Why Magic Eden is betting on NFTs disrupting the gaming industry

For many crypto advocates, video games offer one of the clearest use cases for NFTs. They enable a user-owned economy that allows players to resell and potentially profit from digital assets, plus such tokenized, interoperable assets can potentially be used across multiple games and online worlds.

But there is one big problem: many players absolutely hate NFTs.

Vocal fans from the traditional gaming space have pushed back against companies like Ubisoft and Team 17 as they have explored the NFT space and many see the industry as a hotbed of fraud and speculation. The environmental impact of NFTs has also been a common complaint that argument is effectively dead after the last one Ethereum is merging.

On top of it all, some believe that game publishers will simply use NFTs as another way to extract even more value from players. The backlash to NFTs is similar to that required against free-to-play games and downloadable add-on content when their respective business models were introduced, and now both are widely accepted industry standards.

Even in the midst of vitriol, NFT marketplace Magical Eden still sees long-term potential in NFT games. Magic Eden, which was launched a year ago and became valued at $1.6 billion in Juneis the leading marketplace for Solana NFTs and recent extended to the Ethereum market.

On last episode of Decrypthis gm podcastMagic Eden co-founder and CEO Jack Lu told co-hosts Daniel Roberts and Stephen Graves that despite player skepticism, he believes NFTs “unlock something completely new for game developers to build an economy and build a new business model on . “

Magic Eden has supported a wide range of NFT-based game projects through both the launch function and secondary marketplace, including upcoming titles such as SkateX, Mini Royale: Nationsand BR1: Battle Royale.

In July, the company launched a gaming-focused venture investment arm with a goal to help lure game developers to Magic Eden. Part of the marketplace’s approach is to build simple integrations so developers can put the Magic Eden platform into their games. That way, users can buy and sell NFTs without leaving the gaming experience.

Lu admitted that there is “so much to unpack” around players’ perceptions of NFTs, including the presence of bad actors in the industry and the increasing financialization of digital assets. Also, as a nascent space built around decentralized technology, it’s no surprise that many early NFT-powered games have been simplistic, failing to meet some players’ expectations.

The Ethereum-based Axie Infinityfor example, the biggest success story in the room is with over $4 billion in NFT trading volume, and millions of active players peaked last year. But the monster-fighting game was also condemned for its repetitive nature, and the game’s games to earn the economy collapsed amid the growing hype. Also the game’s Ethereum bridge was hacked too crypto worth over $600 million.

As more and more experienced game developers enter the Web3 space and start building, we may see richer NFT-powered experiences going forward – but that may take time. Large-scale video games often take years to build, and are supported by significant development teams.

Lu said his team is “waiting for a few diamonds to shine” — that is, great games that showcase NFT functionality — to help spread adoption across the gaming industry.

“Great games take a long time to build – it takes vision, inspiration and a lot of developer time to build that much content,” he explained. “We’re actually waiting for the most promising game studios to have time to build out their content, and then figure out what’s the secret sauce of how to use NFTs in it.”

Lu suggested that when some of the so-called diamonds hit the market and thrive, they will serve as a “case study” to nudge other developers into the NFT space. He described it as a potential “tidal wave that follows past paradigm shifts” in the gaming world, such as the move to free-to-play games.