The popularity of NFTs has exploded and they are now accepted by both the mainstream and crypto communities. The coverage of nonfungible tokens (NFTs), which were initially considered a bubble, is now growing across the cryptoverse.
According to a report by DappRadar, the NFT market has had its best year, generating over $23 billion with the floor market capitalization of the top 100 NFT collections standing at $16.7 billion, as of Dec. 17, even before the year closed out.
The biggest move for NFTs and the metaverse space has been Facebook’s announcement of being rebranded to Meta on Oct. 28 in a bid to expand its reach beyond social media and into the Metaverse. In fact, in the last week of October, it was revealed that over $106 million worth of Metaverse land was sold in seven days.
Within the cryptoverse, the NFT collectibles frenzy first began in 2017 with the launch of the CryptoKitties game and the subsequent demand for these digital cats. At its peak, the blockchain game recorded a maximum of 140,000 daily users and 180,000 daily transactions in November 2017, but this traction was quickly lost over a few months. The collectibles domain has grown to include renowned collections such as CryptoPunks and Bored Apes Yacht Club.
The initial interest in NFTs was sparked by the tokenization and digitization of artworks by well-known artists such as Beeple, through auctions hosted by traditional galleries like Christie’s or Sotheby’s.
Since then, NFTs have expanded to encompass art, music and tweets.
GameFi is the game-changer
The prime watershed moment for NFTs that followed the Metaverse narrative is through GameFi protocols. GameFi can be described as the integration of gaming and decentralized financing (DeFi) within one ecosystem. According to Huobi Research, the research arm of the cryptocurrency exchange, GameFi has revived the interest in blockchain gaming.
The leading protocol in this regard in 2021 has been Axie Infinity, a game universe where gamers can collect Axies as pets in order to battle, breed, raise and build kingdoms for their pets. AXS, and SLP are the native tokens that power the game ecosystem.
The Ethereum-based game was released back in March 2018 and has been developed by Vietnamese game developer Sky Mavis. The Axie-Infinity collection quickly rose to become the most traded NFT stock in NFT history due to the high level of hype surrounding it. The collection has clocked nearly $4 billion in all-time sales. Axie Infinity’s current trading volume has outperformed other blockchain games by miles.
The daily active users of the game grew from 20,000 users in March of this year to 2.5 million users in December of this year, marking a 125x increase in less than nine months — a remarkable feat for a game that gained hype only this year. The game has earned $9. 72 million in a single day in June, surpassing a record Tencent held at the time. In the third quarter of 2021, the game accounted for 19.5% of the total NFT trading volume in the same period and $2. 08 billion of trading volumes.
While this game is based upon Ethereum, blockchain-based games are becoming more popular across other blockchain networks such as Solana or the Binance Smart chain. Many games have enjoyed popularity on blockchain networks, including Splinterlands on Hive and Wax and Alien Worlds on Wax and Upland on EOS.
The investment raised with the blockchain gaming domain has well surpassed over a billion dollars in 2021, led by the $930 million raised by the gaming company Forte Labs.
Pushback from traditional gaming and regulations
Even though GameFi has been disrupting gaming with the introduction of blockchain technology, the traditional gaming industry hasn’t exactly been receiving this innovation well. Steam/Valve removed all blockchain-based games from their platform in the beginning of this year. In response, however, over 26 companies and advocacy groups have called on the company to reverse the ban.
Additionally, the South Korean government has now blocked the release of new play-to-earn (P2E) games and asked the existing blockchain games with a P2E model to be removed from Apple Store and Google Play Store. Epic Games, creator of Fortnite, stated that it is open to blockchain-based gaming that supports cryptocurrency and blockchain-based assets.
Even Elon Musk, the CEO of SpaceX and Tesla, recently stated in an interview on Dec. 22 that he believes his company’s technology, Neuralink, is better than the Metaverse in the long term as he doesn’t see “someone strapping a friggin’ screen to their face all day.” Musk added: “In the long term, a sophisticated Neuralink could put you fully into virtual reality. I think we’re far from disappearing into the metaverse, this sounds just kind of buzzwordy.”
Despite the pushback from the traditional gaming industry and some regulators, GameFi has been growing at an incredibly fast pace. The company behind the first Bitcoin-based ETF in the United States, ProShares, has announced its plans to launch a Metaverse-focused ETF that will include companies like Apple, Meta and Nvidia. The company filed for the ETF at the United States Securities and Exchange Commission under the name ProShares Metaverse Theme ETF. This will track the performance the Solactive Metaverse Theme Index, (SOMETAV).
Even one of the consulting Big4 firms, PricewaterhouseCoopers (PWC) Hong Kong, have dipped their toes into the Metaverse. The company purchased a land plot in a metaverse game Sandbox. After a deal with Velas Network, a Swiss blockchain startup, Ferrari even hinted at NFTs.
Enterprises as such can utilize blockchain technology to create business models in the Metaverse and achieve efficiency and cross-compatibility with the real world. If 2021 can be considered to be the year of DeFi and NFTs, it is almost certain that 2022 will be the year of GameFi and the Metaverse.