GameFi: cryptocurrencies in gaming Play2Earn "play and earn"

The take-off of gaming tokens has become one of the most notable events of this summer in the crypto industry.A Flagship of Growthbecame the AXS token from the Axie Infinity blockchain game, which in three months grew by more than 1500%, breaking into the top 50 assets in terms of capitalization and hitting the pages of world financial publications.

Let's figure out what is happening in the blockchain-based gaming industry and what its prospects are.

Blockchain at the service of the gaming industry

Blockchain technologies have begun to penetrate the gaming industryindustry since 2014, when the first online casinos began accepting deposits in Bitcoin. But it was only with the advent of non-fungible tokens (NFTs) that it became possible to create games where players could be full owners of digital characters and items. And where property appears, commercial relationships arise.

Back in 2017, the project CryptoKitties cWith NFT kittens that could be bred and sold for tens of thousands of dollars, it demonstrated that you can not only spend money in online games, but also earn money.

However, only by 2021 a critical mass of developers and players had accumulated, which led to the formation of an entire market segment -GameFi (short for Game Finance).

This term, proposed in 2020 by the famous developer Andre Cronje, refers to the whole variety of gaming projects on the blockchain, including those using NFTs.

There are several categories in the GameFi segment:

NFT games of various genres using the Free2Play and Play2Earn models;
game worlds or metaverse (metaverse);
projects that provide tools for the development and distribution of NFT games, as well as for the transfer of existing online games to the blockchain;
projects that enable the use of NFT in DeFi services.

Games created in 2020 and earlierprimarily run on the Ethereum blockchain. However, high fees forced developers to switch to cheaper and faster solutions. Many games have already been released on the EOS, Tron and Wax blockchains. Since the beginning of 2021, the popularity of Binance Smart Chain has also been growing. In addition, specialized blockchain platforms such as Flow have been launched, adapted for use in the gaming industry and the easy issuance of NFTs.

Axie Infinity: Multiply, Fight, Earn!

The game made a lot of noise this summer, earning mentions in Forbes and other mainstream publications.

Axie Infinit was developed by Vietnamese studio Sky Mavis. The creators were inspired by the success of CryptoKitties in 2017 and combined its basic principles with another popular game - Pokemon Go.

The rise in popularity of Axie Infinity began in June2021, and already in August more than 1 million people played it daily. At the same time, the monthly trading turnover on Axie Infinity’s own marketplace, where game NFTs are bought and sold, reached more than $1 billion. Sky Mavis’s revenue from Axie Infinity from 2018 to July 1, 2021 amounted to only $21 million, and in July and August this figure increased to a fantastic $485 million.

Since launch, the game has been running on the Ethereum network,so all the game actions cost the players dearly. In April 2021, Axie Infinity switched to a proprietary Ronin closed sidechain with much cheaper transactions.

Axie Infinity gameplay is built around creaturesaxi (axie), each of which is an NFT token. They come in nine different classes with their own sets of combat characteristics. Axi can grow, multiply and fight in two types of battles:

team versus team (PvP),
team against monsters (PvE).

Поскольку акси не достаются новым игрокам free, the game requires an initial investment. As of the end of August, prices for the simplest axi on the Axie Infinity marketplace started at $ 200, while creatures with improved combat characteristics cost over $ 600- $ 700. Thus, in order to just start playing, you need to spend at least $ 600, and to assemble a combat-ready team, you need to invest at least $ 2000.

The most difficult and costly part of the game ismultiplication axi. These creatures have six body parts, the properties of which are encoded by a set of genes. When a pair of axi interbreeds, the offspring inherits the genes of the parents with a certain probability, according to their dominance or recessiveness, and this determines its combat characteristics and cost on the Axie Infinity marketplace.

There are several nuances in the reproduction of axi:interbreeding is impossible between brothers and sisters, as well as between parents and their offspring. In addition, an axi can reproduce no more than seven times in its life. All these rules prevent the creation of farms for mass breeding of Axi and the uncontrolled increase in their population.

The base game currency of the game is Axie Infinity tokenShards (AXS). It is needed to level up and multiply the axi. One crossing requires the consumption of 4 AXS and from 150 to 3150 Smooth Love Portion (SLP) tokens, depending on which time the axi is multiplied.

The main income of players is made up of SLP tokens,which players receive in PvP and PvE battles. SLP tokens are traded on Binance, FTX and a number of other crypto exchanges, so players can easily withdraw their earnings to fiat.

With active daily play, players' earningsreaches $500-$1000 per month. The Internet is already full of stories of people in developing countries escaping unemployment, solving their financial problems and quitting their regular jobs thanks to earnings in the game. It is especially popular in the Philippines: more than 40% of Axie Infinity players are from this country.

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NFT games: remakes, imitations, imperfections

The number of NFT games has increased since the beginning of 2021many times. Only in the Playtoearn.net rating there are more than 360 online games in the Free2Play and Play2Earn formats, where you can interact with NFT items and earn cryptocurrencies. They cover all known gaming genres - from card games to economic simulators, strategies, arcades and racing.

