Autor Cointelegraph By Adrian Krion

Just recently, Yuga Labs, the team behind the world-famous bored nonfungible token (NFT) primates, nabbed some $300 million with its sale of Otherdeed NFTs, a collection of land plots in a soon-to-be metaverse. Indeed, NFTs, the blockchain industry’s primary method of creating digital asset scarcity, have emerged as the preferred way to handle virtual land ownership for most metaverse projects, including Decentraland and The Sandbox. All of this has prompted an interesting question in the community: In the metaverse, a vast, near-endless digital space, how can digital land ever be scarce? Well, let’s dig in.First and foremost, let’s address the elephant in the room: The metaverse isn’t real. I mean, the Ready Player One-style metaverse, a seamless virtual reality-based rendition of the internet as we know it. So, while you may don your VR helmet for a rave in Decentraland, the device will hardly stay on for your daily dose of Instagram or a news feed surf.In other words, what we have right now is a growing number of relatively siloed metaverse projects, which offer users an array of project-specific experiences and functions as opposed to the browse-whatever of the larger web. This in itself hints that scarcity is a valid concept to consider in as much as their lands go, even if we consider their value through the same prism as real-world land. Related: Sci-fi or blockchain reality? The ‘Ready Player One’ Oasis can be builtThe laws of the landIn the real world, the value of a plot of land is a product of a few quite clear-cut variables — i.e., natural resources, from oil or mineral deposits to forestry and renewables, access to infrastructure, urban and logistical centers, and fertile soil. All of this can come into play depending on what you are planning to do with this land. Purpose defines value, but the value is still quantifiable.Value, for its part, often goes hand in hand with scarcity, and land is no exception. The planet’s total surface area is 510.1 million square km, but more than half of that is under water, which works for oil and gas pipelines and submarine cable lines, but little else. So far, we have modified about 15% of the available land area, and yet, at the end of the day, land is finite. Factor in the value and financial feasibility considerations (an investment has to be worth it), and the pool of land that actually makes sense to acquire goes even slimmer. Let’s take The Sandbox as an example. What’s the value of getting there? Again, value comes from purpose. If you are a fashion brand, for example, you would probably benefit from being in a similar digital space as Gucci. What’s more, if you are looking to compete with this brand, you would want your plot located as close to its own as possible to try and cut into its footfall with the stunning exterior of your own outlet.Related: The metaverse is booming, bringing revolution to real estateThis is where scarcity comes back into play. There are only so many NFT plots that you can buy next to the Gucci store. In a digital realm, distance as such may seem arbitrary, but it’s not entirely correct. Distance comes down to how this specific metaverse handles space, objects and movement — the crucial, foundational components of its design. After all, you probably want your own metaverse store to be an actual 3D store a buyer can explore, which demands a 3D spatial grid and at least a basic physics engine. Sure, it’s probably possible to play with non-Euclidian geometry and other smart design features to make the space bigger on the inside than on the outside, but this would amp the workload on the backend and affect the user experience.As we see, technological constraints and business logic dictate the fundamentals of digital realms and the activities these realms can host. The digital world may be endless, but the processing capabilities and memory on its backend servers are not. There is only so much digital space you can host and process without your server stack catching fire, and there is only so much creative leeway you can have within these ramifications while still keeping the business afloat. These frameworks create a system of coordinates informing the way its users and investors interpret value — and in the process, they create scarcity, too.The great wide world out thereWhile a lot of the valuation and scarcity mechanisms come from the intrinsic features of a specific metaverse as defined by its code, the real-world considerations have just as much, if not more, weight in that. And the metaverse proliferation will hardly change them or water the scarcity down.Let’s start with the user bases. The Sandbox reports 300,000 monthly active users, and for Decentraland, the figure is roughly the same. In terms of pure math, this is the cap for your monthly footfall at whatever metaverse outlet you are running. So, even if they are not too impressive, they will likely be hard to beat for most newer metaverse projects, which, again, takes a toll on the value of their land. By the same account, if you have one AAA metaverse and 10 projects with zero users, investors would go for the AAA one and its lands, as scarce as they may be. This also creates a value-driven meta-scarcity: Sure, there’s plenty of land in general terms, but only a limited portion of it makes a feasible investment.Related: How blockchain technology might bring triple-A games to metaversesA comparison with on-page ads will be helpful here. Advertisers prefer websites with