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How blockchain games create entire economies on top of their gameplay: Report

Blockchain technology brings economic building blocks to games and sparks a tsunami of economic activity — inside and outside the games.



Blockchain technology brings economic building blocks to games and sparks a tsunami of economic activity — inside and outside the games.

Axie Infinity turned its game into a billion-dollar economy that helped thousands of players in the Philippines and other low-income countries to weather the fallout from pandemic mitigation measures. The main ingredient for success: strong property rights. 

Players can take in-game material out of the game and trade on third-party marketplaces like OpenSea. The freedom to set prices and to easily trade unlocked a veritable tsunami of economic activity in and outside of the game.

The 30-page report from Cointelegraph Research analyzes the top five titles and what changed since the days of Second Life and is produced in partnership with Galaxy Fight Club, The Sandbox, Planetarium, Immutable x, SolaDefy, Decentral Games, X World Games and Animoca brands.

The making of a new economy

The report dives deep into the differences between virtual economies of the past, like Second Life or World of Warcraft, and modern blockchain-powered games such as Axie Infinity or DeFi Kingdom.

Developing a well-functioning marketplace complete with an in-game currency and open standards for game material was simply beyond the scope of any development studio in the past. But, blockchains offer economic building blocks to game developers. The technology allows developers to launch a token within an hour or to define game materials as nonfungible tokens (NFTs). This gives users strong property rights and the ability to take their characters and items outside of the games onto third-party marketplaces or even other games at little additional development cost.

Download the full report here - for free.

With the addition of decentralized finance (DeFi) technology, players have financial opportunities they never had before, which led to the lightning-fast adoption of these games.

The report then compares the top five blockchain game titles Alien Worlds, Axie Infinity, Bomb Crypto, DeFi Kingdom and Splinterlands. Each of these games has different gameplay and offers different incentives to players. Daily active users, transaction volume, deposited balances and gameplay — as well as tokenomics that are the economic incentives for the in-game currency — are each put into comparison.

But, no report would be complete without covering the dark side of blockchain gaming. Environmental concerns, a sharp divide between the haves and the have-nots, the legality and tax implications are all valid concerns around these new economies. This is especially important as the sheer success makes these games increasingly attractive to players and game developers.

GameFi titles were responsible for more than 35% of all Polygon transactions during peaks in 2021 and early 2022. But, without addressing the possible issues, the long-term viability of the whole blockchain game space is compromised, as critics and regulators will use these arguments to hinder development or make it harder for players to participate.

Get ready, fight!

The report has an optimistic conclusion about the future of blockchain gaming and the potential unlocked by economic freedom. Lower transaction costs, stronger property rights and open standards all work together to break open the planned economies of prior game markets.

Blockchain technology opens a world of new opportunities for developers and players. If environmental and regulatory concerns can be addressed, 2022 will be the best year for GameFi yet.

This article is for information purposes only and represents neither investment advice nor an investment analysis or an invitation to buy or sell financial instruments. Specifically, the document does not serve as a substitute for individual investment or other advice.

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Better than Axie Infinity: Kieran Warwick’s 2032 plan for Illuvium

Kieran Warwick created the play-to-earn game Illuvium with his brothers Aaron and Grant all siblings of DeFi maverick Kain, the founder of Synthetix….



Kieran Warwick created the play-to-earn game Illuvium with his brothers Aaron and Grant all siblings of DeFi maverick Kain, the founder of Synthetix. He shares his alpha on how NFT game mechanics can be designed in such a way that playing them can be fun and profitable in the long term.

Warwick entered the retail world right out of high school, eventually becoming an online shopping entrepreneur. He got his start in the crypto world at brother Kains company BlueShyft, which first made Bitcoin and crypto exchange payments available over-the-counter at more than one thousand physical retailers around Australia in 2015.



Kieran Warwick
Kieran Warwick is riding Illuvium until 2032.



Years later, with a number of business projects under his belt, Kain encouraged him to reenter the space, which led to the creation of Illuvium, a Pokemon-like play-to-earn NFT game. Unlike contemporaries such as Axie Infinity, which experienced dramatic in-game inflation, Warwick believes Illuvium will have a decade of staying power. In June 2022, the game brought in $72 million through the sale of 20,000 plots of NFT land, laying the literal groundwork for what Warwick envisions as a longstanding playing field.

Designing deflation

He explains the setup of Illuvium. When players first arrive or crash onto the planet, they find out that theres this society thats been built, and its your job to be a hunter and to go out and catch creatures known as Illuvials.

