Splinterlands and Axie Infinity are well known blockchain games, with opportunities to stake and yield cryptocurrency. This Play-to-Earn trend is becoming increasingly popular, and it even looks like bigger gaming companies such as EA games are looking to bring blockchain technology into their gameplay.
Go back a couple of years, and 2020 was the year of DeFi summer when decentralized finance protocols started to take off. And, in 2021, we saw an explosion of interest in NFTs, with prices to match.
Here at the beginning of 2022, it makes sense to wonder what this year’s major areas of interest will be, and if, like DeFi and NFTs in the past couple of years, one area, in particular, will pull in attention and spending.
A reasonable estimate would be that 2022 will see DeFi and NFTs continue to move and develop, that there will be continued hype around the metaverses, but that blockchain gaming could be the area that, potentially, sees explosive growth.
This might all be against a backdrop of discussion about web3, but essentially, all those things, DeFi, NFTs, blockchain gaming and metaverses, will be components in the structure of web3.
DeFi and DAOs
Although 2020 had the DeFi summer, it is in 2021 that adoption grew further and DeFi inched closer to the mainstream. At the very least, people who are not engaged with the crypto space will have become aware that DeFi is happening, and that it might be worth looking into.
In 2022, expect to see further interest and more new users who are drawn in by the allure of cutting out traditional financial institutions and, of course, making returns on their investment.
Relatedly, this may be the year when DAOs enter more noticeably into mainstream awareness. A DAO is a Decentralized Autonomous Organization, meaning an online group with a shared purpose, the workings of which are set in code and operated through smart contracts. DAOs often issue native tokens that give voting rights to holders.
It has been said by true believers that DAOs, non-hierarchical, transparent and self-organizing, will replace traditional company structures. That is a bold prediction but plausible in DeFi and other quarters of web3.
The idea that NFTs are an overpriced fad usually stems from a misinterpretation of what NFTs actually are. If you mean collections of cartoon animal JPEGs, then sure, faddish is a reasonable assertion (although even then, there will be JPEG survivors that retain value and status, and more will continue to be created).
But, NFT technology itself, that is, blockchain tokens that are non-fungible rather than Fungible.
Non Fungible Tokens are here to stay as long as crypto is here to stay. Metaverse projects and gaming in particular will incorporate NFTs.
And, as some NFTs are stores of value, then DeFi platforms will treat them as assets and find ways to unlock that value.
Also, while periods of hype and spending crazes are sure to rebound eventually, I still would not suggest that NFTs in their more cartoonish forms are over and done with quite yet.
Yes, there will be corrections and losses, but that is the case in traditional art markets too. An enormous number of NFTs will become (in fact, already are) worthless, but digital collectibles, as a whole, are here to stay, and the overall generational trend is towards more of everything being done online.
If you were looking for the new area of growth that we will associate with 2022 as DeFi and NFTs are associated with the previous two years, then blockchain gaming might be a decent bet.
What that could look like is an expansion in play-to-earn gaming, and in-game assets, in the form of NFTs and coins, becoming integral to gameplay while accruing real marketable value. This will crossover with metaverse projects, and also with DeFi, as some (but certainly not all) games incorporate elements such as staking and Yield.
Axie Infinity has already been doing parts of this kind of thing for some time. You can buy an Axie (that is a creature that you breed in the game, by the way) as an NFT on its marketplace, and you can trade an in-game token called Smooth Love Potion (yes, really) on Binance, among other exchanges.
Major mainstream game producers such as Square Enix, Ubisoft and EA Games are indicating clear intent to incorporate blockchain technology as part of their future games, and remember that gaming is a huge industry with a young online audience.
Then take a look at a dedicated blockchain gaming company such as Gala Games, or a metaverse project such as The Sandbox, and you can see that the competition is changing, and those putting crypto at their core are moving fast.
There is a vocal opposition to these moves, but it can tend to appear part of a habitual dislike of crypto in general (and NFTs in particular), and besides which, movement towards blockchain gaming is part of a much larger and perhaps irresistible transition to web3.
Challenges to Ethereum
Up to now, Ethereum has been the dominant blockchain when it comes to smart contracts, NFTs and DeFi. However, its shortcomings are well-documented (gas fees, transaction speeds and congestion), Ethereum 2.0 is not yet here, and 2022 might be the year when Layer 1 competition heats up.
There is much debate around this issue, and those who are heavily invested in one or another of the key competitors relish putting the boot into everyone else. Still, it is likely that Ethereum alternatives (take your pick from Solana, Cardano, Avalanche, Binance Smart Chain, Tezos, Terra, Fantom and your favorite that I’ve omitted) will see plenty of action this year.