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Playing Fortnite Made Me Bullish On GameFi👾
Gaming plays a crucial role in social culture & friendship. Some of the most vital relationships I built started in game lobbies, but I never thought an investment thesis could come from the same place.
The R Roundup
November 24, 2023
Playing Fortnite Made Me Bullish On GameFi👾
Gaming plays a crucial role in social culture & friendship. Some of the most vital relationships I built started in game lobbies, but I never thought an investment thesis could come from the same place.
Casually loading into the new Fortnite OG, Epic Games appeared to hit the nail on the coffin by revisiting nostalgia. One step further, their in-game economy was infiltrated with licenses from Travis Scott, Lewis Hamilton, Marvel & more.
Cast your minds back to the peak of Fortnite when everyone was rushing to load up their VBUCKS for the latest skin drop. This is game retention through an in-game economy that grasps all ages.
But why did it make me bullish on GameFi?
The answer is simple: GameFi has always been one of decentralization's most substantial theoretical use cases for mass adoption. However, in-game economics's game quality and structure have let it down. Projects promise to replace tier-1 games, forgetting the intrinsic value we create with established games like GTA, Call Of Duty, FIFA & Fortnite. While we have seen cases of young games dominating, a considerable amount of work still needs to be done, especially for an industry plagued with doubt like crypto.
Fortnite might be the perfect example of how GameFi needs to position itself, but what if Fortnite itself has lessons we can learn from to remind ourselves why GameFi isn’t dead?
TL;DR📖
Fortnite's in-game economy and integration of popular licenses demonstrate the potential for GameFi to attract and retain users of all ages🎮
The current state of GameFi, with a focus on finance over gaming, may limit its adoption and potential success🎲
By emulating Fortnite's model of incorporating game value first, followed by emotional and nostalgic value, and then establishing an ownership economy, GameFi could become a prominent use case for blockchain technology🌎
GameFi: Bid Or Sidelined? 🤔
Crypto investment, more than ever, is a narrative game. You must learn to choose different difficulty settings depending on the market conditions. When things were heavily bearish, the difficulty of spotting narratives was in expert mode. You had stuff like LSDs & RWAs that provided infrastructure that could displace traditional finance. You need some advanced level of crypto to understand these plays fully. When we go into bullish sentiment, the difficulty becomes easy, and you can just see what people are talking about, where liquidity is going, and bid.
But why is GameFi different?
As a narrative, I have always struggled to position myself in it despite investing in some good games in the early rounds, like Star Atlas. The reason for that is because…the game part was lacking.
If we look at the GameFi landscape, over the past 30 days, several games have seen an uptick in UAW (user active wallets), which doesn’t indicate the game value, but it indicates the players coming back.
Source | https://gamefi.org/game-world
With the sentiment shifting towards more users finding value in GameFi, we can see more projects spending time on creating an actual gaming experience rather than just developing an AMM with a game interface. The funding GameFi got in the 2021-22 run was so substantial that any project that did develop a game in that time might have something unique on their hands.
As narratives mature, your perspective on it matures, which is definitely the case with GameFi. The fewer MMORPG copy-and-paste games, the more value in GameFi.
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Where Does Fortnite Come In 🎮
The latest Fortnite OG update, where Epic Games brought back nostalgic maps from their first seasons, was a giga play, but a simple one. While I am not an expert on game data, I stopped playing Fortnite in the first place due to an overcomplexity of in-game mechanisms, unfamiliarity with maps, and the game cycle simply dying. These are all challenges that games face, but not many can recover. Fortnite did.
While to many people, games are just a pastime, the intrinsic value is the memory created and associated with that game. It wasn’t about playing a game when I loaded back into Fortnite. It was about reigniting some of the feelings that the first map had created when I played it.
The feeling of owning precious skins, getting the golden scar & getting that victory royale was a privilege a few years ago. I wanted that feeling back.
Now imagine in an alternate universe, the skins, the customization & specifically the ownership were REAL. You can log in to not just associated with an account but a wallet with on-chain verification proving these assets belonged to you. It takes it to another level.
Creation Of An External Game Economy💰
So many GameFi projects focus on creating an in-game economy similar to Fortnite with the purchase of VBucks as their currency. While in GameFi, this is done with NFTs & tokens, the concept is the same.
Fortnite faced some legal issues relating to the structure of their in-game purchases, which resulted in a settlement of $245m. It sounds familiar to the crypto industry vs the SEC, but the concept remains the same.
Since then, the value of genuine ownership within Fortnite has skyrocketed. People have taken it upon themselves to create external game economies where accounts with specific highly sought-after skins are placed on a marketplace for sale. This blew my mind because little did I know I could be sitting on a couple of hundred dollars without realizing it.
This takes me to my point of all of this. GameFi emphasizes the “Fi” (finance) part more than the game part, putting people's priorities on making money rather than playing games.
With Fortnite, most of the value comes within the game and flexing your skin while killing guys. The value of your account comes second, as there was initially no reflection of a real economy. Fortnite leaves itself in a position where the moment skins go on-chain, they have struck gold.
Fortnite Made Me Bullish🐂
I am saying all of that to say this: if GameFi can emulate Fortnite’s model of👇
Game Value → Intrinsic Value (Emotion + Nostalgia) → Ownership Economy
It starts to replace itself as one of the most apparent use cases for blockchain. As mentioned, we often hit mass adoption when people don’t even know blockchain is being used. Imagine a situation where someone has reached the end of the game cycle & now is sitting on 100 skins, which each go for 0.1 ETH. They get the best of both worlds rather than playing in return for rewards, a system that, on many occasions, has proven to shrink the game life cycle by half.
Who would’ve thought Fortnite would give me a degree of investment direction? It's funny.
As a reminder, this is not a trading signal or investment advice; it is an opinion, and each trader/investor should know and understand the risks of trading cryptocurrencies.
This should not be regarded as financial advice; feel free to familiarise yourself with our NFA disclaimer.
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