If you’re not interested in joining Mark Zuckerberg in the metaverse, I have bad news for you: You’re already there. You don’t need a virtual reality headset to enter a virtual world. Humans have been representing reality since the Quant ancestors first painted on cave walls. If the television, radio, books or newspapers have given you access to events that you did not expect to attend physically, you have already experienced a type of metaverse.
Sports and games are another reality that we often wriggle into virtually, in stands or behind a screen, when not on the field.
So it’s not a coincidence, so that, until now, games dominate what most people understand as the metaverse, or more broadly, Web3. Our innate love of games, our understanding that compliance with games depends on rules and structures, and our willingness to attribute value to the events that unfold in them are integral to our cultivation, from soccer to chess. to ROBLOX. They are also an important part of the economy: the global esports market reached almost $400 billion in 2020, even after the pandemic lockdowns and market estimates for video games reached $178 billion.
Therefore, it’s totally natural that games could lead the way to more immersive and interconnected metaverses. Games are also likely to continue to provide financial value to consumers, businesses, and countries in their meta-realities. Microsoft’s recent offer to buy Activision Blizzard in an all-cash deal certainly underscores this point.
How major online game franchises have come to be integrated into a Web3 metaverse. Thesse games have pioneered a play-to-earn (P2E) model that provides insight into that future.
The use of non-fungible tokens (NFT) and in-game digital currencies allows players to generate assets in these games, trade them in the form of tokens and transfer their value to real-world currencies through cryptocurrency exchanges.. A compelling development for gamers and non-gamers alike is that instead of brand owners (Facebook/Meta, Microsoft, etc.) extracting all the value from games, gamers themselves can have a stake in the success of a game.
Stories of communities in the Philippines earning income from playing Axie began to emerge last year, drawing so much attention that government officials suggested making play-to-earn income taxable. This phenomenon offers a glimpse of how an emerging crypto economy could create opportunities for financial inclusion. However, The rise and fall of one of Axie’s in-game currencies reveals the challenges inherent in developing sustainable economic models for games, as well as a practical reality that for metaverse games to succeed: They must be more about gaming than gaming. to earn.
It’s not tokenomy
As an example, Axie Infinity is a game of digital pets called Axies. When players contribute to the game ecosystem, they earn tokens. But to get started, they need to buy their first Axie, an NFT that can rise in value throughout the game. The game includes two tokens built on the Ethereum blockchain: Axie Infinity Shards (AXS) and the brilliantly named Smooth Love Potions (SLP). SLPs are earned in-game and are required to “breed” new Axies (don’t ask how).
In a gaming world, there are several factors that can contribute to the price performance of a digital asset like Axies SLPs. The way a token is distributed, the rules around supply, the price stability mechanisms, the way governance is carried out, and of course the power of expectation from the gaming public itself, all of it matters. But, utility may be the most important factor for a token powering a game. In a nutshell, Does the asset allow the holder to have the experience they want? This may include gameplay aspects, community status, or opportunities to earn money. If players perceive their value, they will keep them or even buy more. Otherwise, as with any asset, people will sell it and invest time and money elsewhere.
In Axie Infinity, the utility of his SLP build is how it allows players to create new Axie pets, which can make more SLP and create more value for the player. That positive feedback loop caused SLP prices to skyrocket during the summer of 2021, but they have since dropped 94%. That implies that people have valued what they can gain from selling SLP more than keeping it and “breeding” more Axies. In other words, they have preferred to collect cash than continue playing the game.
First days
It is important to remember that the concept of “play-to-earn” is still in its infancy. Games like Axie are early model experiments that combine gameplay with economy. Axie himself introduced SLP as the second currency in the game after finding that the single-token economy had its own liquidity problems. The experimentation will continue, but a key lesson for metaverse game developers is that the fun of the game should come first, not the profit.
The risk of prioritizing economy over gameplay is simply turning players off. Attempts by Sega, Konami, and Square Enix to introduce NFTs into popular games have met with backlash from users, for example. Over time, however, we can expect more and more sophisticated and expansive metaverse games to come to offer an incredible variety of experiences. Greater choice and richness in the game will naturally lead to more users finding utility in owning tokens, and therefore more sustainable game-based economies.
As more games and esports become established in the metaverse, a critical factor will be the quality of the show.. We humans need contests, heroes, narratives, and stakes. We want to interact as part of an audience living a shared experience, as well as play games ourselves. There’s no reason why metaverse games shouldn’t be as real and exciting to us as the English league, the NBA, or the Free Fire World Series, the most-watched esports event of 2021.
Better game is the stickiness that can make a game-specific microeconomy more sustainable. What blockchain can add is a level of interoperability to make the macroeconomics of metaverse gaming, in general, more liquid and fairer than those of today’s big sports. Interoperability opens up opportunities for players to take digital assets or status from one game directly into another, gold further afield, and across social platforms. That gives players a larger share of value creation and more power and therefore interest, as opposed to the economics and rights associated with gaming franchises and leagues, where owners and publishers have all the benefit.
You may not be willing to join Mark Zuckerberg in his metaverse, but on the blockchain, it needs to be a game for fans and regular gamers to have fun and capture more value for themselves.
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The views, thoughts, and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Ben Caselin He is the head of research and strategy at AAX, the cryptocurrency exchange that will be powered by London Stock Exchange Group’s LSEV technology. With a background in Creative Arts, Social Research and Fintech, Ben develops insights on Bitcoin and Decentralized Finance and Strategic Direction Provisions at AAX. He is also a working member of Global Digital Finance (GDF), a leading industry body dedicated to driving the acceleration and adoption of digital finance forward.