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Gate.io Blog Game-Fi: The Key To The Metaverse
Industry Analysis

Game-Fi: The Key To The Metaverse

16 August 10:44
By Ashley. H, Gate.io Researcher




Abstract: In the previous article([Hot spots] Into the Metaverse, Where Sci-fi Meets the Reality), the concept of NFT’s and the Metaverse was illustrated in detail. It was proposed that Game-Fi was laying the foundation for NFTs and the Metaverse. The recent explosion of NFTs and the Metaverse has brought nearly $1 billion worth of investment into the Game-Fi market. So, how did Game-Fi gradually move towards the Metaverse and what makes it a pioneer of the Metaverse? Is there any project other than Game-Fi on the market that is worth your attention? Or is this cryptocurrency worth investing in? The above questions will be analyzed briefly in this article.


Keywords: Game-Fi, Metaverse, NFT, Axie Infinity, Play-to-Earn


Introduction
Together with the rapid development of the Internet in the 21st century, video games have played significant roles in our lives. Whether playing games is healthy is a matter of debate as there are some who consider games as electronic waste that poison the youth. Others believe that it is an essential leisure after work.


But just as Jane McGonigal wrote in 'Reality is Broken: Why Games Make Us Better and How They Can Change the World:“game design is not just a technical skill but also a way of thinking and leadership in the 21st century; playing games is not just for fun, it’s a way to achieve exceptional innovation while maintaining global collaboration in the 21st century.”


If humans are in a three-dimensional world, then the games created by humans are two-dimensional simulations of the real world. With the benefits of encryption technology as well as the Metaverse, the two-dimensional world is closely mirroring the real world. As if there is a door between the two worlds and we can get a glimpse of that tip of the iceberg.


The Development of Game-Fi
In 2021, approximately $1 billion worth of investment has been brought into the Game-Fi market. It seems that Game-Fi only set the wheels in motion and into prosperous development when the first real Game-Fi project, CryptoKitties, appeared in 2017. So, how did Game-Fi gradually move towards the Metaverse? Will it be the initiative that launches the Metaverse to a mainstream audience?


Firstly, we need to clarify the premise that the birth of the blockchain has brought a consensus layer to the Internet, which makes the Internet a witness to value. In the world of gaming, NFTs give games clear, transparent, and irreplaceable property rights. The game itself can accomplish the decentralization of property rights management when NFTs are adopted as characters, equipment, and other in-game elements. In traditional games, the ownership of items belongs to the original game developer, while players only have the right to use them. As a result, the game developer possesses considerable control. In Game-Fi, even game officials cannot bypass the blockchain and tamper with in-game data. This makes the economic system authentic and reliable. In-game items can get the benefits of scarcity and their value can be anchored. Some would argue that NFTs are the baselayer for the Game-Fi economic system.







Once property rights were defined, stable commerce also emerged. DeFi also appeared in a timely manner, injecting vitality into the economic system of Game-Fi. It also bridged the real world with the Metaverse.. With a defined value, in-game items and offerings can be exchanged interchangeably under the equivalent and just value. Smart contracts make these exchanges even more innovative and daring. Furthermore, the issuance of game currency breaks the barriers between different games as well as between the virtual world and reality. This allows players to directly trade game currency with real-world currencies at the exchange. Consequently, scarce in-game items have real value in reality. This gives birth to the Play-to-Earn model, contributing to the popularity of Game-Fi as we know it.


Meanwhile, the economic system created through NFTs and DeFi endows the game world with relentless vitality and innovation. The virtual game world and the real world are closely related and interconnected. This makes another long-standing vision possible—the Metaverse prototype can be seen through the eyes of Game-Fi eventually.


The Hitchhiker's Guide to the Metaverse
In a broader sense, the concept of the metaverse can be applied in a wide range of fields. But the principal and most promising venture of the metaverse ahead is in gaming. On one hand, some of the most well-known simulation games are very similar to the kernel of the metaverse, namely "The Sims" and "Minecraft". They are virtually no different from the current metaverse games in terms of gameplay. The similarities between these games have conveniently served a certain portion of the user base for various metaverse projects. Games are life emulators with exceptional extensibility created by human beings. Players can recreate almost anything they see in the real world and recreate them into something extraordinary in the Metaverse. This presents a massive opportunity to innovate.


