Author: Double Protocol, Winkrypto
Compiled by: Frank, Foresight News
The main points:
Most of the users in the Web3 gaming space come from a few top games;
Among the top 100 games, 7% support NFT leasing and 18% plan to adopt this model;
The main reason gamers use leasing is to reduce costs and increase their chances of winning in NFT games by using or combining NFTs;
Barriers for game developers to adopt their own rental marketplaces include technical hurdles, lack of prioritization, or counter-intuitiveness;
The mission of Web3 Games is to enable gamers to truly own and sell in-game assets without any friction, but it doesn’t stop there. As digital assets become more and more like real-world assets, gamers will be able to perform various other types of financial transactions on them, starting with leasing.
In this article, we will explore the following questions:
How many games have adopted, want to adopt, or plan to adopt NFT leasing capabilities?
What is the reasoning behind renting out these gaming assets?
What are the barriers for game developers to adopt their own rental marketplace?
Users are concentrated in a few top games
The data source we chose is metadata.io's ranking of games with the highest 30-day average daily number of independent active users on June 12, 2022. Before looking at the rental data in these games, we should first understand the properties of these games.
It is clear from the data above that in terms of users, the GameFi project is a winner-takes-all, with users of the top three games accounting for more than half of the total users. By looking at the difference between the median and the mean, we can see that most users come from a small number of top games.
Blockchain network distribution
There doesn’t seem to be any player dominating in terms of ecosystem performance, but WAX, BNB Chain, Polygon, and ETH appear to be the leading GameFi blockchain networks among them.
25% of games have adopted or will adopt NFT leasing
We then investigated whether the games in the corresponding data had NFT rental functionality, and if not, whether they had plans to implement it, documenting it in their roadmaps, whitepapers, etc.
Therefore, they can be divided into three categories:
Own NFT rental marketplace/functionality: 7%
Have not yet implemented NFT leasing, but have publicly expressed interest or commitment to doing so in the future: 18%
Have not yet implemented NFT leasing and have not publicly expressed interest or made commitments: 75%
While rental games appear to be in the minority, we also looked at the share of players in each of these categories, and relative to the number of games in existence, rental games also make up a disproportionate share of the player base (20.4%).
One possible explanation is that leasing may make in-game NFT assets more accessible to new players who might otherwise be reluctant to purchase one outright to play the game.
Another possible explanation is that once a game’s player base reaches a certain level, game developers will be more motivated or able to build an NFT rental market.
The main reason gamers use leasing is to reduce costs and increase their chances of winning in NFT games by using or combining NFTs.
Reasons for NFT leasing: reducing costs or increasing chances of winning
1. Splinterlands
Overview
Splinterlands is an online collectible card game that uses blockchain technology. Each card in the game can be used as a tradable NFT. Players can earn income in the game through tournaments, ranked matches, and missions, and the game's card NFTs can be purchased and rented through third-party online markets.
Advantages of renting vs buying/trading in games
Daily Quests: Gamers need to play different factions (water, fire, earth, etc.), but instead of having enough cards to play each faction, they can choose to rent cards to complete quests;
Brawl Rentals — brawl (guild fighting): this may have certain restrictions on their battles, and in order to participate in these activities, it is necessary to use niche cards that gamers are not very willing to buy;
Experimentation: Players have the opportunity to try out new builds and combinations using cards they don’t own before committing to a purchase.
2.DeFi Kingdoms
Overview
DeFi Kingdoms (DFK) is a browser-based pixel art game built on the Harmony network that combines DeFi functionality with gaming elements. Its DEX uses the Uniswap V2 protocol, enabling users to exchange tokens and provide liquidity to earn fees.
Advantages of renting vs buying/trading in games
Summoning: Summoning a hero requires two heroes. Gamers can own them, but they can also rent heroes to summon new heroes.
Reduce the cost of summoning new heroes: The cost of summoning is linked to the generation, so if the gamer has a hero of a higher generation, you can always use one of your heroes to rent a hero of a lower generation, thus reducing the cost of summoning. In many cases, even if the gamer pays a certain amount of JEWEL to the owner of the rented hero, renting a hero of a lower generation is more economical than using a hero of a higher generation, such as a hero of the 5th generation;
Maximize your chances of getting good heroes: Gamers can rent high-level heroes to use with their own heroes, giving them a better chance of getting higher-quality heroes.
3. MOBOX: NFT Farmer
Overview
MOBOX: NFT Farmer was launched on BNB Chain in early April 2021. It describes itself as a unique infrastructure built on the DeFi ecosystem and combines it with games through NFTs. The GameFi infrastructure uses liquidity pools, liquidity mining, and NFTs to find the best yield strategy for users and generate unique NFTs that can be used in multiple games, which enables MOBOX users to play games for free and earn money in the process.
In addition, MOBOX is a gaming DApp where players can stake LP tokens or stablecoins to receive rewards in the form of liquidity mining tokens KEY. KEY can be used to unlock NFTs to be used as game characters or collateral assets in the MOBOX platform.
NFT plays a vital role in the MOBOX ecosystem as users need MoMo NFT to become active in the MOBOX ecosystem.
Advantages of renting vs buying/trading in games
Players can obtain gold coins by placing MOMOs into the MOMO vault. The output of ordinary quality MOMOs is low, while the gold collection speed of rare quality MOMOs is generally more than 100 pieces/minute. If gold coins are scarce, renting MOMOs is considered the fastest and safest method;
Gamers can participate in the looting feature, similar to Clash of Clans. Rented MOMOs usually have relatively high statistics, and if gamers are new and want to win looting steadily, renting MOMOs is a good choice.
