The Financialization of Fun: Crypto Gaming Thesis

While many will try to supplement knowledge gaps with crypto-native VCs/advisors who tout they can handle the tokenomics, in reality, the one-in-a-million game is going to be a result of crypto-natives working hand-in-hand with experienced game developers/economists to take a “player first” approach to solve difficult design problems.

Very few traditional game developers have experience designing and controlling gameplay/gamer psychology when the game becomes exposed to the forces of speculators, investors and arbitrageurs who have their own out-of-game incentives that move around the game’s token and NFT prices.

Axie and its dozens of clones imply that perhaps fun isn’t what’s key for a crypto game to grow, but rather gameplay mechanics that reward players with real-world earnings. Illuvium, another game that won’t be launching for another 2 years, has found itself with an $11B valuation ($ILV) driven largely by introducing a pre-game token and staking mec... See more

Most games won’t cross the adoption chasm from the early market (crypto enthusiasts) to mainstream market (traditional gamers or low-SES players). Nonetheless, games like Axie are paving the way for others to cross over to a large population of people who want to earn by playing games.

Meanwhile, some developers will spend years trying to rival a AAA game to target the mass gaming community, but it’s possible that crypto games that see early success simply embrace crypto-native principles where people can have fun by earning. A huge potential pitfall is sinking months to years developing a game with both mid-tier gameplay and unc... See more

Much like how DeFi protocols can’t just rely on inflationary tokenomics and yield to sustain their product, games that are first and foremost fun to play without being crypto-first are strong contenders in this space because they can stand alone as a product. But these games will have some lag time before we see more of them come to market because ... See more

In the medium term, we’re going to see more gameplay-first games launch with crypto concepts and innovations. These innovations will happen along a spectrum from cosmetic skins becoming NFTs to token models where gamers can play for ownership in a game.

At the same time, crypto also enables another type of participant alternative to the conventional gamer: the gaming enthusiasts, collectors and money-makers. These people are not necessarily playing the games but can be supporting the space by taking other sides of trades, betting, attending events, watching streams, speculating and collecting gami... See more

As the space becomes increasingly saturated, nuanced takes on the state of crypto gaming are few and far between ranging from “everything is a Ponzi scheme” to “Crypto gaming will fundamentally change every aspect of work, life, and play forever.”

1) “Play-first” crypto games where the fun gameplay takes centre stage and crypto is used as a competitive edge to engage players further.