December 6, 2021

Join in the craze: GameFi & NFT

As the saying goes, “chaos breeds creativity.” This couldn’t be more true with the recent rise of blockchain games and NFTs. From April to August of this year, many countries hit hard by the pandemic like the Philippines, Brazil, and Venezuela experienced a surge of popularity in the blockchain game called “Axie Infinity”. This recent trend has not only allowed people to cash in on virtual currency and NFT exchanges but it even empowered high-earning players to completely forgo their own professions in pursuit of higher rewards from these new revenue streams. Due to increased media coverage and word-of-mouth news, players around the world began scrambling to join in the craze, and this new trend has particularly put Axie Infinity and other platforms in the “Play-to-Earn” and GameFi industry under a new spotlight. One example of such blockchain games is Illuvium, a role-playing game (RPG) company that develops 3D blockchain game technology, which received widespread attention from the global gaming community. A couple of other examples are My Neighbor Alice, a social simulation blockchain game, and MOBOX, a gaming platform that combines NFTs and yield farming to create a play-to-earn ecosystem.

This sudden upsurge of interest in GameFi and NFT was an opportunity that both game developers and institutional investors did not want to miss. As a recent example on November 1st, blockchain game company The Sandbox announced a funding round led by Softbank’s Vision Fund of $93M USD. Meanwhile, the main stakeholder behind The Sandbox, Hong Kong-based Animoca Brand, a leading blockchain game company, also recently raised $65M in funding from an all-star investor lineup that includes Dragonfly Capital, Sequoia China, Ubisoft Entertainment, and Justin Sun, founder of TRON. With the new capital injection, Animoca Brand aims to continue partnering with and investing in other fast-growing companies in the GameFi and NFT industry.

Under the frenzy of GameFi, the valuation of NFTs has not only skyrocketed, but the underlying opportunities for the overall ecosystem have grown faster than ever. Yield Guild Games (YGG) is a prime example of such opportunities. As minting fees soar to match rising NFT prices, which prevented many players from joining the games, YGG created a “scholarship” program that gave out NFT assets as loans to players, giving individuals a foot-in-the-door into the NFT market. In exchange, YGG would take a slice of any transaction that a player benefits from playing blockchain games. Furthermore, YGG even scouts for investment opportunities in high-potential games like Axie Infinity to diversify their revenue streams. Their decentralized network structure of gamers and unique business model has made YGG an outstanding outlier in the overall GameFi industry. 

Observing the GameFi industry’s recent rise, one thing that’s become clearer is the expanded applications of NFTs along with its growing adoption among users around the world. Along with NFTs, other related areas like the metaverse, cryptocurrency, and blockchain will also continue to expand in various forms because of the spillover effect of NFTs entering new markets. 

Seeing all of these changes, I believe that we are currently at a turning point in history. Because of blockchain gaming platforms, people around the world who had no prior knowledge about cryptocurrency, NFTs, and blockchain are suddenly becoming more interested in these technologies. And these new interests are now creating new business opportunities that are yet to be discovered. Years down the line, we’re going to look back and realize that all this change started from this era. Right now, we are only seeing the tip of the iceberg of a new industry in formation.

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