Like Pokemon cards, these Illuvials, which live in certain regions of the map, are limited edition. And much like the original 1999 Charizard or Pikachu cards, Genesis Illuvials are no longer available. Whenever a new set of Illuvials becomes available, they get progressively more difficult to find and capture based on a bonding curve comparable to the one that governs Bitcoins halvings and makes Bitcoins progressively rarer and more difficult to capture by way of mining. Thats what makes them valuable, Warwick notes.



Artwork from Illuvium. Source: Twitter



In addition to being limited in mintage and increasingly difficult to mine, Illuvials are deflationary due to a game mechanic termed Fusing, which consists of destroying lower-level characters to create higher levels.

Three level-one Illuvials can fuse into a single level-two version, whereas summoning a level-three Illuvial requires a sacrifice of three level-twos, equivalent to nine basic creatures that are forever removed from circulation.

Warwick is quick to note that the capped and deflationary nature of his Illuvial game pieces makes Illuvium the polar opposite of Axie Infinity, whose native Axie characters are created through a mechanism called breeding that produces an ever-inflating pool of characters within the game universe.





A single Axie cost hundreds of dollars in mid-2021 to the extent that individual gamers often rented them from owners and split their earnings but have now crashed in value to almost nothing. This price plunge can be explained by the runaway breeding of more Axies, which also caused possible earnings per Axie to fall.

Warwick is not surprised by the downfall of Axie Infinitys game economy. Ive been calling this for 18 months now, he says, explaining that he believes the game was doomed from the beginning, as its economics were unsustainable. The model attracted many players who worked full-time to extract value from the game, while few added any, he asserts.

Many people are finding that these games are smoke and mirrors. We are not that we are here for 10 years at the least.


Having held an interest in business from a young age, Warwick, now 32, reasoned that he wanted to start earning money right out of high school in 2007 and decided to skip college in favor of Australian retailer Harvey Norman, where he eventually became a franchisee responsible for running a store.

After leaving in 2012, he founded Audio Invasion, a competing online retailer for music and computing goods with his brother Kain and a mutual friend whod recently begun mining Bitcoin as a hobby. Around this same time, he dabbled in a business selling online tutorials.

That was the first I heard of Bitcoins he had hundreds of BTC, Warwick recalls, adding that the friend who introduced him to Bitcoin had tragically passed away in a biking accident, taking his private keys to the grave with him, like so many other early adopters who met untimely deaths.





When Audio Invasion ran out of money in 2014, Warwick worked as head of marketing for BlueShyft, a financial payments and retail network he founded with his brother Kain and billed as the first in the world over-the-counter exchange, which saw over 1,000 retail locations around Australia becoming outfitted with an iPad, with which customers could directly purchase BTC in-store. In short, anyone could walk in with cash and have BTC deposited to the address of their choice. In addition to the retail business, the company today operates, billing itself as the fastest way to buy Bitcoin in Australia.

In 2017, Kierans brother Kain, who is nine years older than him, founded Synthetix (originally Havven) an Ethereum-based DeFi platform. Kieran helped his brother raise money for the project. Around this time, Warwick started investing in Ether and other cryptocurrencies back when the price of ETH was in the single digits.

I was a little skeptical of crypto I had lost $30,000 margin trading ETH, which left a bad taste.

Instead of flipping crypto, the younger Warwick tapped into his taste for burgers in 2016 to create the Burger Collective, described as an app made for burger lovers that hosted reviews and discounts to nearby restaurants. With 200,000 users, the app experienced initial success and an imminent integration with DoorDash, before the COVID-19 pandemic caused restaurants to close for in-person dining. Our product was all about going to the store, Warwick explains regarding why the company had to wind down in May 2021 after running out of money.

It was while his burger app was beginning to fail that Kain peer-pressured him to get back into crypto, even loaning him $100,000 to do so. I ended up making a whole bunch of money 10x in six months, Warwick recalls. In June 2020, he had the fortune of learning about the play-to-earn game Axie Infinity, which fascinated him.





They branded it as a Pokmon-like game, and I am an avid Pokmon fan, he notes regarding the initial appeal, which led him down a rabbit hole of learning about NFTs, upon which the game was based. Describing himself as a gamer, Warwick came to the view that this is exactly what the mainstream gaming world has been asking for decades.

What if we made a AAA Fortnite-like title? Thats exactly what gamers have been wanting! Warwick opined, a realization followed by what he describes as a couple of weeks of deeper research into the technology and possible game functions.



