Gaming NFT projects raised 4x as much capital as any other NFT vertical in H1 of 2022.
A recent report conducted by Messari and Dove Metrics showed different trends in fundraising throughout 2021 and 2022.
The report compares different sectors of the crypto industry to see which sectors are the most dominant, as well as examining some of the more directional trends.
There are many interesting things in the report, but what is most remarkable is that the phenomenon of NFTs is still extremely new, and most people don’t even understand some of their most basic principles. Some would see this as an industry ripe for opportunity, whereas others would argue that NFT industry is simply a product of excess liquidity and overhyped sentiment.
Either way, funding for the play to earn space remains strong, and the gaming NFT vertical appears to be the niche that investors are most bullish on.
Blockchain wars – will ETH remain dominant?
The battle between Turing complete blockchains has been accelerating over the past few years. Previously, people would talk about BTC dominance. Now that the industry has matured, BTC dominance has less and less relevance, for the community at large is aware that BTC and ETH have very different use cases.
Bitcoin appears to have already won the battle of which asset is the best store of value. Given the difference between being a commodity and a security, having no insiders, the lack of ability to change the code, and the fact that Bitcoin has been running for longer, it is clear that there is a difference. Investors understand this difference now, particularly thanks to the brutal way in which a litany of CeFi failures plagued the industry over the course of the last few months (and many masquerading as DeFi, which weren’t).
The competition between Turing complete layer ones, layer twos, and sidechains, ramped up the last cycle. AVAX, FTM, SOL, MATIC and BNB all performed extremely well, and all contributed to eroding ETH’s market share. This hasn’t just been through holding the native tokens, but also the thriving dApp ecosystems on these various platforms.
The dApp ecosystems are themselves predicated on the success of the underlying technology, and to think that everything can be accomplished on a monolithic chain, or even one that fractures its liquidity into different shards, is woefully misguided. For example, there are many things that can done on Avalanche that can’t be done on ETH, such as Initial Litigation Offerings. MATIC is to be releasing Zero Knowledge Proofs before they are successfully implemented into Ethereum and this itself comes with a range of use cases.
The steady growth of DeFi
NFTs have been touted throughout the course of 2021 and 2022 thus far as the way in which blockchains can reach mass adoption. The theory is that retail users, who on the whole are less interested in high-risk speculation, may be more interested in art, gaming and collectibles.
Brands seem to find that NFTs are often a more appropriate addition to their business models than Uniswap V3 LPs, and this makes sense.
Nevertheless, the use cases of yield, lending, borrowing and participating in DAOs is a large use case, and the efficiencies that DeFi can offer to the traditional financial ecosystem are enormous. DeFi growth may not be quite as exponential as it was during DeFi Summer of 2020, but the growth is steady, and the DeFi industry has matured, so is far less volatile than the play to earn gaming and NFT industries.
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