more traffic, and the number of ad spots on a page is limited by the constraints of reasonable UX. You can always make another dozen websites, but if they don’t bring in the same traffic, the ad spots there will hardly be as valuable, and the ones on the top site are scarce.Moving beyond the user bases, there is also the intangible wow-factor. One of the reasons whybrands buy lands in metaverses is because they know the media will write about it. It’s true that the biggest companies will generate traction no matter what metaverse they would enter through their own sway. Still, they would rather roll with something that’s built up some traction on its own, in the same way they would prefer coverage on Bloomberg to a tiny newspaper. Brands like partners who play in the same league, or punch above their weight, or at least come off like they’re doing any of that. And those are usually scarce. Related: Basic and weird: What the metaverse is like right nowOne day, we may indeed end up with a single coherent metaverse, but even there, the rules binding it will likely work as a natural — or artificial — foundation for conceptualizing value, which will likely factor in scarcity in some form. Now, in a world of scattered metaverses that users cannot seamlessly bounce between, competition and, by extension, scarcity are very much part of the equation. This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Adrian Krion is the founder of the Berlin-based blockchain gaming startup Spielworks and has a background in computer science and mathematics. Having started programming at age seven, he has been successfully bridging businesses and tech for more than 15 years, currently working on projects that connect the emerging DeFi ecosystem to the gaming world.

Blockchain-based play-to-earn (P2E) games stole the show in 2021, exploding from a fringe hobby into a major part of the decentralized space. They even helped people in developing economies put food on the table, as these games’ economic models do not shun things like farming in-game currency and items to re-sell to other players, which many non-blockchain massively multiplayer online games (MMOs) frown on, to say the least. The mainstream gaming industry was taking notes as the P2E rocketship shot for the moon — and its flight has left the industry bitterly splintered. On the one hand, top executives from leading games companies, such as Ubisoft and Square Enix, set their sights on the new market, seeing new business models, new revenue streams, new monetization opportunities — and telling investors that they’re in on what the cool kids are doing can always score a few bonus points. Related: Play-to-earn games are ushering in the next generation of platformsOn the other hand, though, gamers themselves were less impressed, lashing out against blockchain initiatives even from beloved developers. Developers aren’t rushing to embrace the novel tech, it seems: About 70% of game developers have no appetite for blockchain or crypto, a major recent poll showed. This also means that 30% are interested to various degrees, but the overall sentiment is negative.Interestningly, the survey included some of the concerns that developers had about developing games on the blockchain. These mostly amounted to all the regular criticisms the crypto community has long grown used to — the environmental impact, scams and monetization concerns. Well, let’s get things straight once again, this time focusing especially on the gaming world.No, blockchain doesn’t have to set Earth on fireBlockchain’s environmental impact is the lowest-hanging fruit for a critic to go after but, at this point, this probably has more to do with the perception of the industry than its actual state of affairs. Yes, it is true that Ethereum, the second-largest blockchain by market cap, has a high carbon footprint due to its use of the proof-of-work consensus mechanism — but nothing compels you to develop on Ethereum in the first place.Related: How blockchain technology is transforming climate actionIt’s no secret that sustainability is one of the major fronts in the DeFi battle for Ethereum’s throne. Multiple other blockchains, from Cardano and Avalanche to WAX and BNB Chain, flaunt their low energy consumption to attract more eco-friendly dev teams. Blockchain gaming is no different, and the vast majority of game developers build their projects on eco-friendly chains.Granted, the main reason for building on Ethereum is the fact that you enter a developed ecosystem worth almost $310 billion, which is more promising for your bottom line than moving into one with a lower market cap. That being said, cool projects bring more people and transactions into any blockchain network, which drives up its token price and market cap. Furthermore, as dozens of chains support the Ethereum Virtual Machine, which is the runtime environment for smart contracts, developers will have an easy time migrating their apps back to Ethereum once the network fully moves to proof-of-stake.Moreover, developers can take one step further and build sustainability into their economy by design. They can hard-code royalty payments to carbon offset providers into their NFTs and tokens, committing themselves to eco-friendliness in the firmest way possible. Energy and finance are already shopping hard for carbon credits, after all, so it could make sense to adopt a similar strategy as part of a larger quest for eco-friendly decentralization. Sure, this would carve into the studio’s earnings, but