Art from Illuvium. Source: Twitter



What goes into designing a game? Designing game characters seems like a natural place to begin, so Warwick went to work to convince his more artistically inclined brother Grant to help out with design. Getting Grant on board was no easy task, however.

Nah man, I wont go into crypto its all scams, so I cant put reputation on the line, Kieran recalls of his brothers protests. He eventually relented and agreed to design five characters.

Five designed characters do not a game make. Though Warwick imagined himself capable of raising money and running the business side of things, he knew little about how to build a game a task that involves much more than mere artistic design.

The answer came in the form of yet another member of the Warwick clan, Aaron. Hes an accomplished game designer and was next in line to join the team. Aaron brought new ideas to the table, preferring more team fight tactics, League of Legends-style.

Being brothers, we just couldnt agree on game mechanics we were arguing for 23 days until Aaron designed a beta version. Thats how Illuvium came about.

“Were a game with Crypto elements rather than gamified crypto. The result of that gaming DNA is high quality gameplay that feels no different to the best of traditional gaming,” Warwick explains regarding the resulting first-hand gaming experience.

How to earn

There are a number of ways by which players can earn while playing Illuvium. The first of these is through capturing Illuvials in the wilderness, which can later be sold for a profit. This process is not without expenses, however, as players must expend in-game Fuel to travel into a specific region where Illuvials might be present and, upon encountering one, expend a shard in order to facilitate the capture. There are several tiers of shards, which cost progressively more, and the capture of a highly ranked Illuvial with a low-level shard is statistically unlikely. Fuel is what powers the entire economy in Illuvium, he says.



The tradeable Illuvials are very Pokmon-like. Source: Illuvium



There is also Illuvium Zero, a mobile companion game, which Warwick describes as a city builder with NFT land. Owners of the land can earn Fuel, which is linked to the Illuvium economy as an integral resource needed to effectively play the game. According to Warwick, land owners make 5% of in-game revenue in this manner. As of writing, the cheapest individual land plots trade for close to 1,000 USDT on the in-game marketplace.

Ranked battles are a driver of the demand of captured Illuvials, where they can be battled in order to climb the leaderboards and earn ILV governance tokens, of which 1 million are set aside as rewards for achievements such as tournaments. In these cases, the DAO that governs the game takes a small percentage. With a market capitalization north of $100 million, ILV sits in the top 200 cryptocurrencies. In addition to the governance-focused ILV token, which is in some ways comparable to Axie Infinitys AXS token in terms of function, there is sILV2.



Illuvials fight on a virtual battlefield.



SILV2 is our in-game currency, but its finite as well, Warwick says, explaining these tokens are commonly used to buy the all-important Fuel. The 2 in the name is the result of a January 2022 incident, in which the currency was exploited by a hacker just prior to launch.

Their plan was to wait until the game started and have an unlimited amount of SLV, Warwick explains, saying that the brothers decided to relaunch the token and make victims whole by personally putting up about $450,000. It was really Warwicks money, however, as the other guys arent liquid yet, but they said theyll pay me back, he says.



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Warwick has a wider vision for the future of blockchain gaming.

I think most games will migrate to Web3, he says with confidence, explaining that the advantages of the new paradigm that is giving power back to the players are so numerous as to make it a necessary upgrade due to consumer demand. Unlike in most mainstream games where players cannot generally sell their in-game items or monetize their achievements, Web3 gaming means that consumers have a choice.

Its the beginning of a new cycle, and consumers will have the power in this 1020-year period.





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Putin Travels To Friendly Central Asian Countries In 1st Trip Abroad Since War Began

Putin Travels To Friendly Central Asian Countries In 1st Trip Abroad Since War Began

President Vladimir Putin arrived in the ‘Russia-friendly’…



Putin Travels To Friendly Central Asian Countries In 1st Trip Abroad Since War Began

President Vladimir Putin arrived in the 'Russia-friendly' central Asian country of Tajikistan on Tuesday, for a one-day visit with Tajik President Emomali Rahmon, in what marks Putin's first trip abroad since launching the Feb.24 invasion of Ukraine.

The two leaders discussed "bilateral ties, the development of cultural and economic relations, and regional and global issues, especially the situation in Afghanistan." He then went on to Turkmenistan on Wednesday to attend an important regional summit of allies.

