GameFi lives at the nexus of gaming and finance, requiring vibrant economic models to succeed and become self-sustainable games. Most blockchain and NFT gamers are incentivized to earn cryptocurrencies and NFTs as a reward for participation and performance. This is why NFT marketplaces are a critical component of any GameFi project, providing the platform for users to create and trade NFT gaming assets inside of a game’s ecosystem.
As users earn their rewards, clever projects look to incentivize economic participation, whether spending in-game currencies or trading in-game assets. Projects that don’t prioritize this tend to see gamers earn and then dump their rewards into fiat or Ethereum, pushing the price of the token or asset downwards. A solution for this challenge can be found in customizable NFT marketplaces that inspire engagement. GameFi projects that explore this route can seize control of their Web3 business models by tailoring the experience to their users and prospects.
Freemium GameFi Models
Freemium business models have been utilized by software companies since the 1980’s, driving incredible growth and awareness. Freemium games are available for no download cost, with a range of optional in-game purchases that augment the experience. Exclusive content such as skins, tools, power-ups, and more are made available to boost engagement and generate revenue. Blockchain is a great facilitator of this model, enabling users to get immediate access for no cost but inspiring purchases that improve game-play.
All economic functionality is built into GameFi ecosystems, allowing for in-game purchases and NFT gated access. A central hub is needed, and NFT marketplace infrastructure is a powerful solution. Games can integrate their own token, a partner’s token, or build out a fiat onramp to facilitate easy payments from their users. From there, a marketplace to buy, sell and trade in-game assets once in-game assets are purchased.
There are a lot of cool directions to take this model. Most recently, Limit Break has pioneered a free-to-own (F2O) gaming model with its DigiDaigaku NFTs. Users minted the genesis NFT collection for free, which generates new in-game NFT assets over time. Now, instead of having a foundation of users that need to recoup their initial buy-in costs, the gamers are incentivized to help the project grow. This is a reason why the collection has been so successful, going from free mint to an 8 ETH floor during a “bear-market”.
Consider the business value if DigiDaigaku had its own marketplace to facilitate all of the trading. It would have saved 238 ETH on its genesis collection alone, a significant amount of money to fund growth or reward users through gameplay. As creator royalties disappear, freemium NFT projects should be exploring how to sustainably capture revenue, and marketplaces hold the key.
Subscription GameFi Models
Subscription-based models are proven to be successful for great products with a product/market fit. This model enables recurring revenue to be generated while increasing the appeal of a product by reducing upfront costs and easing onboarding. Gaming is an excellent use-case for subscriptions, and Web3 technology deepens this potential.
In GameFi, NFTs are most commonly used as in-game assets. Whether it’s a card-based game asset, or a piece of property in a metaverse, we’re all familiar with this use for NFTs. Using an NFT as subscription verification is equally as powerful a use case, and one that can drive revenue for a variety of GameFi projects.
Users purchase subscription NFTs for the services or product access associated with it. Instead of focusing on the ownership of the specific asset, it’s the value unlocked by holding the asset and paying the associated subscription fees. GameFi projects can develop a gated platform that can only be unlocked by holding a subscription NFT. Or, they can release their in-game assets as NFT mints only made available to subscribers.
Play-to-Earn GameFi Models
Play-to-Earn gaming is currently one of the most prominent business models in GameFi. As gamers participate in-game, they earn real money rewards in cryptocurrency or NFTs. Most games utilizing this model offer their native tokens as rewards, enabling the purchasing and trading of NFT assets. As assets are earned, a marketplace serves as the hub to spend and exchange these assets, allowing players to increase their game-play ability or earn some profit through secondary market sales of their asset rewards.
Popularized by Axie Infinity, and furthered by games such as Alien Worlds and Star Atlas, P2E games started introducing the power that GameFi holds. While there are still questions as to the longevity of this model, NFT gaming projects continue to explore its potential. Looking at Axie Infinity specifically, one can see the value of a dedicated NFT marketplace. Axie was the first NFT collection to pass $4 billion in sales, in large part due to the platform fees collected. The company made the strategic decision to make their platform the hub for all game-play and in-game commerce, driving revenue and engagement.
There would be no play-to-earn without the ability to earn, and marketplaces enable earning via reward mechanisms for users. One creative approach is the community wallet, which accumulates funds from marketplace platform fees and pays out rewards to community members based on participation. This marketplace feature is perfectly aligned with P2E business models, and helps provide some additional utility for in-game tokens. As users buy and sell their in-game assets, they can earn rewards that are usable in game and increase engagement.
GameFi ecosystems can be complex, requiring the integration of multiple elements. From in-game NFT assets, to in-game currencies and commerce infrastructure, there is a lot to connect. NFT marketplaces are the perfect connective tissue for GameFi projects, helping shape and control business models within this emerging space.
At Liteflow, we provide pressure-tested and future proof NFT marketplace infrastructure to GameFi companies. Our solutions help development teams integrate and deploy quickly, reducing the headache of long development cycles and unpredictable budgets. If you’d like to explore marketplace development in more detail, and build a seamless GameFi experience, schedule a demo with Liteflow today!