Let us mention just a few notable projects.For example, the RPG game CryptoBlades, developed by Riveted Games. It is worthy of mention not only because of its unexpected popularity (up to 90 thousand players per day), but also because the SKILL gaming token experienced a dizzying rise from $1.05 to $184 in July 2021. Even after a deep correction, the asset is trading around $40.

GameFi, like the entire crypto industry, widely and without hesitation borrows solutions that have proven to be successful. For example, an NFT gameMy DeFi Pet, running on the BSC blockchain, is very similar toAxie Infinity: It also involves raising and breeding pets. However, the mechanics of inheriting pet characteristics, like the entire gameplay, are much simpler. In July, the gaming token DPET experienced a tenfold increase. In those days, the game attracted more than 30 thousand players per day, but by the end of the summer, attendance had dropped tenfold.

A number of NFT games have not even reached the release stage yet, but their tokens are already traded on leading exchanges and are even in the top 200 in terms of capitalization.

Example –My neighbor alice, a mixed multiplayer blockchain gamesandbox/social simulation genre, which is being developed by Antler Interactive. The release is planned for spring 2022, but the ALICE token, launched on Binance Launchpool in March 2021, already has a capitalization of over $300 million.

A similar situation with the projectIlluvium. This is a decentralized RPG with an NFT collection,which will work on the Ethereum network. The launch is scheduled for the end of 2021, but the ILV token already has a capitalization of more than $250 million, having risen in price more than eight times over the summer. This was greatly facilitated by staking with annual returns of over 85%. While waiting for the release, ILV holders were able to earn money both from staking and from price growth. Staking rewards paid in ILV tokens are locked for 12 months, which saves the token rate from selling pressure.

How much is a hectare of virtual land?

A special category of NFT games are virtual worlds, where players can own digital items and land in the form of NFTs and use them within the game economy.

The most famous tokenized virtual world isDecentraland. This project began to be developed by a group of enthusiasts back in 2015, but the public release took place only at the beginning of 2020.

At auctions in 2017–2018, more than45 thousand digital plots, each of which corresponded to a LAND token in the ERC-721 format, confirming land ownership. Currently, plots can only be purchased on the secondary market. In June 2021, the largest digital real estate deal, Decentraland, took place: investment firm Republic Realm purchased a block of 259 virtual lots for $913,000. And the cheapest LAND can now be bought on the built-in marketplace for $4,000 — $5000.

Plots in Decentraland are purchased fordifferent purposes. They are rented, virtual buildings are built on them, mini-games, casinos, shopping malls with NFT goods and advertising platforms are opened.

Decentraland is governed by the DAO principle:LAND land owners and MANA token holders have voting rights. Interestingly, the value of the MANA token has long gone beyond Decentraland: it can be used as collateral for loans on the MakerDAO DeFi platform..

Own markets for tokenized land and internal onesThere are also currencies in other well-known virtual worlds, such as SANDBox (a similar to MineCraft on the blockchain with the SAND gaming token) and Somnium Space (with support for 3D glasses and a CUBE token).

In Axie Infinity in early 2021 alsothere was an opportunity to own plots in the virtual world called Lunation. Its territory is divided into 90,601 land plots, each of which corresponds to an NFT. The plots are valuable because they can be used to collect game resources and conduct PvE battles.

In February 2021, the largest purchase of an NFT plot took place in the amount of $1.5 million. And the cheapest plots of Lunation are now sold on the Axie Infinity marketplace for $12,000.

Currently the most visited virtualworld with the digital real estate market can be called the game Alien Worlds, running on the WAX blockchain. According to DappRadar, at the end of August, more than 400 thousand players entered this metaverse daily. The game is attractive because, unlike Axie Infinity and other games with the Play2Earn model, it does not require an initial investment. A beginner receives a basic set of tools for mining Trilium (TLM) gaming tokens, which can be withdrawn and sold on crypto exchanges.

Players can buy land atplanets of the metaverse Alien Worlds, receiving daily their share of the tokens generated by the planet, as well as a commission from all players mining TLM on its site.

To help developers and players

With the rise in popularity of NFT games and virtual worldsAn infrastructure has begun to form around GameFi, adapted to the needs of developers, players and investors in gaming assets. Let's consider some of the most interesting projects in this segment.

Enjin CompanySince 2017, he has been creating a platform that helps developers transfer existing and new online games to the blockchain, as well as release game items in the form of NFTs.

In 2020, the Enjin Adopter program was launched,which has attracted dozens of game developers, helping them create, finance, monetize and sell their projects on the blockchain. To date, several online games are running on the Enjin platform: Lost Relics, 9lives Arena, Space Misfits, The Six Dragons, etc.

To bypass all the restrictions of the Ethereum network in the springIn 2021, the company launched its own Efinity blockchain with a native EFI coin. The new network provides performance up to 1000 transactions per second and has its own NFT standard. It is understood that all game projects on the Enjin platform will work on this blockchain in the future.