Putin and Tajikistan's President Emomali Rakhmon, Sputnik, Kremlin Pool Photo via AP

According to Japan's NHK World, this week includes a "tour of central Asia" by the Russian leader, as he's visiting "Turkmenistan on Wednesday to attend a summit of five countries bordering the Caspian Sea, including Iran and Azerbaijan. The region is said to be rich in natural resources."

During the visit to the country's capital of Ashgabat, Putin is further meeting with Iranian President Ebrahim Raisi to discuss central Asian security, particularly Afghanistan in the wake of the US military withdrawal of last year, and as Western sanctions on the Taliban remain. It comes also at a moment the Iran nuclear deal with world powers continues hanging by a thread, and as the West scrambles to tap alternative oil and energy supplies.

Concerning the ongoing Afghan crisis, Putin indicated in statements while in Tajikistan that "Russia is trying to build relations with the Taliban and that Russia wants to see all the ethnic groups in Afghanistan take part in running the country," according to the AP. Russia has a military base on Tajikistan, which shares a lengthy, hard to secure border with war-torn Afghanistan.

The short central Asian tour is happening as the Kremlin confirms this week that Putin will attend the G20 summit set to be held in Indonesia in November - which could prove deeply awkward as Ukraine's Volodymyr Zelensky has been invited as well:

Vladimir Putin plans to attend the G20 summit in Indonesia in November, an aide to the Russian president said Monday. 

Despite launching a brutal full-scale invasion of Ukraine, Putin was invited to the meeting of the world’s major developed and emerging economies by Indonesian President Joko Widodo — a move that will spark soul-searching for Western allied leaders also invited to the summit.

Some European leaders have suggested they might boycott the G20 summit if it includes Putin's personal participation. On Wednesday's the UK's Boris Johnson said he would do so.

However, it remains uncertain whether the Russian leader would actually travel there in person or if he'll address participants via video link. A Kremlin statement indicated:

Putin’s participation — either in person or via video link — is "envisaged" at the meeting, said aide Yury Ushakov, according to Interfax. "They are still inviting in person. There is still a lot of time. I hope that the pandemic will allow this event to be held in person," he added.

German Chancellor Olaf Scholz is among those who have said they are still deciding on attending the summit after Putin's invitation and participation became clear. "In the end, we will have to make the decision shortly before the departure, because the course of the world can still change very considerably until then," Scholz said.

Tyler Durden Wed, 06/29/2022 - 11:05

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Governments, enterprise, gaming: Who will drive the next crypto bull run?

With all the recent turbulence in the crypto space, the question of the moment is: What will drive the next crypto bull run?
In his…



With all the recent turbulence in the crypto space, the question of the moment is: What will drive the next crypto bull run?

In his monthly crypto tech column, Israeli serial entrepreneur Ariel Shapira covers emerging technologies within the crypto, decentralized finance (DeFi) and blockchain space, as well as their roles in shaping the economy of the 21st century.

The crypto market, just as any other market, runs in cycles. Even though digital assets are known, if not infamous, for being more volatile than many other asset types, their price action still follows a familiar pattern of ups and downs. Some of this, such as Bitcoin’s (BTC) four-year cycle, largely comes down to the algorithm’s intrinsic rules — more specifically, the halving of miners’ rewards. Off-chain factors, such as the U.S. tax-reporting rules, can also come into play.

Still, while the market’s logic dictates change, the logic itself remains largely unchanging. In other words, in the same way a bull run eventually runs out of steam and hits a plateau, bears eventually lose grasp of the market as well, giving way to another upshoot.

For now, of course, the market is still recovering from Terra’s crash and many other pressures that there has been no shortage of in the past few years. As fragile as its rebound attempts may be, and as red as every coin is compared to just a few months ago, the global crypto scene is hunkering down and powering on in wait for another bull run. So, where could it come from?

Related: How to survive in a bear market? Tips for beginners

National governments

Just a few years ago, the very idea that Bitcoin could be legal tender in any given nation seemed like a far-fetched delusion. And yet, after El Salvador’s daring Bitcoin gambit, the Central African Republic (CAR) joined the fray in late April, granting Bitcoin and other cryptocurrencies the status of legal tender.

These two countries make for an interesting comparison. It’s by now common knowledge in the crypto space that remittances from abroad make up a major portion of El Salvador’s budget, and this fact was seen as the economic rationale behind the experiment. While reports suggest the process is shaky, the nation’s government does shop for Bitcoin, embracing the “buy the dip” stratagem.

