The concept of yield agriculture has gained a lot of traction over the past year, especially as it allows crypto owners to stake their assets in exchange for tangible returns within short time windows. And while the thought of making a profit on someone’s investment may not be new at all, the idea behind yield farming – where users can earn rewards for using a particular DeFi application – is largely limited to the purview of the decentralized financial industry.
Like produce farming, intangible tokenshave also become extremely popular in recent years. This is because these cryptographic entities – whose values are directly linked to a particular asset – are ideal for owning physical items such as artwork, title deeds, collectibles, such as CryptoKitties, as well as digital goods such as game skins, trading cards, and so on.
How can NFTs be used in the field of yield farming?
Since the Napster debacle From a few decades ago – when the legendary rock band Metallica took on the file sharing giant to allow users to illegally download their music – came to light, conversations about digital content ownership and rights management have become increasingly common around the world .
In this regard, NFTs alone seem to have captured the imaginations of crypto enthusiasts around the world in the course of 2020, mainly because they enable digital data ownership processes to be facilitated in a very streamlined, efficient manner.
There are several blockchain-based digital collectible card games available online now. They allow players to operate in a fantasy landscape, and even allow them to create some new items, collectibles that can then be used in-game in exchange for a wide variety of digital goodies or even on different markets can be sold for a monetary fee.
Why combining NFTs with yield farming could be huge …
Most globally recognized video game developers – such as Electronic Arts, Activision, and UbiSoft – tend to use a monetary maximization model, primarily focused on making as much money as possible with each title release. In this context, it should be mentioned that the issue of microtransactions has evolved over the past 4-5 years teased the entire gaming market, so that players now have to pay a small fee for unlocking every little feature present in a host of popular gaming titles, e.g. FIFA 2021, NBA 2k21, etc.
Blockchain gaming, on the other hand, seems to be more concerned with providing players with as much value and playability as possible. For example, in the vast majority of blockchain titles, users are given the ability to store and sell their in-game items at will, shifting the balance of power from the hands of game developers to that of the players, particularly from a financial perspective. point of view.
What is next?
As the gamified yield farming market matures, it will be natural for the industry to move to a framework in which the rules of the game can be changed by the players themselves. For example, if a game typically assigns certain attributes to an in-game item – for example, a factory has the ability to produce only 80 cars or 50 motorcycles per day – users will over time have the option to change these rules. and increase / decrease the production capacity of these defined entities, depending on the governance tokens they own.
What this means in the long run is that players will eventually influence the core rules of the game through governance – something previously unimaginable with traditional video games. Also, from a monetary aspect, such a model could completely shake up the gaming industry as users could potentially change production rates, inflation standards, etc. within the game – making their governance tokens more valuable over time.
Finally, the ability to change in-game protocols means that players with substantial governance tokens can modify parts of the game economy quite easily, which is revolutionary, especially considering that blockchain titles are fully decentralized, both in terms of design as for usability.
The future of gaming is here
Empire building games, such as Sid Meier’s Civilization, Command and Conquer, Age of Empires, have captured the imagination of millions of people around the world for decades. As entertaining as these titles are, they don’t allow players to generate any sort of monetary return for them in lieu of their time and effort spent.
The concept of gamified yield farming with NFTs can change all that, as it allows users to make money with every in-game asset they own. Not only that, depending on a person’s personal skills, players can potentially bring in thousands of dollars for something they enjoy doing on a daily basis.
For example, in fantasy landscapes, players can purchase collectible NFT game cards that can be used in-game to earn a wide variety of digital goodies, and they can also be sold on various NFT cryptocurrency marketplaces. In a yield-farming fashion, the NFTs can also be confidently leased to other players to earn passive returns on NFT assets.
That said, traditional PC / console games still have an overwhelming edge over blockchain titles at this point, both from a visual and functional standpoint. When the graphics and gameplay side of things start to get similar between the two, decentralized games will dominate the industry.
This article was contributed by Jesse Reich and Aly Madhavji.
This article does not contain investment advice or recommendations. Every investment and trade move carries risks, and readers should do their own research when making a decision.
The views, thoughts and opinions expressed here are the sole ones of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Jesse Reich is the CEO of Splinterlands. Jesse graduated from Texas A&M University with a Ph.D. in chemistry in four short years, and at the age of 27 he became a professor. He worked for 10 years as a leading university sales engineer at major publishers. In discovering the economic and social freedoms and protections that blockchain technology can afford, Jesse founded Splinterlands with Matt Rosen.
Aly Madhavji is the managing partner at Blockchain Founders Fund, which invests in and dares to build top startups. Aly consults organizations on emerging technologies such as INSEAD and the United Nations on solutions to help alleviate poverty. He is a senior blockchain fellow at INSEAD and has been recognized by Lattice80 as a “Blockchain 100” Global Leader. Aly is a board member of CryptoStar Corp and has served on several advisory boards, including the University of Toronto board of directors.