Crypto-based gaming has seen a wide range of titles shutting down in the last year. But it is still a viable ecosystem, and what does it need to attract those playing RPG titles?
The blockchain provides many opportunities and has been used for everything from financial to legal applications. One much lauded prospect was its ability to provide decentralized gaming opportunities. But with many going bust, facing major cyber attacks, and others being shut down, is the crypto gaming experiment over, or does it just need a restart to bring it back up to speed?
The Current State of Crypto Gaming
This year, the price of the foremost cryptocurrency by market cap, Bitcoin, has enjoyed great success. It does still embody volatility. Crypto exchange Binance noted that in the first week of October, the market cap fell to $3.7T. The Bitcoin price was down 6%, ETH down 13%, and Solana down 20%. Yet over the year to date, Bitcoin has experienced a rise of 23.35% and 95.25% over the past 12 months, as of October 6th.
Much of this growth has been pushed by cryptocurrencies, and particularly Bitcoin’s switch to a tool of investment. Countries, states, and corporations are swallowing up the supply of both Bitcoin and altcoins. This is pushing cryptocurrencies further away from their main aim as a tool for decentralized, everyday finance. The result has been that the crypto gaming sector has been hit hard.
Those in the crypto gaming sphere would love to make out that crypto gaming is alive and booming. While this may carry some weight in the online iGaming field, when it comes to general crypto gaming, including role-playing games, the situation is a little more patchy.
There are successes, but a huge number of games are closing. This year alone, games like Ember Sword and Nyan Heroes have shut down. Even big license tie-ins like The Walking Dead: Empires have sealed their doors for good. Reasons for this are varied, but for many, it is a simple case of the money going into development drying up, while the profit is very little.
Behind this is always the shadow of the famous Axie Infinity. Dogged by claims of it being a pyramid scheme reliant on cheap labour, it was subject to a major cyber attack and suffered during the previous cryptocurrency crash. All of this saw its player base drop from 2.7 million participants to 250,000.
What Does Defi Gaming Need to Thrive?
Gaming tokens have taken a large hit over the last 12 months. Very few are now in the top 100 cryptocurrencies by market cap, with only Floki, Stacks, Immutable, and Render between 60-100 as of October 6th. This shows crypto gaming at one of its lowest points since the last crypto crash. So what does it need to thrive?
The first thing is financial security and transparency. Cryptogaming needs to distance itself from titles like Axie Infinity, and for that, stablecoins could be the answer.
The GENIUS Act was passed in the United States this May. Its main priority was to establish rules on the creation of stablecoins, one of which was that they must be backed by 1-1 low-risk assets or fiat currency. Since the introduction of this, stablecoins have done extremely well. Binance noted that the USDe supply grew 43.5% in August to US$12.2B, capturing 4% of the stablecoin market. It became the fastest asset to surpass US$10B, reaching the milestone in 536 days versus USDC’s 903 and USDT’s 2000+. Coins such as this would provide a much more cohesive and transparent approach to in-game currencies.
Changes Coming to Defi Gaming
This does not mean all games are closing down, and there are new ones that are bucking the trend. Ragnarok Landverse Genesis is one of many that have started over the last year. Like many games, it continues to blend decentralized in-game economies, using marketplaces and land as capital in the title. However, in places like the US, there is a worry that these could qualify as securities. This becomes even more complicated if people are benefiting from in-game yields. The implications for tax and a lack of regulation could be a fear for many players of blockchain based role playing games.
Regulations are beginning to change and clarify this. Ripple recently wound up a legal battle over securities classification. Hester Peirce, Head of the Crypto Task Force, also said they do not classify them as securities, though this was not legally defined.
There has so far been very little to link tabletop gaming itself to the world of the blockchain. However, integrations such as this could prove beneficial. Stablecoin based currencies could transfer from mobile devices to the real game, blending the world of technology and tabletop as many board games have done over the last few years.
In the eighties, after the major video game industry crash in the West, Japanese company Nintendo used a robust marketing ploy to launch its Famicom system in the US and Europe. It began a tight quality control process and rebranded its consoles as ‘Entertainment Systems’, distancing them from the poor, substandard products they had been given in the past. This is a tactic that could quite well apply to crypto-based gaming: A board that checks the authenticity and financial security of these games. However, this does mean a push away from the decentralized nature of gaming, but it is one that may be necessary.