Over the last year, NFTs have been a rollercoaster ride, especially in the realm of crypto games. As we delve into the second half of 2023, the once-blooming NFT market has witnessed a sharp decline in value However, it's not all doom and gloom; this downward trend may signify the natural progression of an emerging market. As we sift through the aftermath, we uncover the enduring potential of NFTs in crypto games, highlighting their role in shaping the future of gaming and digital ownership. How to tell the intrinsic value of gaming NFT utilities?
The 2023’ Decline in NFT Value - From Bored Apes to Bored Holders
Got it. The second half of 2023 doesn’t shine with much hype (or hope?) in the NFT world. In the past year, the value of several widely recognized non-fungible tokens (NFTs) has experienced a significant decline. This decline mirrors the decrease in the worth of metaverse assets in 2023, which were previously seen as highly promising virtual real estate investments. Notably, popular NFT projects such as Doodles, Invisible Friends, Moonbirds, and Goblintown have witnessed substantial drops in value, with some seeing reductions of up to 95%. No more bloated craze, as the shoes of Bored Apes are getting filled with bored holders. But that’s a good thing.
Any bubble created by emerging trends will burst. Sooner or later, the fad-induced NFT projects will clear the way for true potential non-fungible tokens represented. Once the culling is done, the only NFT collections that still stand will be those with underlying value. Although several industries can benefit from this blockchain-based technology, game developers proved to be the most ambitious first-movers. Why are so may game developers optimistic despite the overall unease in the NFT realm?
NFT Utilization in Crypto Games - Overview
While most of the Web3 crypto games are still in the crib, some major titles have already left a significant mark on the blockchain. After all, games represent nearly 50 % of the entire blockchain activity. Moving beyond industry staples like Axie Infinity, Gods Unchained, or Decentralands, we are introduced to a wide variety of Web3 games across multiple genres.
Each prosperous crypto game has introduced its own pick on NFT utilization within its ecosystem. Overall, non-fungible tokens enhance the players’ experience with authentic digital ownership, monetization freedom, voting and governance rights, as well as, not seldom, interoperable features.
Another advantage of NFTs utilized in games is their unique in-game representation. NFTs can be anything. Thanks to their programmability, NFTs can brim with any properties and functions. From in-game characters, gadgets, and skins, to abilities and access tickets and virtual lands, the flexible and highly imaginative world of gaming is sewn for the opportunities NFTs bring to the table. Furthermore, NFTs are not mere virtual items Web2 players are used to. Any of these assets you can freely monetize on secondary markets.
The Most Valuable Gaming NFT Utilities
The most straightforward way to utilize NFTs in crypto games is to implement them in gameplay; thus, every in-game asset would be represented as an NFT. However, there’s much more potential here, and still more Web3 game developers are reinventing their approach to use it to the fullest. Here are some of the most valuable utilities NFTs are gracing crypto games with:
Authentic Ownership
Talks about authenticity and true ownership may have gone a bit stale over the years. But the authentic ownership of NFTs has proved to be much more than just a gimmick. Utilities stemming from NFT ownership grant holders power to freely monetize their in-game assets, reap royalties, earn referral bonuses, and foremost, trade their NFTs on secondary marketplaces.
Interoperability & Transferability
Despite the lukewarm results yet, the metaverse pursuits have been on fire lately, seeking a vision of vast digital universes. Interoperability of NFTs can grant a chance to transfer these digital assets across metaverses. Particularily in gaming industry, NFTs can be designed to work across multiple games, enabling players to carry their assets and progress from one game to another. This interoperability enhances the value of NFTs and creates a more expansive gaming experience.
Airdrops & Rewards
Besides the possibility of earning royalties, companies are exploring new, inventive ways how to engage their users with tempting rewards. ome crypto games implement play-to-earn mechanics, where players can earn NFTs as rewards for in-game achievements, participation in events, or through various gameplay actions. These NFTs can have real-world value, creating opportunities for players to earn income. Often times, token Airdrops are also part of the rewards structure for the loyal NFT holders.
Voting & Governance Rights
Some crypto games give NFT holders governance tokens, allowing them to influence the game's development, rules, and decision-making processes. Players with more valuable NFTs may have more significant voting power. Not seldom, these games use NFTs to allow players to shape the game's storyline or events. Choices made by players may affect the game's narrative trajectory.
Community Engagement
Games can leverage NFT inclusion also for the user engagement and community-building purposes. Whitelists, special events, and early accesses are only the tip of the iceberg. Another way how to engage community beyond the in-game environment are PFP (profile picture) NFTs. These NFT avatars can represent in-game heroes and characters, which allow players to further identify with them on their social media.
Virtual Real Estates
In virtual worlds and metaverse games, players can buy NFTs representing virtual land or property. These NFTs grant ownership rights, enabling players to build, develop, and monetize their virtual real estate. Specifically in the context of games, the ownership of virtual lands doens’t have to serve solely for gaming purposes. This ability can be highly effective in marketing. In-game advertising has become huge over time.
The in-game advertising market is poised for substantial growth in the coming years, with projected revenues of US$32.51 billion in 2023. This strong upward trajectory is expected to continue, with an annual growth rate (CAGR 2023-2027) of 9.10%, reaching an impressive market volume of US$46.06 billion by 2027. NFT-owned virtual lands can serve perfectly for in-game ad-placement.
Gamified NFTs and Crypto Games - a glimpse into the future
Naturally, just like any up-and-coming innovation, blockchain technology is rapidly shaping and solidifying its place throughout the industries. Right now, we are in the post-hype state, when harsh reality bursts the bubble and bloat loses overestimated value. Many opportunist projects will die off, while truly inventive developers will prosper from a clean slate.
These efforts are also reflected in numbers. According to a comprehensive Mordor Intelligence research, the NFT gaming market is set for remarkable growth, with projections indicating a surge from USD 5.10 billion in 2023 to an impressive USD 21.61 billion by 2028. This anticipated growth signifies a robust compound annual growth rate (CAGR) of 33.50% throughout the forecast period from 2023 to 2028. The NFT gaming sector is poised for substantial expansion and transformation in the coming years, reflecting the increasing significance of NFTs in the gaming industry.
The benefits of NFTs, not only in crypto games, are immense and tangible. It’s just a matter of time before NFT-based games will be a common thing and projects with potential will take the lead. In the meantime, let’s monitor the scene and learn as much as possible.
