A new marketplace has been launched to provide game companies and players with open access to NFTs in gaming. Fractal launched on 24th December, backed by Twitch co-founder Justin Kan. The game-style trailer says their intention is to combine the worlds of gaming and NFTs, clearly with an eye on the growing P2E (Play-to-Earn) movement.
Why it’s important
Gaming is set to be the next big thing in NFTs, recently attracting huge amounts of attention and controversy. In October, games studio giant Steam announced a ban on NFTs in its games, which rivals Epic and Ubisoft used to promote their plans to push ahead with in-game NFTs. The growing popularity of P2E could have huge implications for the whole gaming industry and beyond.
- Games companies have embraced digital goods: in its first two years, Fortnite made $9B in revenue primarily from selling skins. Compare that, from one game, to the $10B that OpenSea made over three years from its entire platform.
- The leading blockchain game, Axie Infinity, achieved $2.5B in NFT trading volume in Q3 2021.
- Justin Kan, co-founder of Fractal (and Twitch), said, “The business model of gaming has shifted away from game sales revenue to selling items and skins that have durable in-game value to players.”
- There is a clear direction of travel for static profile photo (PFP) NFTs to become active assets in games and metaverse spaces, combining art and advanced utility such as in-play features and P2E traits.
- A new opportunity is opening up for savvy artists to enter the gaming world, creating all sorts of assets such as avatars, skins, equipment, and other items, which can then be traded openly.
- Kan said, “While players have recognized the value of items in centralized games for a long time, when game companies create lasting durability beyond their games by making their in-game assets NFTs on a blockchain, tremendous amounts of value will be unlocked for players and the gaming ecosystems themselves.”
- Kan added, “For players, this will mean they can truly own the value of their in-game work: items they own will be buyable, tradeable or sellable.”
About Fractal
- Describing Fractal’s plans, Kan said, “Fractal is a marketplace for gaming NFTs: durable assets that let you do something inside a gaming universe. Our mission is to create an open platform for the free exchange of digital goods.”
- Fractal has some heavyweight founders who will give it a good chance of success. As well as Justin Kan from Twitch, Robin Chan founded and sold a mobile gaming company, XPD Media, to Zynga, and was previously head of Zynga Asia. David Wurtz was the cofounder of Google Drive and an advisor to Shopify. Mike Angell is a twenty year e-commerce veteran who was previously at Fast and Shopify.
- Fractal will run on the Solana blockchain initially, instead of the more mainstream Ethereum. This is a good move for the launch, as it should enable high volume use at reasonable fees, both of which are needed for the potentially huge gaming market.
Play 2 Earn
- P2E became popular during the pandemic lockdowns around the world. Southeast Asian players, especially, realised they could sit at home and make more money than from their jobs.
- People who might not otherwise buy NFTs or Crypto might be more than happy to buy in-game digital goods. If these take the form of NFTs, then other avenues open up for them.
- Gaming NFTs can be traded in the same way as any other, but the difference is the gaming aspect. NFTs can be picked up as rewards for completing in-game tasks and their value and rarity can be influenced by how the player uses them in games. Thus, Play 2 Earn.
- Not all players could afford an NFT to play, so the concept of scholarships was quickly conceived. People with NFTs can ‘lend’ them out to players who then take a share of the earnings. A whole network of agencies exists to link up players and owners.
- NFTs are native Web 3 composable items – a trait also of DeFi (Decentralised Finance) tokens. Therefore, expect the gaming/DeFi crossover with yield farming linked to gameplay (sometimes known as GameFi). Indeed, Wolf Game looks a lot like GameFi with a bias toward the DeFi side of the spectrum.
- Games could provide an easy to use, slick environment for players to learn skills in advanced DeFi, investing and wealth management that could make a big difference to their lives.
- Ultimately, the centralised games companies have the power to dictate how open their games are, the profits they can take and how much opportunity exists for players to make money.
What’s next
This is obviously just the beginning for NFTs in games and the inevitable crossover with DeFi. On their future plans, Kan commented, “Eventually, we see ourselves creating infrastructure for emergent use cases of NFTs as well, such as the lending / scholarship model in some play-to-earn games.”
