The emergence of Play2Earn games has led to the development of the GameFi industry, allowing players to earn cryptocurrency simply by playing games. Yes, that’s right, you heard correctly! Play2Earn games give players the opportunity to earn cryptocurrency and own elements of the game itself through the use of non-fungible tokens (NFTs), which usually take the form of in-game characters, land, items, etc.
Blockchain-based games have not only revolutionized the gaming world, but have also directly influenced how gaming communities operate. Teamwork has been a key component of traditional online games, and classic in-game guilds became popular with the advent of massively multiplayer online role-playing games (MMORPGs). Guilds, in their original sense, were informal associations of players who gathered for raids, battles, and other missions to gain a competitive advantage over their rivals.
Games such as World of Warcraft are well known for their guilds, which bring players together to battle the most challenging bosses and participate in group raids. These groups of players work together to support each other, obtain rare items and armor, and ultimately grow their guild. Some of these guilds have been influential enough to become widely known in their gaming community. For example, Method, an influential esports organization, can strike fear into the hearts of many WoW players.
While traditional gaming guilds provide players with a support system and competitive advantages in battles, Play2Earn game guilds take the concept one step further by directly influencing players’ final earnings.
What is a GameFi guild?
Like their traditional counterparts, GameFi guilds are organized groups of players who often work together to complete tasks. However, while traditional guilds are exclusively a community of players helping each other complete various missions, GameFi guilds add monetary value to the player’s gaming experience, which is achieved in two main ways, which we will discuss below.
Decentralized Autonomous Organizations (DAOs)
First, these groups of players often form decentralized autonomous organizations (DAOs), which are blockchain-based companies governed by their own cryptocurrency token. Token holders can vote on DAO-related issues, such as which games the guild will play. These organizations consist of players, managers, and the game guild treasury, and all guild members receive a share of the game’s profits.
Gaming asset lending
In addition, these organizations also own a large collection of in-game assets that can be loaned to players in exchange for a share of their income. This model is known as Rent2Earn. It allows players to access expensive NFTs that are necessary for the game. Otherwise, it could take a significant amount of time to collect them, or they could become a costly barrier to entry for certain games. These players can then participate in the game with the new NFTs in exchange for a percentage of what they earn.
What problems do GameFi guilds solve?
Many Play2Earn games require the purchase of NFTs, and as these games grow in popularity, so does the cost of the necessary NFTs.
For example, the popular Play2Earn game Axie Infinity requires new players to have at least three different Axies before joining the game. Axies are Pokemon-style NFT characters in the Axie universe, and are usually purchased or bred by players. In the early days of the game, they could be purchased for a very small fee, but due to the popularity of Axie Infinity, new players now have to shell out nearly $300 for just a few starter Axies.
That’s too much money to pay just for a starter kit for the game, isn’t it? This is precisely the problem that GameFi guilds are trying to solve. Guilds bring together investors and players for the benefit of both. Investors looking to profit from Play2Earn games can purchase NFTs and other in-game assets. If NFT owners don’t have the time or desire to play, or simply no longer need a particular set of assets, they can provide these NFTs to players through guilds and continue to realize their full earning potential.
On the flip side, most potential players are unlikely to pay $300 to enter the game. Instead, newcomers can borrow assets from the guild in the form of a “scholarship.” This simply means that players are provided with NFTs of certain characters or items to use in the game.
However, this does not mean that scholarship recipients do not pay for renting NFTs from guilds. Players usually have to pay the guild a certain percentage of their future earnings in exchange for these NFTs. In addition, certain games allow players to “level up” their NFTs during gameplay, thereby increasing the potential profit from these assets. In this case, a scholarship holder may spend a significant amount of time playing and improving the rented NFT, only to return it when it is no longer needed. This creates a double benefit for guilds, which generate income while simultaneously increasing their portfolio of more powerful assets through NFT rentals.
Limitations in the activities of guilds and Kyoko.Finance
While Play2Earn games have opened up a world of opportunities for a whole new kind of professional gaming, the industry is still in its infancy. Different Play2Earn games are completely incompatible with each other, and the blockchains on which these games are hosted are largely independent of each other. Transferring NFTs between games is usually impossible, resulting in fragmented in-game assets and guilds that are often limited to games on a specific blockchain.
Kyoko.Finance solves this problem by offering a cross-chain asset lending platform. On the Kyoko platform, guilds and players can borrow NFTs from completely different games, securing their debt with cryptocurrency. They can also list NFTs on the Kyoko platform to realize potential profits from their unused assets. This allows guilds to go beyond a single game, as well as beyond the blockchain to which the games are attached. Guilds can also apply for unsecured loans using Kyoko’s inter-guild lending protocol, which helps guilds obtain the financing they need to enter new gaming blockchains or expand their operations.
GameFi guilds — a community of players or an ATM?
The Play2Earn trend has opened up many new opportunities for gamers and crypto enthusiasts. While these opportunities can be quite lucrative, players who were unable to join earlier will likely have to pay a hefty sum to start playing. GameFi guilds are a natural phenomenon in this new ecosystem, given their solution to the problem of rapidly rising entry costs and their ability to expand access to GameFi for newcomers.
Thanks to guilds, investors can take advantage of the earning potential of Play2Earn games, while gamers can avoid high entry costs and get straight to doing what they love: playing games.
