Why NFT Gaming is Here to Stay: From Crypto Kitties to AI-Driven Worlds

Non-fungible tokens (NFTs) took the crypto industry by storm in 2021, and while the initial hype may have died down, this niche crypto asset class is gradually proving to be futuristic on several fronts. 

Most notably, NFT-related games account for a significant share of on-chain activity; the latest report from DApp Radar reveals that blockchain gaming made up 30% of the crypto industry activity in Q1 2024, with a record of 2.1 million daily active wallets.

Before diving into the details of why NFTs are nowhere close to their deathbed, it is worth noting there have been several iterations of NFT games. One of the earliest games to be released was Crypto Kitties, which is infamous for clogging the Ethereum network in 2017.

Fast forward to today, there are more advanced NFT games such as Axie Infinity, a darling of the crypto community during the NFT craze; Pixels, the leading NFT game in UAW as of writing; and My Pet Hooligan, one of the advanced NFT-oriented games that are tapping into Artificial Intelligence (AI) to enhance the Web3 gaming experience.

That said, let’s take a deep dive into the value proposition of NFTs in modern gaming and the futuristic integrations with emerging tech that could define the future of gaming. 

Web3 Gaming: A Resilient Ecosystem  

Similar to the 90s Yahoo boom, almost all NFT innovations were at some point experiencing a wild surge. According to a study by BNP Paribus, NFT trading skyrocketed by 21000% in 2021 to hit a record of $17.6 billion from a mere $82 million in 2020.  However, as fate would have it, most of the NFT collections that were worth thousands of dollars are now illiquid; pretty much what happened with most of the yahoo stocks. 

But what about the NFT innovations that have stuck around? It is intriguing to observe that in Q1 2024, some of the NFT games that were leading in volumes and user activity are the same names that made top news during the bull run. For instance, Alien Worlds and Splinterlands both featured among the top five games in user activity. Axie Infinity, on the other hand, was the leading NFT game in volumes. 

Evidently, there is still significant interest in NFT gaming, but more importantly, the wheat was separated from the chaff. What stands out about the games mentioned above is their value proposition in the larger gaming ecosystem. 

Let’s take the example of Axie Infinity which at some point was the most popular NFT game. Why? The Axie Infinity gaming model allowed participants from across the world to earn a passive income from breeding and selling digital pets dubbed ‘Axies’. While it is now more costly to get started compared to the earlier days, Axie Infinity’s cutting edge as a pioneer play-to-earn game has continued to sustain its in-game economy. 

Another good example of an NFT game that has stood the test of time is Splinterlands. This blockchain-based digital trading card game mirrors the likes of Pokemon which fall in the larger digital collectible card game market. 

For context, this is a gaming ecosystem that was valued at $528 million in 2021, with projections showing it could eclipse $1054.3 million by 2027. It comes as no surprise that Splinterland’s introduction of a blockchain-native card game seems to be attracting a huge interest as well. 

These two pioneering games are just a glimpse of the resilience of the NFT gaming sector despite some critics wishing it away. But what’s even more intriguing is what lies ahead; NFT gaming innovators are now embracing newer technologies, including AI to advance the Web3 gameplay. 

Web3 & AI: The Future of Gaming 

Last year, generative AI took the center stage, with Large Language Models (LLM) such as Chat GPT and Gemini attracting a huge user base. Meanwhile, Nvidia made a comeback to rank as the top gainer in the magnificent 7 stocks of the S&P 500, thanks to the company’s focus on making specialized chips for the AI sector. 

AI has also become a driving force in the development of futuristic NFT-oriented games. While there are several projects building in this area, one that has particularly stood out is My Pet Hooligan (MPH); this Web3 multiplayer, social-action game leverages AI tech and motion capture to enable players to stream/create content and interact as their in-game avatars. 

The game is built on the KARRAT Protocol; a decentralized gaming infrastructure whose core focus is to support transformative AI innovations in the NFT gaming space and Web3 at large. Notably, the MPH NFT collection has already achieved over 23000 ETH in trading volume, having been the 1st ever AI integrated Digital Collection (NFT). 

Looking at such innovations, there is a glimmer of hope that the NFT industry will finally advance from the old style pixelated collections and metaverse worlds that were barely usable to a more vibrant ecosystem. To provide some perspective, the most expensive crypto punk to be purchased was bought at 8000 ETH; today, the average NFT floor price for crypto punks is around 27 ETH.  

Metaverse worlds which touted to be futuristic gaming environments have also suffered a similar fate, with pieces of virtual land on The Sandbox going for as low as $2.78 ETH compared to the bull run where a single piece sold at record breaking figure of $4.3 million. The reduced interest and prices does not necessarily mean that these NFT innovations didn’t have the potential of breaking into the virtual gaming realm, but rather a piece of the puzzle was lacking. 

Of course, there is still a lot of development that needs to be done, but what’s gradually becoming obvious is that Web3 gaming powered by AI might soon replace traditional gaming. With gaming giants such as Ubisoft embracing both Web3 and AI, it is only a matter of time before this paradigm shift happens. 

“Adding AI to the Web3 gaming mix is like giving our games a superpower. AI enhances the gaming experience by creating dynamic, responsive environments and intelligent NPCs that adapt to each player’s unique style and decisions.”  –  previously noted Yat Siu, Co-founder and Executive Chairman, Animoca Brands. 

Disclaimer. The information provided does not, and is not intended to, constitute financial advice; instead, all information, content, and materials are for general informational purposes only. Information may not constitute the most up-to-date information and readers must do their own due diligence and assume responsibility for their own actions. Links to other third-party websites are only for the convenience of the reader, user or browser; Cryptopolitan and its members do not recommend or endorse contents of the third-party sites.

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