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Industry Challenges
Instead of concentrating on token price, the main goal of any cryptocurrency project is allegedly to continually evolve and grow, expanding on partnerships, and providing stakeholders with greater value over time. On the other hand, users and investors (token investors) are primarily interested in token values that increase over time.
In order to put things into perspective, game developers frequently have a primary interest in attracting early investors before to the ICO, building up their treasury over time, and attracting more players over time. However, the price of the token itself, which is established algorithmically through exchanges and the liquidity pool ratio, is of primary relevance to investors and players. In the majority of NFT gaming ventures, the project owners will gather money from early investors, allocate it for initial liquidity in liquidity pools, and then that will be the sum they provide to the liquidity pools. As early investors and players cash out their vested tokens, supply pressure on game tokens in liquidity pools gradually outweighs demand pressure.
Decentralization and Web3 are characterized by the lack of a central authority, giving each individual complete power over the ability to acquire and sell assets whenever they like. In reality, NFT gaming is a zero-sum game since a willing buyer is needed for every token seller who wants to sell their tokens.
The problem with NFT games (and even NFTs) is that, like the prisoners' dilemma, players are encouraged to make decisions that provide subpar results for the community as a whole.
The mismatch between value producers and value extractors is another acute issue that NFT gaming is now facing. Yes, the project receives funding from early investors like your venture capitalists, angel investors, and GameFi degens, producing financial value & facilitating growth of the product. However, as no one will want to invest in a project knowing they would lose money, these "value creators" who enter the game will eventually morph into "value extractors." In other words, early investors decide to invest because they think that these ventures will ultimately be more valuable. The idea of "Play-to-earn" has a serious issue here: players are mostly short-term value producers who want to turn into value extractors and get wealthy quickly.
The number of value extractors grows as more players sign up to play the game and participate in the community. When the number of new players reaches a plateau, more value producers than value extractors are present, which eventually causes the project to stagnate or even end.
Last modified 1yr ago