How Do NFT Games Work?
NFTs are unique digital collectibles stored on the blockchain, which can be used in games as characters, consumables, and tradeable items. These NFT games have gained popularity in the Game-fi world, allowing players to earn income by selling their in-game NFTs to collectors and other players, and even earning tokens through play-to-earn models.
When transferring gaming NFTs, it's crucial to use a compatible wallet and be cautious of scams when sending them to an NFT marketplace or another user. Make sure to review the rules of any NFT game you play to understand the potential risks. Most NFT games are found on Ethereum and Solana blockchains, featuring battling experiences with collectible characters like CryptoBlades, Axie Infinity, and Walken, as well as collectible card games like Sorare.
Basics
NFT games have evolved from the CryptoKitties craze and now incorporate play-to-earn models. This new genre, known as Game-Fi, combines finance and gaming, allowing players to earn income while playing. It's no longer necessary to solely rely on valuable collectibles like rare animals that can be worth thousands of dollars. Players now have the option to explore different gaming models across various themes beyond collectible animals.
About NFTs
An NFT, or Non-Fungible Token, is a digital token on the blockchain that represents a unique item. It can be used in various ways, such as in games, as collectible art, or even for real-world assets like real estate. NFTs address the challenge of establishing decentralized digital ownership in a world where copying is common.
Unlike fungible tokens like Bitcoin, NFTs are unique and cannot be exchanged for identical tokens. Even within a series of NFT art, each token has different metadata, similar to numbered prints in a series.
How Do NFT Games Work?
NFT games go beyond holding crypto-collectibles in your wallet. These games integrate NFTs into their rules, mechanisms, and player interactions. For instance, NFTs can represent unique characters or items in the game. You can trade these NFTs with other players for profit. Developers use smart contracts, which are self-executing code stored on the blockchain, to implement NFTs in games. An example is CryptoKitties, where specific contracts determine the generation of new cats with different traits. Players even analyzed the code to optimize breeding rare and valuable breeds.
Play-to-Earn NFT Games
Play-to-earn NFT games allow users to earn income while playing. By participating in these games, players can receive tokens and sometimes NFTs as rewards, with the opportunity to earn more the longer they play. Tokens are often used for crafting in the game. Play-to-earn has become popular, especially among users in low-income countries, as it offers an additional or alternative source of income.
One notable play-to-earn game is Axie Infinity. Players can start by purchasing three Axies or receiving a free Scholarship from another player. By completing tasks and challenges, they can earn Smooth Love Potion (SLP), an ERC-20 token that can be traded on exchanges. SLP is used by breeders to create new Axies, establishing an in-game economy. Axie Infinity has gained significant popularity in the Philippines, with many players earning between $200 to $1000 (USD) per month, or even more depending on market prices and their level of engagement.
In-Game NFTs
NFT games provide an additional avenue for earning income while playing. Unlike games like Axie Infinity or CryptoBlades, where you earn fungible ERC-20 tokens, in-game NFTs represent collectible items. These NFTs can have varying values based on factors such as cosmetics, rarity, or in-game utility.
CryptoKitties serves as an example of a game that relies solely on the collectibility of in-game NFTs. In this game, there is no option to earn a consistent income without the element of chance. However, most newer NFT games combine both play-to-earn mechanics and in-game NFTs.
How Do NFT Games Make Money?
Your earnings from playing an NFT game depend on the game's mechanics and market demand. Other users who value the NFTs or cryptocurrencies earned in the game will provide the money. To cash out, you will need to sell your items on a market, exchange, or auction house. In NFT games, value comes from the collectability of NFTs or their in-game utility, which can also lead to speculation.
Risks of Playing NFT Games
Losing Money
Playing NFT games comes with the risk of losing money. The extent of potential loss varies based on the game, its mechanics, and the value of the NFTs involved. It's important to note that losing money in these games doesn't always indicate a scam. The speculative nature of NFTs means their value is subject to market forces and individual perception. As with any crypto investment, it's advisable to only invest funds that you can afford to lose.
Losing NFTs
Losing NFTs while playing games or interacting with the blockchain is a common concern. To prevent this, it's important to take certain precautions. Here are some ways you might lose your NFTs and how to avoid it:
- Transferring to an incompatible wallet: Make sure the wallet you're sending your NFTs to supports the same type of NFT token. Double-check before making the transfer.
- Falling for scams or fraud: Be cautious when sending your NFTs and avoid interacting with suspicious individuals or platforms. Educate yourself about common scams to protect your NFTs.
- Allowing access to malicious smart contracts: Only trust reputable projects and be careful when granting permission to smart contracts. They could potentially take your NFTs without your consent.
- Losing NFTs within the game: Understand the rules of the game you're playing to avoid unintentionally losing your NFTs.
To keep your NFTs safe:
- Stay informed about NFTs and blockchain technology.
- Verify wallet addresses and ensure compatibility.
- Be cautious when dealing with smart contracts.
- Familiarize yourself with the rules of the game.
By following these steps, you can reduce the risk of losing your valuable NFTs.
Popular NFT Games Examples
NFT games come in various forms, predominantly found on BSC, Solana, and Ethereum blockchains. These games offer a diverse range of experiences, from traditional video games to ones focused on the collectibility of NFTs.
Axie Infinity
Axie Infinity, built on the Ethereum blockchain, offers a gameplay experience reminiscent of Pokemon, featuring collectible creatures and battles. Players have the opportunity to earn income by trading Small Love Potions (SLP), Axies, and Axie Infinity Shards (AXS).
Sorare
Sorare is a fantasy football game that features tradeable, collectible soccer players based on real-life athletes. In the game, you assemble a team of five players using either free cards or by purchasing tokenized cards. By winning games, scoring goals, and completing events, you can earn points to level up your players.
Gods Unchained
Gods Unchained is an Ethereum-based NFT card game that resembles popular games like Magic The Gathering and Hearthstone. In this game, players construct decks with unique abilities to engage in battles against other players. Winning matches rewards players with in-game items that can be utilized or sold. By winning Ranked games, players can earn Flux, a currency used to craft potent NFT cards. Players have the option to sell these cards for profit or reinvest in new cards to further progress in the game.
Walken
Walken is a mobile game that uses NFTs and is based on the Solana blockchain. The game combines physical activity with online gaming, where players can engage in battles with unique characters called CATHletes. They can collect valuable in-game items to enhance their abilities, compete against other players, and earn rewards. Walken also offers customization options that players can explore and has its own token called WLKN.
Conclusion
NFT gaming allows players to engage with each other's digital collectibles through defined rules. While some value NFTs for their collectibility, others seek their utility. These games often resemble trading card games, but not all collectors aim to play. The emergence of Game-fi has revolutionized NFT gaming economies, enabling players to earn through active participation. Earning money is no longer solely dependent on luck and collection; playing the game also plays a crucial role.