The addition of NFT elements also attaches monetary incentives to the game ecosystem. Users can be both consumers and creators; they can secure ownership of an item in the virtual world. They can also offer their creations as NFTs for sale. This sounds exactly like the real-world economic system. In the early days of societal progression, the whole idea of the division of labor was underdeveloped. This was the circumstance that led to the commodity economy being developed. According to Xiao Feng, a blockchain expert, the advancement of the metaverse may go through three stages: The digital twin, the digital native, and the coexistence of reality and virtuality. The digital twin phase has sketched out the prototype of the metaverse. The digital native means that NFT games will solidify the concept of the Metavers. We then ultimately reach the stage of 'virtuality meets reality.'




The concept of the metaverse has yet to take on a solid form, which means we can't know for certain what it will develop into in the future. But it is an undeniable fact that the metaverse is indeed a very promising innovation with immense potential. On an economic level, NFTs assign a value to everything in the virtual space, creating an economic system similar to the real world but incorporating decentralized features. Monetary incentives and benefits will always be powerful tools to attract and retain users. Perhaps in the future, the economy in the metaverse will be several times larger than that in the real world. On a social level, the metaverse can deliver a deeply immersive social experience. For players with social anxiety, socializing in the virtual world is a tremendously popular idea. It presents them with a sense of involvement and high satisfaction beyond the physical space.


So, what are some noteworthy games and their corresponding tokens in the metaverse right now?


The Game-Fi of Pokemon: Axie Infinity
Axie Infinity (AXS) has risen nearly 300 times since the day it was launched, and its revenue has transcended Uniswap. To offer an alternative perspective outside of the blockchain community, its revenue has surpassed King's Glory, which is the most commercially successful game in China. So what kind of game is Axie Infinity? What is so special about its gameplay?


Axie Infinity (AXS) is a digital pet raising game with a battle system produced and published by Vietnamese game developer SkyMavis on the Ethereum blockchain.



The gameplay isn't complicated at all. To begin, players need to spend ETH to purchase three pet sprites, also known as Axies. Axies have their own unique appearance and attributes. Each Axie is the equivalent to an NFT. Players can breed or trade Axies in the game. They can also dominate other players with the in-game battle system with their own collection of Axies.


The core mechanics of Axie Infinity are breeding, dueling, and trading. Players can use all three of their initial Axies purchased with ETH to challenge other players. Before the duel begins, players line up their Axies in strategic order. During the duel, players can adopt certain tactics to replenish their Axies' energy and take the initiative at the right time to earn the Love Potion SLP rewards. These SLPs can be used to breed the next generation of Axies and can also be traded on the secondary market. Next, players can breed a new Axie with two of their existing Axies using the Love Potion SLP. The appearance and attributes of the new breed are determined by these two Axies. Again, this new Axie can be used to breed a new generation as well as in-game battles. It can also be traded on the secondary market.


You may be thinking, 'It doesn't sound like anything new' and you would be correct. Axie Infinity is unquestionably not too different from Pokemon in terms of logic, and it's not the first of its type to emerge on the Ethereum blockchain. But why is it so popular around the world? Well, the answer to this lies in its"play-to-earn" model.


Axie Infinity utilizes two types of tokens in its ecosystem. One is the game's mission-incentive asset SLP, which is obtained through battles and can be used for pet breeding and trading, and the other is the governance token AXS, which can be used to propose and vote on the game's future direction. As mentioned above, players can obtain the highly incentivizing SLP by winning duels or completing required tasks in the game, which in turn produces AXS. By selling AXS and SLP on the secondary market, they can accomplish the outcome of earning while playing. In places like the Philippines and Vietnam, there have been reports that people are quitting their jobs to support their families by playing Axie Infinity to earn an income.


Since June, Axie Infinity's market capitalization and trading volume have soared like a rocket, with sales exceeding $20 million in nearly 30 days and AXS up more than 1,000% in a month. Coupled with the self-built exclusive Ether sidechain Ronin, which solves the problems of high Gas fees and Ether congestion, its user base has exploded in the past few months.

Currently, both tokens in Axie Infinity are live on Gate.io, trading under the codenames AXS and SLP. In addition, Gate.io is offering a variety of other Game-Fi tokens for trading purposes.


Gate.io platform AXS trading address: https://www.gate.io/en/trade/AXS_USDT
Gate.io platform SLP trading address: https://www.gate.io/en/trade/SLP_USDT


So What’s Popular in the Metaverse?
With the metaverse and NFT markets soaring in popularity, the Game-Fi market as a whole is also exhibiting explosive growth. In addition to Axie Infinity, various NFT games with unparalleled competitive advantage have emerged as major contendants, such as Cryptoblades, Decentraland, The Sandbox, Cryptovoxels, Enjin, etc. to which I will be summarily introducing below.


