Sharing is caring in the new digital economy
As the play-to-earn blockchain game movement continues at full pace, another side is emerging which looks to cater to those potential players finding it difficult to leap the initial financial barriers to play. In a bid to scale play-to-earn, dapp projects and independent guilds are arising which lend out NFT game assets to players so they can progress, get started, or just try out dapp games. Need that all-important in-game weapon to defeat the end-level boss? No problem, just lend it, beat the boss, and give it back. Minus some fees of course.
The idea of leveraging value through underutilized assets is already prevalent throughout the modern world. Airbnb is just one example of how popular it has become for hosts to make extra income and allow accommodation seekers to save money. It would appear the world already has a strong desire for decentralization and cutting out the middleman. Today Airbnb is the number one hotel room provider on earth – without owning a single hotel room.
While gaming NFTs remained mostly sleeping giants during 2021, the play-to-earn sector has now broken a record of $1 billion in NFT trading volume. In November trading volume increased 71% compared to the month before. However, as leading play-to-earn games increase their user bases, the cost of entry also increases. For example, 2 years ago you could pick up three Axies, the minimum amount required to play Axie Infinity, for around $10/15. Fast forward to today and you would be lucky to pay less than $1000 for three Axis. Representing quite a barrier to entry.
In response to this situation, guilds were conceived in places like the Philippines. Where people desperate to play and earn a basic wage can rent in-game assets and Axies needed to get started or level up. Paying a percentage of the rewards they receive in the game back to the lender. The lender gets paid, the player gets paid, and importantly the game ecosystem continues to grow.
In another example, HodlGod recently revealed a major update that includes the option to lend an NFT and introduce scholarships into their gaming community. A completely new layer is added to the PVP battle game now that players can lend their items to others in exchange for a percentage of the earnings. In HodlGod, players must own a Bounty Contract in order to find certain NFTs in the game. The Bounty Contract itself cannot be loaned out (at least not yet), but the owner of one can take advantage of the WhenStaking system to create a lease for the Bounty Contract.
That lease can then be given or sold to another player, allowing that player to utilize the lease as if it were the Bounty Contract until the lease expires. In the meantime, the owner of the original Bounty Contract still has it in their possession.
The problem with scholarships
The Scholarship Model pioneered by Axie, YGG, and other guilds have been extremely successful and demonstrates a clear path forward. It shows how to get NFTs into the hands of players without relinquishing ownership of the asset. However, the scholarship model in its current form has a major drawback, which is that it relies on trusted relationships between complete strangers.
A scholarship program essentially requires an HR department to manage all the players and scholars. Players have to apply and hope to “make the team” and, in effect, be hired. In addition, the scholars must rely on the agency to pay them at the end of each scholarship period — a process prone to error or abuse. It can be argued that this system is unlikely to scale to the levels needed to push play-to-earn gaming to new heights.
Just like the original Tamagotchi introduced the world to digital pets, Aavegotchi introduces the world to playable NFTs, backed by a digital value. Moreover, the project has emerged as a strong way to combine gaming and DeFi, as it leverages the explosive potential of both combined. Recently, Gotchi lending was announced to circumnavigate the high barrier to entry.
In this system, the Gotchi lender rents their Aavegotchi out to another user who can then use the Aavegotchi within the Gotchiverse to earn Alchemica. The Lender decides on the duration of the lending period, a fee (if any), and the reward split. Once the rental period concludes, the Lender sends a transaction to reclaim their Gotchi. This transaction will initiate the transfer of the agreed-upon portion of Alchemica and defined NFTs back to the lender. This all happens on the blockchain, using dapps, without the risk of human failure.
The rise of guilds and lending services indicates that a shared economy for digital assets is clearly on the rise. Seamlessly facilitated by real ownership of NFT items and blockchain. Scalability has always been a core issue in the blockchain space and play-to-earn gaming appears to have conceived its own solution. Landowners in various game worlds can already add services for other players to use and earn from that. Additionally, it’s not inconceivable to think that in the near future NFT wearables will be available to rent as people look to step up their digital swagger.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in ETH, BTC, AGIX, MATIC, SDAO, HEX, LINK, GRT, CRO, OMI, AND ENS.