While Bitcoin remains in a cooling period after hitting its all-time high in early November and the decentralized finance sector (DeFi) in an apparent dry spell, gambling tokens appear to have taken the limelight as massive gains are seen across the industry. .
The Sandbox ‘SAND captured the headlines as it spearheaded the buzz for gaming tokens, with over 340% profit in the past month. Another is GALA, with a similar rebound of 300% in November. Such coins, including those found in the meta-versa sphere such as Decentraland’s MANA and Illuvium’s ILV, gained momentum after Facebook’s rebrand to Meta, suggesting that gaming tokens could be preceding a new altcoin season. .
An altcoin season is defined as when most of the major altcoins outperform Bitcoin (BTC) for a given period. For example, Cointelegraph Markets Pro uses two weeks on its algorithm and currently broadcasts a 40% reading in favor of altcoins. This means that altcoins have fared better than BTC over the two week period.
However, the top 10 cryptocurrencies by market capitalization had mixed results against BTC over the past month, and it is the leading tokens in the gaming sector that outperformed Bitcoin. SAND, of course, has been the trailblazer since October, but Axie Infinity Shards (AXS), Enjin Coin (ENJ), ILV, and Ultra’s UOS all made better gains compared to Bitcoin during November.
An investment in SIL in September would triple and one in SAND at least seven times. Overall, most of the tokens in the gaming sectors have appreciated by more than 100% against Bitcoin in the last month.
Why did gaming tokens take off?
The apparent popularity of gambling chips is due to the marriage of cryptocurrencies and gaming. The two are forging a new ecosystem where crypto enthusiasts and gamers intertwine. Most are already familiar with Axie Infinity, as the Pokémon-like game exploded in popularity due to its game-to-win (P2E) model. Initially, players breed monsters called “Axies” using experience points instead of in-game “currency”. The Soft Love Potion (SLP) token is not inserted until the launch of Community Alpha on December 19, 2019. From there, the game gained momentum, particularly among developing countries like the Philippines, as it provided a way to earn income amid last year’s pandemic.
Furthermore, non-fungible tokens also play an important role in the success of the sector. The NFT hype was very close to DeFi’s summer of 2020, and 2021 has been its breakout year. While artwork and collectibles got the most publicity early on, games like Axie Infinity and Dark Country muffled the industry in the May market recession.
NFTs introduced the element of property into games. For Axie Infinity, these could be the Axies, who are valued for their rarity and aesthetic elements or for the in-game assets of their game. Battle of the Guardians has the same concept, whereas for something like Splinterlands, these are the collectible cards. Apparently, the ability to uniquely verify the attributes and uniqueness of digital assets is what inspired a new dynamic for games.
As the popularity of gaming tokens continues to rise, more investments are funneled into the space. In 2021, blockchain companies involved in games have raised around $ 3.7 billion, an increase of 414% from 2020, according to BlockchainGamerBiz.
Forte, the most notable among them, insured $ 725 million in a Series B funding round led by Sea Capital and Kora Management. Forte plans to expand its product and service offerings and attract more game publishers to its blockchain gaming platform. Fantasy football game Sorare also pocketed a whopping $ 680 million in September, increasing its valuation to $ 1.2 billion.
OpenSea, an NFT marketplace that deals with gaming assets and other digital assets, is also among the unicorns of the space. Such agreements signify the flourishing growth of this class of tokens.
Future of blockchain gaming
The gaming sector of the cryptocurrency market in general is still relatively small. The top gaming tokens only boast a market capitalization of $ 21 billion, which is inconsequential compared to Bitcoin. This means that the dominance of the sector is still available, as the market can change quickly, especially since games, by design, can come and go. The argument, however, is whether the play-to-win model can keep everyone interested.
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For example, the Axie Infinity scholarship program allows users with more capital to bear the initial costs of playing the game for players (called “academics”) who cannot afford them, and the generated SLP is shared by the two parties.
Axie Infinity has created a new digital ecosystem and continues to attract more users. However, if players are more interested in playing for money, that is, charging, the price of SLP suffers. This has been the case for a while now. Suppose you get to a certain level where players in your scholarship programs find that the dollar value of SLP (after profit sharing) is significantly less. In that case, it might discourage them from spending time playing the game.
However, Sky Mavis also entered the Metaverse, as it recently sold virtual land for 550 Ether (ETH), or $ 2.3 million. He also plans for developers to create other games to keep things interesting for users, hoping to attract players who are attracted to the game rather than the financial aspect. But it remains to be seen if this could boost the price of SLP in the future.
The gaming industry seems to have more advantages when merging with blockchain. If the current altcoin season leaks into 2022 with new developments, particularly the Metaverse, the dominance of the market could quickly shift between tokens moving even further in the space.
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