Decentraland
Decentraland is a decentralized virtual reality project built on the Ethereum blockchain, similar in design and gameplay to popular games such as 'The Sims', 'Minecraft', and the 'Civilization' series, it is a virtual world truly imagined and governed by users. In Decentraland, users can purchase lands that are entirely their own to which they can build houses, hold art exhibitions, meet with friends, and essentially generate any content to be used in-game which includes customized sceneries, artworks, games, and applications. Just like in the real world, users in Decentraland are free to create, explore and socialize, and are incentivized to earn revenue via developing high-quality content. As founder Esteban Ordano says, "We are creating a 3D virtual world with a complete economic and social ecology."


Decentraland's governance token is MANA, which can be used on features such as acquiring land and assets, using in-game services, as well as participating in governance. MANA is destroyed after each purchase to ensure the stability of the economic system. Recently, Decentraland's stellar performance in terms of sales and market capitalization has continued to push the price of MANA in the secondary market.


Gate.io platform MANA trading address: https://www.gate.io/en/trade/MANA_USDT


The Sandbox



The Sandbox has "Play-to-earn" as its core mechanism. Similar to Decentraland, it uses the SAND token to build a deeply immersive virtual world that is decentralized and not controlled by a single entity, which includes the creators of The Sandbox. Players can utilize an in-game component, known as the Game Maker, to expand on the virtual world as well as to create games on their own. In addition, players can also make use of the official VOXEDIT tool for 3D rendering to create various characters or virtual items which can then be sold on the market as in-game assets to generate revenue.


With over $20 million in sales and several well-known IPs having invested in land acquisition and character creation, The Sandbox has become a decentralized NFT metaverse in which players can create, experience, and cash in on the content they've created.


Gate.io platform SAND trading address: https://www.gate.io/en/trade/SAND_USDT



CryptoBlades
CryptoBlades is also one of the NFT games that emerged following the big bang of Axie Infinity. CryptoBlades is deployed on the Binance Smart Chain, in which the developer Riveted Games has extensive experience building games since 2014. In CryptoBlades, all characters and props are NFT assets that can be traded freely. The game's token is SKILL with a total supply of 1 million. To purchase characters and equipment, improve combat power, and earn additional SKILL via the in-game battle system, players are essentially required to trade and spend the SKILL token.


Gate.io platform SKILL trading address: https://www.gate.io/en/trade/SKILL_USDT



Conclusion
Nevertheless, the development of the metaverse seems to have fallen into a somewhat overheated stage. As of now, metaverse games are still at a particularly early stage. Resembling the early era of the internet, most of the virtual worlds built by NFT game developers are relatively crude in design, with only the most basic functions. Additionally, some metaverse games seemingly appeared out of thin air with no content, no playability, and based solely on the Play-to-earn business model with no actual 'playing' involved. If these projects are only riding the NFT trend to attract players, once the funding starts to withdraw, users will also diminish accordingly due to their apparent zero content.


Another difficulty is that the current metaverse projects can not be linked across games, which means players are confined to a single project, i.e. players can only buy land in Decentraland, breed monsters, and engage in PvP battle in Axie Infinity. If developers can increase the interoperability of each game platform and build an "arbitrary gateway" between the various worlds, the player's experience will be considerably enhanced. The day when all game content from different projects can be linked to each other through smart contracts is the day the metaverse can be considered a genuine 'Universe.'


In a general sense, the metaverse can be presented through the gaming experience, but this is merely a scratch on the surface. Maybe one day in the future, with the mature development of blockchain technology, our imagination of the gaming experience can be liberated and amplified. And only then can we truly unleash the potential and grand vision of the metaverse.


Written by Gate.io researcher Ashley H.
*This article represents the opinion of the writer and does not constitute any investment advice.
*The content of this article is original and copyrighted by Gate.io. Please cite the source and the author if you plan on sharing this article, otherwise, you will be held legally responsible.




Expanded reading:
[Hot spots] Into the Metaverse, Where Sci-fi Meets the Reality
[Observe]: If you missed BTC, Don’t repeat the same mistake with NFT and the Metaverse
[Observe]: With the rising popularity of NFTs, How far away are we from scaled development?
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