The world of non-fungible tokens (NFTs) is constantly developing and expanding, with new innovations and use cases emerging every day.
In this article, we’ll explore what you should know about NFTs, the overlap with DeFi and Gaming protocols, and the exciting developments expected in the space in 2023.
The Backstory of NFTs and Other Protocols
NFTs gained widespread attention in 2021, thanks to high-profile sales like the $69 million sale of “Everydays: The First 5000 Days” by digital artist Beeple. These unique digital assets have many applications, from digital art collecting to ticketing and gaming.
Despite a drop in sales due to market volatility in 2022, NFTs are here to stay and expected to reach new heights in 2023.
NFT Protocols
NFT protocols like ERC-721 and ERC-1155 enable the creation and trading of unique digital assets. These protocols allow creators to monetize their work and collectors to purchase and trade NFTs securely.
Interoperability is also crucial in NFT protocols, allowing for cross-chain trading and ownership of NFTs. Cross-chain trading and ownership mean that NFTs can be traded and owned on different blockchain networks, making them more flexible and accessible to a larger user base. A real-world (loose) similarity is being able to use Euros across different countries.
Gaming Protocols
Gaming protocols like ERC-1155 and Enjin allow for the creation of blockchain-based games with in-game assets that can be owned and traded by players.
These protocols enable the creation of novel forms of in-game economies and offer players more control over their virtual assets.
DeFi Protocols
DeFi protocols can provide liquidity for NFT and gaming protocols, creating new opportunities for creators and collectors. NFT and gaming protocols can also create alternative forms of in-game economies, transforming the traditional gaming industry.
An example of a current centralized in-game economy is World of Warcraft, where the game's developers, Blizzard Entertainment, control the distribution of in-game items, currency, and other assets.
Players earn gold and other rewards by completing quests and other in-game activities, but the value of those rewards is ultimately determined by Blizzard.
The Overlap of NFTs, Gaming Protocol, and DeFi
In recent years, we’ve seen a surge of innovation and growth in the areas of NFTs, gaming protocols, and DeFi. As these sectors continue to grow, we are now seeing an overlap between them, leading to exciting fresh developments and possibilities.
Web3 Gaming and DeFi
DeFi, or decentralized finance, refers to a set of financial applications built on blockchain technology that operate independently of traditional financial institutions. It is a new way of approaching finance, with no intermediaries and complete transparency.
In the gaming world, DeFi is being used to create new ways for players to earn money and participate in the game's economy.
One example of this is Axie Infinity, a blockchain-based game that uses its own cryptocurrency, AXS, to facilitate in-game transactions. Players can earn AXS by playing the game, and can then use it to buy and sell in-game items and creatures.
This has created a whole new economy within the game, with players able to earn a living by playing Axie Infinity.
Another example is The Sandbox, a virtual world where players can buy and sell virtual real estate using SAND, the game’s native cryptocurrency. SAND can also be staked to earn rewards, creating a DeFi aspect to the game.
Web3 Gaming and NFTs
NFTs have become increasingly popular in the gaming world, with many games now using them to represent in-game items, creatures, and even virtual real estate. This allows players to truly own their in-game assets and gives them the ability to buy, sell, and trade them in secondary markets.
One game that has taken NFTs to the next level is Illuvium, a collectible 3D fantasy RPG. The game uses NFTs to represent creatures and allows players to evolve and upgrade them over time. These NFT creatures can also be traded in secondary markets, with some selling for thousands of dollars.
Web3 Gaming, NFTs, and DeFi
The overlap of web3 gaming, NFTs, and DeFi has led to some exciting new possibilities. One example is Yield Guild Games (YGG), a platform that allows players to earn money by playing blockchain-based games.
YGG buys in-game assets from players and rents them out to other players, creating a revenue stream that is shared among its members.
Another example is ChainGuardian, a blockchain-based game that combines elements of RPG and tower defense games. Players can earn CGG tokens by playing the game, which can be staked to earn rewards. CGG tokens can also buy in-game items, creating a DeFi aspect to the game.
NFT Innovations in 2023
In 2023, NFTs are expected to see widespread usage in virtual events like concerts, eSports tournaments, and conferences held on metaverse platforms.
NFT ticketing services will also become heavily adopted, making it easier for organizers to manage ticket sales and prevent scalping.
PFP (Profile Picture) communities powered by NFTs could rise in prominence, offering loyalty memberships attached to exclusive collections from different brands and games.
Music NFTs are poised to enter mainstream adoption, offering partial ownership of music tokens via certain marketplaces; this can link up to some amazing in-game airdrops.
Using AI-enabled NFTs, game developers can monitor character behaviors and fine-tune game mechanics, thereby facilitating the creation of dynamic gaming experiences. Additionally, users can stay abreast of their GameFi NFTs' real-time valuations and make informed trading decisions.
Conclusion
NFTs have come a long way since they first emerged, and 2023 is expected to be a transformative year for the industry. NFTs offer limitless possibilities for creators, collectors, and users alike.
Whether you’re interested in digital art collecting, gaming, or exploring new use cases for NFTs, there’s never been a better time to dive into the world of non-fungible tokens.
End credits: I used #chatgpt to flesh out the bones of this article, and then used my skills as a writer (and fact checker) along with ProwritingAid to add a bit of flare to this article.
I have been using ChatGPT to learn about new concepts like Web3 and blockchain more efficiently by summarising and comparing other blogs and articles. I have always found that the best way to consolidate knowledge is to write or talk about it and so the worlds of AI and tradition collide.
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