With the CAR, things could not have been more different. The economy of the war-ravaged nation has been ailing for quite some time. Furthermore, only about 10% of the country’s population has internet access, according to World Bank data. In other words, the use of crypto will likely be restricted to a small portion of the population — and, given the geopolitical and local context of the move, the prospects can indeed be quite murky.

Still, more emerging economies may choose to follow suit, especially given that El Salvador is not the only nation leaning a lot on remittance transfers for budget cash. Even the fact that there is precedent for that is big enough to get the momentum going, and should even one more nation join the club this year, the crypto markets will know it.

Related: El Salvador’s Bitcoin Law: Understanding alternatives to government intervention

Blockchain for institutions

While the early crypto rallies primarily came from private retail investors and traders, institutional investors have been joining the fray as well in recent years. From top banks and hedge funds delving into the crypto space to fintech giants adding support for digital assets to their platforms, institutional adoption is no longer a pipe dream — it’s reality.

Even the inside-baseball use cases, such as JPMorgan experimenting with its private blockchain meant for interbank use or a group of top information and communication technology providers tapping ClearX’s blockchain solution for data-on-demand services, matter. They add extra credibility to the technology powering the crypto ecosystem, which adds to long-term investor confidence.

Even though quite a few enterprise-grade blockchain projects will likely stay on private blockchains, the growing investor confidence in the technology is likely to further normalize crypto in the public eye and draw more eyes to the public blockchain space. Furthermore, such projects make for a whole niche market of solutions that will help companies build their private chains. Another niche may be in bridging these private chains with the public space. Crypto is, after all, all about connectivity and inclusion, so such aspirations only make sense.

Asset managers

The first Bitcoin exchange-traded fund (ETF) in the U.S. took off in late 2021, and the amount of interest it drew from investors is another testimony to just how much appetite the market has for crypto exposure. We have come to the point where some financial advisors are recommending that everyone, regardless of their age and risk preferences, should have at least some exposure to crypto.

Thanks to a change in sentiment like that, more and more asset managers will be looking into the crypto space, whether it’s on a client’s request or on their own inclination. By the same token, more and more high earners will be joining the ranks of crypto investors, bringing more value into the blockchain economy.

With all due respect to ETFs and other traditional assets, any crypto-savvy user will tell you that actual crypto is better than a traditional asset mimicking its movements. The reason for that is that crypto is far more dynamic. Your Ethereum-pegged ETFs (if those pop up some day) will only sit with your broker. With the actual coins, on the other hand, you can stake, use yield farms, and tap various other DeFi services for more passive income.

In this respect, it will be interesting to watch and see if traditional asset managers soon start losing ground to crypto-native alternatives such as EQIFi, backed by EQIBank. One of the platform’s key services is its yield aggregator, which effectively acts as an asset manager by allocating the user’s funds into various DeFi protocols to guarantee maximum returns. Such services make crypto more lucrative as an asset class that can work for its owner 24/7 through platforms that are always accessible and take just a few clicks to manage.

Related: Elusive Bitcoin ETF: Hester Peirce criticizes lack of legal clarity for crypto

Games and gamers

Blockchain games are not exactly something new, as anyone who remembers the CryptoKitties craze can attest to. Still, when Axie Infinity began making headlines as people in the Philippines turned to it in search of an income amid the COVID-19 pandemic, the play-to-earn industry stepped proudly into the limelight.

Now, it’s hard not to wonder if some of this pride may have been misplaced, given the plights that Axie Infinity, the industry’s standard-bearer, is now facing. The game has long had an inflation problem as its underlying business model began to give way. Adding to this issue was the recent hack, one of the worst ones on record in the DeFi space.

Axie Infinity’s pains could be just another case of a nascent industry figuring out its own best practices. A whole host of new projects is now gearing up to move this space further, aspiring to bring it to AAA-level polish in terms of visuals and gameplay. Once these new juggernauts enter the arena, we will likely see more gamers begin to explore crypto.

It may be tempting to write blockchain gaming off as just another subset of the retail market, but there's more to it in the long run. The video game industry is an undisputed powerhouse in the entertainment world, and wherever it goes, its adherents will follow. From esports to in-game ads, the traditional gaming industry has already given birth to a wide array of satellite markets, and all of those make for new use cases, new audiences and new business opportunities.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ariel Shapira is a father, entrepreneur, speaker, cyclist and serves as founder and CEO of Social-Wisdom, a consulting agency working with Israeli startups and helping them to establish connections with international markets.

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