4. Thetan Arena
Overview
Thetan Arena was launched in December 2021 by Wolffun, a leading Vietnamese gaming company, with investments from venture capital firms such as Animoca Brands and support from gaming guild YGG.
It is one of the largest MOBA (Multiplayer Online Battle Arena) games on BNB Chain, combining free-to-play and game-to-earn models, with two types of tokens - Thetan Coin (THC) and The Gem (THG), players earn THC or THG by participating in battles or completing other tasks.
Advantages of renting vs buying/trading in games
Obtain gTHC through daily battle spoils;
Earn Power Points to upgrade gamers’ NFTs;
Opportunities to attend upcoming special events.
5. Aavegotchi
Overview
Aavegotchi is a DeFi-enabled crypto collectibles game developed by Singapore-based Pixelcraft Studio that allows gamers to pledge NFT avatars with tokens of interest and interact with the Aavegotchi metaverse, a unique combination of DeFi and NFT.
Aavegotchis are pixelated ghosts that live on the Ethereum network, powered by the ERC-721 standard, and their value is determined by their rarity, which is calculated through a variety of factors such as basic characteristics, the amount of staked collateral/aTokens, and the wearable device they are equipped with.
To upgrade their Aavegotchis, gamers can participate in various activities including mini-games, governance, and parties, and Aavegotchis can also increase in rarity by equipping in-game wearables and upgrades.
Advantages of renting vs buying/trading in games
Players can collect tokens in the game to mint golden altars, and players who don’t have ghost NFTs can rent them from the rental market to enter the game;
Purchasing an Aavegotchi typically costs around 400 GHST, while renting it costs a fraction of the price of 1 GHST (see Aavegotchi rental data).
6. DracooMaster
Overview
Dracoo Master is a strategic Roguelike deck-building game on BNB Chain. Dracoo’s card arrangement allows gamers to achieve unlimited possibilities in the Sacred Peak real-time multiplayer online competitive game. In Dracoo Master, there are utility tokens BAS and governance tokens DRA. Gamers can use BAS tokens to breed Dracoos and create summoner equipment.
Dracoo Master players can also collect DRA tokens through adventures and battles in the game. At the same time, players can collect and evolve different kinds of Dracoos, obtain DRA tokens through battles, and Dracoo NFTs can be traded on the NFT market.
Advantages of renting vs buying/trading in games
For users who are not blockchain gamers, they can use fiat currency to rent Dracoo NFTs to play games during in-app purchases;
Renting NFTs with fiat currency not only lowers the threshold for playing blockchain games, but is also a more economical way for users in certain regions who cannot afford NFTs.
7. Pegaxy
Overview
Pegaxy is a P2E PVP style horse racing game where gamers compete with 14 other horse racers for the top 3 spots, with each race having random elemental variables including wind, water, fire, speed and more.
Using strategic upgrades, food, and skills, players must place in the top 3 to earn the platform's utility token, VIS (Vigorus). In the game, players can breed, merge, rent, sell, and race their Pega to earn VIS tokens, a system that enables teams to build large guilds and scholarship programs, and even provides single players with the opportunity to earn in-game tokens through daily competitions.
Advantages of renting vs buying/trading in games
There are three types of leases in the Pegaxy game, namely fixed lease, profit sharing and direct lease.
In a fixed lease scenario, once the lessee accepts the agreement and the Pega is in the escrow wallet, the owner will receive a fixed amount of PGX from the escrow account, but will not be able to redeem their Pega within a fixed time to ensure that the lessee redeems Pega within the fixed lease period;
The profit-sharing model incentivizes hard work while reducing the workload for managers/owners. Scholars/renters can access NFTs for a lower fee than a fixed lease option, but share a portion of the profits with managers/owners;
The direct rental system is designed specifically for Guilds, allowing managers to create rental contracts and then send them directly to scholars for them to accept.
Pegaxy enables large-scale rental programs and guild development through an in-game economy model, creating a wide range of opportunities for those who want to access the game for free.
What are the barriers for game developers to adopt their own rental marketplace?
While the advantages of allowing gamers to be able to rent NFTs to play games rather than buying them are clear, it’s clear from our observations that games with this functionality are still in the minority.
Here are a few possible explanations for why more games don't have their own rental marketplaces:
Technical barriers
NFTs based on the ERC-721 and ERC-1155 token standards generally cannot be used out of the box and can only be transferred. While it is possible to lease them out without collateral, doing so can be tricky and take a long time to develop.
For this reason, we released new token standards ERC-4907 and ERC-5006, which are extensions of ERC-721 and ERC-1155 respectively, to simplify the process.
Lack of Priority
Almost all games using NFTs are relatively new projects with new features coming out every month. With NFT leasing, there are a million different tasks to accomplish: new gameplay, maintaining servers, fixing bugs, etc.
For some games, developers have other priorities to deal with before implementing something like a rental marketplace, especially if its benefits aren't fully understood yet.
Counter-intuitive
The role of NFTs and cryptocurrencies in gaming is to “enable true ownership of game assets,” and of course with leasing, there is no exchange of ownership, so for mainstream gamers and game developers, while NFT- and blockchain-based ownership may be a leap forward, NFT-based leasing is another cognitive leap built on top of it, which may affect its adoption.
Conclusion
Games that adopt leasing generally have more user engagement and account for a disproportionate share of active users because leasing makes NFTs more accessible and affordable for new users who are not yet willing to invest a lot of money before purchasing the game's digital assets.
Experienced users may choose to rent specific cards or game components for activities, which may also be because NFT leasing allows players to try out certain combinations and builds of gameplay before committing to a purchase.
Regardless, we expect NFT rental adoption to grow steadily alongside NFT-based games themselves.