sustainability is worth it.No, blockchain isn’t all about scamsCrypto does have a scam problem — that is undoubtedly true. Over the past year, scammers, fraudsters and hackers were able to make off with $14 billion worth of cryptocurrency. Crypto scams come in all shapes and sizes, including rug pulls, social engineering, and pump-and-dumps. Everyone entering the space should be aware of the possible risks, that’s for sure.Related: Beware of sophisticated scams and rug pulls, as thugs target crypto usersThat said, though, the mainstream gaming industry has a scam problem too, and it actually spiked in 2021, as Lloyds Bank found. COVID-19 brought more people and money into gaming, and scammers go wherever money flows, using all of the tried and tested techniques, from phishing to malicious third-party sites claiming to offer free in-game currencies. At the same time, the survey revealed, only 8% of gamers had seen tips on how to spot fraudsters. In both industries, there are also cases of questionable behavior on the developer side. From crowd-funded projects sitting for years without updates to early releases sold on Steam without ever seeing further development, the mainstream stage is not without its scammers. On the crypto side of things, there are, similarly, developers disappearing with the money raised through token sales and other scams. All in all, fraud can happen in any space incorporating anything of value, whether it’s a magical sword that helps your game character deal with those pesky dragons or, let’s say, real estate. Both for crypto and mainstream games, education must play a major role in eradicating scams. Developers working on blockchain projects should make sure to convey the ABCs of avoiding fraud to gamers at every possible opportunity.At the same time, the crypto space offers additional safeguards against scams. When integrating with decentralized services, such as exchanges or yield farms, developers can inspect their code on-chain, as it’s available in the open. They can also use the maturity and market cap of specific protocols as a measure of their security, as both are indicative of the larger investor trust and more solid protections. No, blockchain isn’t bad for monetizationThe concern about possible monetization issues seems somewhat misplaced at first glance. Blockchain was designed from the get-go as a protocol for transferring value, which, if anything, is actually quite conducive to monetization efforts. A P2E game naturally has to include a strong economic component that would allow both players and developers to turn in a profit.At the same time, though, there is a problem here. Any blockchain game becomes part of the larger ecosystem. This ecosystem is inherently turbulent, volatile, and speculative, and these are risks both players and developers must be ready to weather to even get into the business. Here is one quick example: To play an NFT game, you usually have to bear the upfront cost of purchasing your NFTs. To be able to do that, you first have to buy the chain’s native token that the game sits on, which means exposure to its fluctuations that will also be there if you want to cash out by selling your NFTs later. Similarly, any fungible in-game tokens will inevitably bounce up and down in value with the overall crypto market. Or will they?The answer, once again, depends on the choices that the developers make. The studio can opt to build the game’s economy around a stablecoin, which does not fluctuate in value over time despite whatever rollercoaster ride the crypto market is on. The reason why teams rarely do that is that they are looking for a token economy that will soar fast, which is only possible with a more dynamic coin. It also creates the risk of extra instability on top of the general crypto market movements, as an economy built this way can begin to collapse as soon as the token flips or the player base growth slows down.Related: Cointelegraph Research report analyzes GameFi’s bumper 2021 and trends for 2022Developers can, however, avoid this problem by getting more creative with their monetization. They can use the programmable nature of blockchain tokens to algorithmically control their price dynamics through burning and minting them based on the demand and wider market fluctuations. At the same time, they can add indirect monetization through second-market fees on NFT sales, which would effectively make for an endless revenue cycle and align their interests with those of the users. If developers release NFT content that players want, they will be able to get a cut in all of the subsequent resales, thus compensating for what they could have made by driving up their token’s price.Like any other technology, blockchain is not inherently good or evil. It’s a protocol with its own design flaws that savvy developers can mitigate by making smart design choices. While not every game has to embrace decentralized technology, there is nothing wrong with experimenting with the value that blockchain brings to game design, and doing so in a safe and sustainable manner is first and foremost a matter of choice.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Adrian Krion is the founder of the Berlin-based blockchain gaming startup Spielworks, with a background in computer science and mathematics. Having started programming at age seven, he has been successfully bridging business and tech for more than 15 years, currently working on projects that connect the emerging DeFi ecosystem to the gaming world.