaming model relies on centralized servers. Such games operate on disparate systems. When it comes to gaming NFTs, they can be designed to be transferable, interconnected and interoperable with other games built on the identical underlying blockchain. The player then has the freedom to use them in other games (if other games support those assets) or to sell them to other players.



<h3>Obstacles to GameFi</h3>



One wrinkle that needs to be ironed out is scaling. Currently, most gaming NFTs are issued on the Ethereum blockchain. Ethereum gas fees are making transaction costs impractical. This bottleneck has meant that chains that achieve much higher throughput, such as Polygon and Solana, are becoming increasingly popular for blockchain-based gaming. This is likely to remain the case until the eth2 upgrade.



There&#8217;s resistance to blockchain-based gaming from many gaming communities. Previously, attempts to use micro-transactions to monetize games have seen backlashes. Due to bad experiences in the past, many gamers assume that a move to gaming NFTs is purely profit-driven and a mechanism that the most prominent game publishers will utilize to nickel and dime them.



Another fear is that a &#8216;pay-to-win&#8217; model will be pursued, resulting in more significant repercussions. If a player manages to buy their way through the game, they gain unfair advantages over other players.



The most prominent game publishers are interested in gaming NFTs but need to innovate ways to integrate monetization without sacrificing play. Top ten gaming company Ubisoft recently <a href="https://gamerant.com/ubisofts-project-q-nft-controversy-issue-explained/" target="_blank" rel="noreferrer noopener">experienced a community backlash</a> when it tried to introduce NFTs through one of its games. As a result of the community response, the company rolled back on its intention to use NFTs.&nbsp;



<h3>The future of gaming NFTs</h3>



While Axie Infinity has been a breakthrough for the play-to-earn model of blockchain gaming, further innovation is needed to bring the advantages of blockchain-based gaming to the mass market. An<a href="https://cms.blockworks.co/play-and-earn-is-fixing-gamefi/" target="_blank" rel="noreferrer noopener"> evolution toward a play-and-earn model</a> is already underway. This approach focuses on gameplay as much as it does on tokenomics.



This doesn&#8217;t mean that play-to-earn is going to go away anytime soon. It will remain an appealing segment of Web3 gaming to participants that are already crypto native. These games will continue to attract participation through their tokenomics more than anything else.



This contentious yet exciting merge of DeFi and gaming has vast untapped potential. As gamers, developers and investors find solutions that satisfy all parties, they will expose the remaining users of a <a href="https://www.investopedia.com/articles/investing/053115/how-video-game-industry-changing.asp#:~:text=In%202020%2C%20the%20gaming%20industry,than%20%24260%20billion%20in%20" target="_blank" rel="noreferrer noopener">$155 billion gaming industry</a> revenue. to DeFi.



<h3>How to invest in Web3 gaming</h3>



Investors can take several approaches to invest in this space.



Play-and-earn: The play-to-earn and play-and-earn blockchain gaming models are one approach. Axie Infinity developer Sky Mavis was the first major innovator in this space. With this model, gamers can invest their time and effort in return for game NFTs and tokens that have value outside the Axie ecosystem.



This is particularly relevant in developing countries with significant potential earnings relative to the local economy and per capita income. The Philippines accounts for 40% of Axie Infinity players. In October 2021, the total number of in-game Axie tokens that had been minted accounted for 1.7% of the GDP of the South East Asian country.



Whether play-to-earn or the more recent advent of play-and-earn, playing games based on these models represents one of the most straightforward entries into investing in NFT gaming.



Rent-to-earn: As development in this space has progressed, many of the most popular NFT games now require a substantial investment to commence playing and earning. At its height, the <a href="https://dappradar.com/blog/axie-infinity-trading-volume-up-despite-crypto-price-dump" target="_blank" rel="noreferrer noopener">average price</a> for an Axie Infinity NFT is around $355 — and a minimum of three are needed before a new player can play the game.



Gaming guilds such as <a href="https://www.unixgaming.org/" target="_blank" rel="noreferrer noopener">UniX Gaming</a> have emerged to help players invest in gaming NFTs through offering newcomers the option to rent under a scholarship program. Profits are then shared between the guild and the player. This is yet another approach that removes entry barriers for a player to participate and earn.



In-game currency:&nbsp; A blockchain-based game will have an in-game token to function as the game&#8217;s currency. It&#8217;s possible to invest directly in these tokens. However, the degree to which the token supply is limited is one factor that needs consideration when deciding whether to take this approach. Games with a capped token supply are more likely to appreciate, given the game&#8217;s sustainability and demand.



Governance tokens: Blockchain-based games are also likely to have governance tokens. A governance token allows the holder to vote on smart contract code changes and treasury management items. Taking Axie Infinity as an example uses Axie Infinity Shards (AXS) as its governance tokens.



Stakeholders have a strong incentive to obtain governance tokens: they hold influence over game tokenonmics. Some of these tokens provide voting rights over the strategic direction of the protocol. Additionally, these tokens will often include rights to cash flow akin to dividends with equities.



Gaming guilds: Many consider investing in individual games risky due to the presumption that most fail. Gaming guilds offer investors a risk-averse strategy.&nbsp;



Take UniX gaming guild as an example. UniX carries out due diligence on games it believes will be successful and buys NFT assets in those games. Therefore, holders of the UniX token benefit from professional curation of NFTs much like an ETF or index fund. Additionally, the holder shares in the revenue from NFT scholar rentals and asset price appreciation. All of these assets are managed decentrally through a DAO. And the diversification spreads risk across all investments.



Initial game offering (IGO): Investing in an IGO through launchpads such as <a href="https://finalround.unixgaming.org/">UniX Gaming’s Final Round</a> offers the opportunity to get NFTs or tokens in upcoming games at a discount price. If the game achieves popularity with listings on major exchanges, investors can expect a significant return on investment.



<h3>Further Reading</h3>



The sponsor of this Investing Guide — UniX Gaming — has partnered with DAO Maker and SL2 on Final Round, its multi-chain launchpad, which is due to launch imminently. Further details can be found <a href="https://medium.com/@UniXgaming/unix-gaming-dao-maker-sl2-team-up-for-final-round-launchpad-40ed978fd023" target="_blank" rel="noreferrer noopener">here</a>.



<h3>Relevant Podcasts</h3>



<a href="https://cms.blockworks.co/podcast-the-future-of-play-to-earn-gaming-felix-sim-gabby-dizon/" target="_blank" rel="noreferrer noopener">The Future of Play-To-Earn Gaming | Felix Sim and Gaby Dizon — Empire podcast by Blockworks</a>



<a href="https://cms.blockworks.co/podcast-why-gaming-nfts-will-be-bigger-than-twitch-justin-kan/" target="_blank" rel="noreferrer noopener">Why Gaming NFTs Will Be Bigger Than Twitch | Justin Kan — Empire Podcast by Blockworks</a>



<a href="https://youtu.be/tIVsk6aOafM" target="_blank" rel="noreferrer noopener">FTX&#8217;s Gaming Strategy | Amy Wu &#8211; Empire Podcast by Blockworks</a>



<a href="https://youtu.be/990N8M7UhIo" target="_blank" rel="noreferrer noopener">How Web3 Will Change The Gaming Industry | Carra Wu &#8211; The Unstoppable Podcast</a>



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This content was sponsored by <a href="https://www.unixgaming.org" target="_blank" rel="noreferrer noopener">UniX Gaming</a>.



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