Web3 gaming and NFTs: A growing market?
What is Web3 Gaming?
Web3 games are digital games using blockchain technology to create a game’s economy.
They include in-game assets owned, (held in custodial wallets) by players in the form of Non-Fungible Tokens (NFTs) or Fungible Tokens. This allows them to create liquid markets to enable players to trade or sell their assets, just like physical goods.
What value do NFTs add to gaming?
The most revolutionary aspect of Web3 gaming is that it allows players to completely own in-game assets and collectibles in the form of digital NFTs. In traditional gaming, players own in-game assets and collectibles, which are lost once they decide to change the gaming platform.
Web3 gaming solves this problem by providing inter-operability between various platforms. The players can own in-game assets on one platform and carry them over to their next gaming platform, offering true ownership.
Importantly, this allows players to benefit from in-game economies where they own and trade their assets. It is even possible to earn a profit. For example, in the trading card game Gods Unchained, users can buy, sell or trade their cards on the digital marketplace, with the certainty that all transactions are supported by the security of the blockchain.
The future of Web3 gaming
At the date of publication, investment in the blockchain gaming sector has already broken $5 billion, compared to $4.2 billion across the whole of 2021. While the total addressable gaming market for Web3 gaming continues to compound 10% year over year, gaming companies such Activision Blizzard have made over $5.1 billion from in-game spending alone.
This trend could see further growth if large gaming companies incorporate NFT trading into household games. Such a move would see an influx of millions of users into new marketplaces with unlimited potential. To this point, Web3 gaming’s success in the longer term will be contingent on mass adoption, ie the platforms’ ability to onboard large amounts of users and keep them engaged.
This is precisely one of the objectives of videogame retailer GameStop, who recently launched its own NFT marketplace, built atop of Loopring and Immutable X Layer-2 protocols. The Layer-2 protocols will offset the current high prices of gas by processing thousands of transactions at minimal costs, making it much easier for users to transact on Web3 games.
The marketplace will also benefit from an upcoming Immutable X expansion, providing access to NFTs associated with games such as Illuvium, Gods Unchained, Guild of Guardians, Ember Sword, and Planet Quest. To kickstart its growth, GameStop and Immutable are also launching a $100 million joint fund to invest in gaming NFT projects. The aim of this it to support creators producing Web3 games on its platform.
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