NFT gaming can be revolutionary, not just because they let speculators make money but also because they make it possible for many people to borrow these assets.
Developers of big games usually don’t want you to be able to trade on the free market. NFTs (non-fungible tokens) threaten the business model of popular games, in which players buy in-game currency or points to unlock more of the game and improve the experience.
This would be a different story if it were possible to control the flow of NFTs in a closed market.
Microtransactions bring in billions of dollars for big game companies, and a big part of that is keeping people spending money on in-game items. These companies want their players to spend a lot of money on their games, so they’ve made systems that make it impossible for third parties to legally access certain content or digital assets.
NFT gaming can be revolutionary, not just because they let speculators make money but also because they make it possible for many people to borrow these assets. By allowing investors to buy an NFT and then lend it to someone else for a fee or a share of the profits, it’s no longer necessary for a player to spend a lot of money on the game to get the full experience.
How “play-to-earn” NFT gaming shows up
When a gaming ecosystem is fully developed, there will be two different types of stakeholders. Some investors with many in-game NFTs are less likely to play the game for a $50 daily return. Then there are gamers worldwide, some of whom would make many times the minimum wage if they split the profits from lending.
The second group may not have as much money and be more worried about how volatile digital assets are in the short term and how hard it is to sell them. They can’t take the risk of buying up NFTs in the hopes that they will be consistently profitable and hold or increase in value.
In the gaming world, digital assets can already be traded. But more and more of these assets are being put on the blockchain. In 2021, NFTs made $8.4 billion in sales, which shows a general trend. The next logical step for this market is video games, and as these sales continue to move to blockchain gaming, there could soon be a big increase in well-known companies selling in-game items, characters, and skins on-chain.
On-chain assets are marked as being unique and only owned by one person. This is different from assets that seem to belong to the gamer or investor but really belong to a centralized gaming platform that can ban the user at any time. P2e is decentralized and gives people a lot of room to go their own way, especially regarding in-game lending assets and lowering entry barriers.
By creating a lending infrastructure for play-to-earn gamers, NFTs can help game developers if it leads to a massive increase in players in new markets. Making the industry easier to get into changes the whole scene for good.
The ability of digital assets to work together
Full cross-metaverse use of NFTs on a single digital identity is a real possibility, opening up uses that no one had previously thought of. This approach unlocks potential value and helps bring speculation under control in a less turbulent and more stable market.
The limits will need to be tweaked and will depend on how rare some assets are and what you can do with them. Can they be made better? Can you put something on NFT land to make it worth more? and Can players buy plots, or should they be able to own an entire mountain? If the players own everything, it will be run by the community. However, it could be argued that developers should have some say and might need to set limits.
Building a DAO (decentralized autonomous organization) system, in which members and NFT holders own the whole world, is a difficult task that is happening right now. However, it remains to be seen whether this can work without a strict set of rules.
Bringing NFT lending to life
Problems can arise when you try to lend a real NFT to another user’s digital wallet. It runs the risk of the borrower not paying back the loan, so you would want them to put up collateral to secure the loan. This, in turn, creates a capital cost that makes it hard for many people to join the game.
The only thing that should be rented out is the NFT’s utility, and the NFT itself should be “wrapped.” The owner of an NFT can put the asset in a smart contract, set the terms of the loan, list it for rent on the market, and let the free market work as it was meant to.
The wrapped NFT is a new copy that can be set to expire after a specific date. It is similar to a copy linked to the original because it has the same metadata, URLs, and other information. This takes away the need for people to trust each other and gives the security that blockchains are known for. This wrapped NFT can’t be spent but can be used for its utility.
At the time of maturity, it expires, goes back into the smart contract, and is burned. This is the end of a system for NFT lending that doesn’t require collateral, doesn’t have any risks, and works smoothly. The value of the original NFT might also go up if the loanee does something like improve a plot of land or give a character a lot more playtime.
Because of what the wrapped NFT has learned or new experiences, these improvements will be added to the blockchain. After the well-known $600 million Axie Infinity scam, most NFT projects and protocols are moving in this direction.
Some words on big builders.
If things keep going the way they are going, and the NFT lending market grows a lot in the next few years, it will be hard for popular game developers not to offer something.
Ubisoft and Epic Games are already trying things out, and NFTs and NFT gaming may take off similarly to cryptocurrencies. Eventually, everyone will use some parts of blockchain technology. Or, they could use private chains or something similar. The idea is that this will become too appealing for companies to ignore.
Most of the time, traditional gamers don’t like the “play-to-earn” craze, and they’re right. At the moment, there isn’t much to get excited about in the field because the overall quality is shallow, and gamers only play these games to earn cryptocurrency. That has a bad effect because it was once hailed as the new way of doing things.
People may also stop working on a project if the price of the tokens drops and the rewards are no longer worth it.
People who play NFT games and want a better future may have to wait a few years. Big developers aren’t going to give up the money they make with their current methods in order to move to a more decentralized NFT-based economy because that would destroy their business model. But it’s possible that well-known game developers will start to test the waters with NFTs that are already in the game, and they could make a lot of money this way.
Companies with a lot of money tend to change very slowly unless their bottom line is in danger or a way to make a lot of money opens up. Maybe both will be key to a big change in how we deal with digital assets and NFT gaming can hopefully provide that.