Another project from this area isUltra Games.It started out as decentralized and cheapan alternative to platforms such as Steam or Google Play Store, which take 30% of developer income. To date, an entire ecosystem has formed based on Ultra Games. It includes a platform for developing and distributing games based on the blockchain, as well as tools for monetizing gameplay and creating decentralized marketplaces for trading virtual goods, a back office for developers, and much more.

In June 2021, the launch of its ownUltra network (fork of EOS) with native UOS coin, which provides free and fast transactions. This network has its own Ultra NFT standard and Ultra Wallet with the ability to interconnect cryptoassets.

The company uses an interesting approachGala Games,developer and publisher of NFT games.So far, there is only one Town Star (city simulator) game available for players, but several more games in different genres are expected to be released, where the same NFT items will be used. In addition, there is a single store of NFT game items for all games, where prices are denominated in GALA tokens. Thus, a whole ecosystem with a single economy is formed from games in different genres.

GALA tokens also have a management function:their holders are voting to include NFT games from other developers in the Gala Games ecosystem, which should be interesting for small teams struggling with distribution and player acquisition.

The project occupies a special place in the emerging GameFi industryYield Guild Games... It is a decentralized governance (DAO) gaming guild that invests in gaming NFTs and virtual worlds.

The project attracted funding from venture capitalDelphi Digital and Andreessen Horowitz funds. The IDO took place in July 2021 and, as of the end of August, provided token sale participants with a return of more than 3,500%, and the capitalization of the YGG management token exceeded $900 million.

YGG holders have the right not only to participate inproject management, but also receive part of the income from operations with NFT assets, for example, from the resale or rental of game items, virtual land, etc. At the start, the project is focused on digital asset management in three popular games: Axie Infinity, Sandbox and League of Kingdoms. In Axie Infinity, the project already owns several thousand axis and leases them to Filipino players, receiving 30% of the SLP tokens they earn.

GameFi prospects and risks

According to many experts, the GameFi segmentpromising future. Developers get new tools for distribution and monetization of games, and millions of players around the world get the opportunity to combine gameplay with earnings.

The financial success of Axie Infinity is pushing hundreds of teams around the world to release NFT games in different genres, so many exciting releases can be expected in 2022.

However, potential risks are also visible.Most of the existing NFT games are graphically primitive (often at the level of flash games of the early 2000s) and have a repetitive gameplay. In terms of player engagement, they are still far from top multiplayer online games like World of Tanks, Fortnite or World of Warcraft, where millions of players literally live for years, wasting time and money.

Monotonous gameplay and low engagement lead to the fact that interest in new games quickly wanes, and after the excitement comes oblivion.

Moreover, existing economic models ingames in the Play2Earn format are sustainable only with a constant influx of new players with their money and hopes for a quick return on investment. It is likely that as the popularity of the game declines, NFT items and game tokens will rapidly depreciate in value.

This suggests that game tokens are good for speculative play during a period of growing popularity of fresh NFT games, but hardly suitable for long-term investments.

The fate of infrastructure projects like Enjinand Ultra, which provide blockchain tools for developers, is far less worrisome. As you know, in the days of the gold rush, the most profit is made not by the prospectors, but by the sellers of shovels.

Where is it more profitable to buy cryptocurrency? TOP-5 exchanges

For a safe and convenient purchase of cryptocurrencies with a minimum commission, we have prepared a rating of the most reliable and popular cryptocurrency exchanges that support deposits and withdrawals of funds inrubles, hryvnias, dollars and euros.

The reliability of the site is primarily determinedtrading volume and number of users. By all key metrics, the largest cryptocurrency exchange in the world is Binance. Binance is also the most popular crypto exchange in Russia and the CIS, since it has the largest cash turnover and supports transfers in rubles from bank cardsVisa / MasterCardand payment systemsQIWI, Advcash, Payeer.

Especially for beginners, we have prepared a detailed guide: How to buy bitcoin on a crypto exchange for rubles?

Rating of cryptocurrency exchanges:

#	Exchange:	Website:	Rating:
1	Binance (Editor's Choice)	https://binance.com	9.7
2	Huobi	https://huobi.com	7.4
3	Exmo	https://exmo.me	6.9
4	OKEx	https://okex.com	6.5
5	Bybit	https://bybit.com	6.3

The criteria by which the rating is set in our rating of crypto-exchanges:

Work reliability— stability of access to all functions of the platform, including uninterrupted trading, deposits and withdrawals of funds, as well as the duration of the market and daily trading volume.
Commissions– the amount of commission for trading operations within the platform and withdrawal of assets.
Additional features and services— futures, options, staking, NFT marketplace.
Feedback and support– we analyze user reviews and the quality of technical support.
Convenience of the interface– we evaluate the functionality and intuitiveness of the interface, possible errors and failures when working with the exchange.
final grade– the average number of points for all indicators determines the place in the ranking.