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Can GameFi still unlock the metaverse? – Concrete blocks

  • The industry is currently trying to move from a play-to-earn model to a play-and-earn model
  • In a play-and-earn model, game architects prioritize gameplay over game economics to attract engagement regardless of financial reward

Has the collapse of in-game economies and the decline of NFT gaming ended GameFi’s mission to create a unified metaverse? According to Blockwork’s Ornella Hernandez, the answer is no. Blockchain gaming is still a driving force behind virtual world interoperability. And the demand for games will persist regardless of economic conditions. In my chat with Ornella, we help everyone stay up to date on market conditions, competing factions, and future implications for the metaverse.

Ornella is not alone in her positive feeling. Absolute released a report predicting over $2.8 billion in GameFi revenue over the next six years.

But the GameFi industry must resolve an identity crisis before producing a new paradigm. The industry is trying to move from a play-to-earn model to a play-and-earn model. Ornella thinks the industry needs to go further and change the terminology from “blockchain gaming to fun games built on blockchain.” He must direct his innovative energy towards the progress of the game rather than the economies of the game.

She also says the face of the game is changing. More and more women are showing interest as hyper-casual games grow in popularity. If GameFi wants to produce a game-first culture, it should include these types of games and the overall diversity of representation.

What are play-to-earn games, and is play-and-earn a real solution?

Play-to-earn games are the first generation of GameFi. Games like Axie Infinity, which reward players with digital assets for in-game achievements, fall into this category. These digital assets can then be bought and sold on a secondary market. In this model, the main objective of the architect is to design a game economy that provides long-term value to its digital assets.

This model exploded in popularity in 2021 as it pioneered a new revenue stream for gamers. And it was particularly popular among people in developing countries because it offered new social mobility amid a pandemic-induced economic downturn.

This new economic incentive, however, has become a source of significant criticism. Many have argued that the popularity of games like Axie Infinity is only sustained by its financialization. And if it lost its profitability, the gameplay would cease.

Its detractors were vindicated somewhat when Axie Infinity’s native SLP token fell from its all-time high of $0.39 to $0.0044. At the same time, the weekly user base grew from 2.7 million users to 368,000. million dollars at the time.

Despite the confluence of negative news, including new insider trading allegations, the game is still alive and well. In July, the developers released a new version of the game called Origin, and as a result, NFT Axies Sales are back on the rise.

This upgrade is part of an initiative to address criticism of the game to win through an improvement attempt called play and win. In this model, game architects prioritize gameplay over game economics to attract engagement regardless of financial reward. Tokenomics is then designed to provide secondary value to the whole experience.

For example, new users can start playing the game using a free starter pack in Origin. Prior to the upgrade, users had to purchase three avatars called Axies to play. Since this update, the number of new monthly accounts has increased from 4,030 in June to 5,387 in July.

Although this increase in new users is a reversal of the trend, it is still unclear whether the new play and win philosophy can be successful in attracting engagement regardless of the “win” nature of the gameplay. Given that the developers initially designed Axie Infinity with the financialization component at its core, it’s hard to argue that upgrading is truly a game and a payoff.

The industry needs games that incorporate a game philosophy from the start to test this new model. Ornella keeps a close eye on Star Atlas and Shrapnel as potential examples in his weekly Web3 Watch report. Star Atlas is an immersive strategy game of space exploration, territorial conquest and political domination. Their virtual world is large and contains a growing Discord community of 220,000 people. And Shrapnel, a first-person shooter attempting to rival Call of Duty and Halo, recently hosted two panels at Comic-Con. They are built on the Avalanche blockchain and incorporate the play-and-earn philosophy through their use of story-driven game design.

What role will he play-and-gain in the metaverse?

Institutional investors are waiting to see if on-chain games succeed in attracting gameplay outside of the native crypto ecosystem. If there is any sign of crossover attraction, it opens up the industry to a $178 billion gaming industry. But more importantly, an increase in user numbers will provide a foundation for a unified metaverse.

Learn more: Is GameFi the next Silicon Valley for investors?

Ornella defines the metaverse as an infinite-scale virtual space with its own digital economy, but is fundamentally about the gamification of social interaction. The industry, however, cannot agree on what this virtual space is and its future. So there are different virtual spaces/economies, all competing to be the metaverse.

In a follow-up conversation, Ornella explained that interoperability is a solution to this problem. Instead of waiting for the ultimate succession of a virtual world like The Sandbox or Decentraland, these worlds will find a way to convey meaning and value across virtual boundaries.

Blockchain technology theoretically provides the infrastructure for interoperability but does not provide the incentive. Ornella explains that the gamification of digital social interaction will ultimately lead to these essential advancements. And the user base acquired from the game-driven play-and-earn model could provide the social foundation for this interconnected reality.

The metaverse as gamification of social interaction

You could say that the web has always been and always will be about social connection. In Web1, individuals owned much of the login infrastructure but did not own the actual content. In Web2, social interaction has become more centralized with platforms such as Facebook. And in Web3, also dubbed the ownership economy, users have the ability to directly take ownership of their online identity and expression. But what does this property really offer?

The property gives limits. Like title deeds, it offers a sort of scorecard that can be used to measure value against others. This is why private ownership has always been a form of gamification.

Digital ownership records are an extension of the same game. They are simply a new way to leverage ownership for social capital – and vice versa. We see it in the NFT culture. Influencers use their social capital to pump the floor price of NFTs, and people with financial resources buy these NFTs to gain social capital. NFTs can even be used as loan collateral.

This gamification of social interaction is a clear and present marker of Web3. But it lacks a neutral, decentralized space for digital expression. There must be a space where ownership of one virtual world can be expressed and exploited alongside ownership of other virtual worlds. NFT marketplaces and social media platforms are examples of neutral online spaces that offer some semblance of this, but the user experience is limited. And the platforms are centrally controlled and operated. At a fundamental level, the metaverse offers a solution by expanding the neutral, mutual space between virtual worlds into an immersive experience.

And as virtual worlds and the games they contain grow, so too will the demand for a unified metaverse. This demand sounds like users asking for new ways to leverage their ownership of digital assets. These can be ways to unlock new experiences, access exclusive networks, or monetize digital creations. This innate tendency towards social gamification is why a unified metaverse seems inevitable. And that’s why GameFi is essential to unlocking that future.

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  • John Gilbert


    Editor, Evergreen Content

    John is the Evergreen Content Editor at Blockworks. It manages the production of explainers, guides, and all educational content for all things crypto. Prior to Blockworks, he was a producer and founder of an explainer studio called Best Explained.

#GameFi #unlock #metaverse #Concrete #blocks

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